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Antitrust investigations in e-commerce : EC

Update On :17 September 2016

Antitrust investigations in e-commerce : EC

The European Commission(EC) have concern on the European Union(EU) consumers that because of restrictive practices by manufacturers and distributors, they may be paying more than they should for a range of physical and digital goods sold online. Hence, it has warned about the opening of antitrust investigations into price restrictions and online sales bans in the e-commerce industry.

The European Union's goal of creating a single market for goods and services has historically been hampered by the geographical and linguistic barriers to selling across the 28-country bloc but e-commerce can help businesses break down both of these. However, the online market is creating barriers of its own to competition, the Commission found, potentially threatening its latest initiative, the Digital Single Market, a way of removing national barriers to online sales.

In a year-long study, it found evidence that one in five retailers is prevented by suppliers from selling goods online, while two in five face some form of price recommendation or restriction from manufacturers. One retailer in 10 was contractually restricted by its suppliers from submitting information to price comparators, used by many consumers to find the best deal.

Jakob Kucharczyk, European director of Computer and Communications Industry Association (CCIA) said via email that restrictions preventing sellers from using marketplaces as a sales channel harms competition, consumer choice and European small and mid-sized businesses echoing to the warning of European commission. The Digital Single Market is bound to remain theory if it cannot become a reality for millions of European businesses because of unjustified online sales restrictions.

CCIA members have included Amazon, eBay, Netflix, Paypal, Rakuten and all major players in e-commerce or the sale of digital goods and services. The Commission published its preliminary findings Thursday, in a report based on its analysis of 8,000 distribution contracts involving 1,800 companies reselling electronic and digital goods across the EU.

The market for digital goods such as e-books and music downloads is little better, it found. Copyright licensing agreements restrict the territories where people may buy such digital goods, with more than 60 percent of license agreements restricting sales to a single country, the Commission found. 

The Commission is inviting people to comment on the preliminary report, giving it some direction before publication of the final version. Depending on its findings, it may take action against companies it believes are breaking European competition law.

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