An update on the E-commerce Sector Inquiry – key takeaways from the Commission’s presentation of its preliminary findings


Following the publication of the Preliminary Report on the E-commerce Sector Inquiry the European Commission presented its findings in Brussels on 6 October, hosting a series of panels and discussions on the topic. Panellists included members from UEFA, Spotify and L’Oréal, as well as organisations representing consumers, retailers and manufacturers. A dedicated enforcement panel, chaired by Competition Director General Laitenberger, brought together the presidents of the competition authorities of Germany, the Netherlands, Portugal and Sweden.

While delivering the keynote speech, Commissioner Margrethe Vestager recognised the challenges that businesses are facing in light of the significant growth of e-commerce in recent years – she cited as examples the need to ensure bricks-and-mortar shops survive and to address free riding. She made clear that not all vertical restrictions are anti-competitive: competition law is not only about ensuring low prices – innovation, quality and choice for consumers are equally important drivers of competition.

Commissioner Vestager also stressed however that in e-commerce businesses must still play by the rules. She welcomed the fact that during the Commission’s inquiry businesses had begun a review of their distribution agreements for compliance with EU competition law and she encourages more businesses to do the same - a point already made in the Preliminary Report. Businesses may be facing new challenges and new opportunities, but their response to these challenges must not restrict competition, she warned.
In the following panel discussions the Commission remained in listening mode and again invited all stakeholders to make their views known and to comment upon the Preliminary Report. The aim of its sector inquiry is to understand e-commerce better. Going forward, its findings will guide its enforcement activities. A better understanding of the market will lead to better enforcement, Commissioner Vestager noted.

Another key takeaway is that the Commission is now back in the driving seat when it comes to vertical restraints. Having reviewed some 8,000 distribution agreements to date in its inquiry it has regained the industry insight it had lost following the removal of individual exemption procedures under Regulation 1/2003. All national competition authorities present at the conference agreed that the sector inquiry forms a basis on which they can now better align their enforcement practices and create the level playing field wished for by so many companies engaging in cross-border business. While the authorities acknowledged that their enforcement priorities may differ, they expressed the willingness to cooperate more closely with each other. The German competition authority in particular stressed how closely it had liaised with the Commission when making decisions in the e-commerce sector, such as in the Asics case.

However, absent any final decision of the Court of Justice of the European Union, national court decisions will affect enforcement practices in Member States. The prohibition on sales via online marketplaces is currently a prominent example; while the Commission explicitly states in its Preliminary Report that these should not be viewed as hardcore restrictions, German courts have taken the opposite view. A preliminary reference is currently pending before the Court of Justice of the European Union and should bring clarity to this issue. Whether the authorities can align their approaches in other respects remains something which can only be hoped will materialise.

The Commission has opened the public consultation on its preliminary findings and invites comments from stakeholders by 18 November 2016.

Its final report is due for publication in Q1 2017.