23 April 2015
Everything Online is the focus of the European Commission’s latest sector inquiry announced on 26 March 2015. This inquiry focuses on the e-commerce sector and is aimed at identifying key technical or contractual barriers to cross-border trade imposed by companies themselves (as opposed to “other” barriers – such as differences in language, national legislation and consumer preferences). These “other” barriers may be tackled by the Commission in its wider push to complete the Single Digital Market (see here). The Commission’s interest in technical barriers in e-commerce can be traced as far back as 15 years ago, when it began separate investigations into Visa and MasterCard. The Commission found that via each of the Visa or MasterCard organisations, participating banks had collectively set multilateral cross-border credit and debit card fees (which were too high). The MasterCard investigation and subsequent appeals has only just been concluded (for the recent MasterCard Court of Justice judgment see here and for the European Commission decision and press releases see here). These investigations identified a need for regulation of multilateral interchange fees. However in 2013 Commissioner, Almunia signalled that the Commission shared wider concerns about the online sector, in particular e-commerce (see our blog post here). Since then, recent regulatory investigations have focussed on the following areas:
The Commission is particularly alive to Most Favoured Nation clauses in contracts or “MFN” which have a number of different guises but which are essentially agreements between a supplier and a specific distributor/retailer stipulating that the supplier will offer the best available terms to the distributor/retailer. The Commission and national competition authorities have conducted investigations into MFN clauses in a number of sectors, including online motor insurance and online sports good retail, but the most high profile investigations have been the e-books investigation (see our guest blog post from Avantika Chowdhury of Oxera here) and hotel online booking investigations (see our post here – by way of update we note that Booking.com has just this week agreed to drop its “price, availability and booking conditions parity provisions” in commitments agreed with French, Italian and Swedish regulators; however, certain ‘narrow MFSs’ are retained).
Geo-blocking, online music streaming, online search engines
In parallel to its e-commerce sector initiative, the European Commission is also understood to have initiated some new related investigations:
- An investigation into online retailers of video games for personal computers: the concern is understood to be the possibility that such retailers are taking technical measures to prevent consumers from accessing websites in other Member States by re-routing customers to the retailers’ websites in their home country. This is not the first time the Commission has investigated such behaviour – it looked into similar practices by Apple iTunes in 2007, leading to a voluntary change in Apple’s business practices.
- An investigation into online music distribution: the Commission is understood to be investigating agreements between Apple (again) and online music labels/digital music companies over concerns that their agreements may be foreclosing competitors from the market.
Experience in the field of MFNs belies a growing feeling that the EU legislation governing vertical agreements is out-dated and doesn’t properly deal with the actual way in which online business operates. For example, the current legislation does not provide enough detail on how MFNs should be categorised – are they hard-core restrictions incapable of exemption or lesser restrictions which may be exemptible? If they are capable of exemption, under what circumstances?
But it may not just be legislation relating to vertical agreements that needs to be re-cast. While each new investigation tackles case-specific antitrust concerns, the results will all feed into the e-commerce sector inquiry, building a picture of the e-commerce landscape and the barriers to cross-border trade. These may ultimately develop into a new vertical agreements regulation, changes to copyright (national TV rights, for example, seem to be in the scopes of the geo-blocking initiative) or even completely new sector-specific legislation – WATCH THIS SPACE!