Vertical Agreements: A New Priority in Antitrust Enforcement. Vertical restraints and the on-line world

Transcription

1 Vertical Agreements: A New Priority in Antitrust Enforcement Vertical restraints and the on-line world Rom March 6, 2014 Marcel Balz Bundeskartellamt General Policy Division

2 Short outlook 2 Reasons for breakthrough of e-commerce Reactions of traditional market participants questionable from an antitrust point of view; our cases: RPM Dual pricing Selective distribution Price parity clauses, a certain kind of MFN-clauses Disclaimer: all views expressed in this presentation are personal opinions and do not necessarily convey the view of the Bundeskartellamt. 06 March 2014

3 Vertical restraints 3 Ambivalence: Can solve intra-brand coordination problems Can reduce inter-brand competition Reflected in the legislative framework: Vertical block exemption regulation < 30% market share and no hardcore restrictions Presumed positive effects => reversal of the burden of proof

4 Why are vertical constraints an issue now? 4 Availability of E-Commerce Coverage of broadband has grown from 30% of households in 2006 to 74% in 2012 (in Germany) In 2013 already 90% of households could be reached with at least 6 Mbit/s Also high coverage of mobile internet networks (UMTS => 90% of population, LTE => 60%; 2013, Ger.) 74% of Germans (aged 14 to 64) are internet shoppers, 15% have more than 10 transactions / year

5 Why are vertical constraints an issue now? 5 Ongoing growth (area of goods): between around 11% per year %, %, 2014 approx. +25% Online sales volume: 39,1 billions (2013, in Ger.) 2/3 via online market places Further growth potential: 8% of all retail sales online, depending on the sector (e.g. electrical devices 27%)

6 How does E-Commerce change the organization of distribution? 6 Reduced transaction costs Reduced search costs for customers => Increased transparency in terms of price and quality => Increased dynamics in market positions, entrances and exits Increased geographic sales areas Producers can get in contact with customers directly Dealers can sell products beyond the area covered by their brick-and mortar-store Reduced distribution costs through optimized logistics

7 How does E-Commerce change the organization of distribution? 7 Growing competitive pressure at an inter-brand and intra-brand-level. Certain traditional market participants sometimes seem to react with vertical restraints.

8 Resale price maintenance 8 Positive effects / negative effects Our RPM-proceedings with internet aspects: Phonak hearing aids Ciba Vision contact lenses Garmin navigation devices Alessi household items Wala personal care products

9 Resale price maintenance 9 Common characteristics of these cases: Markets with strong traditional specialized shops Producers argued with the protection of the image of their brand and consumer needs But: No convincing efficiency defense by undertakings, focus simply on high prices Also indispensability doubtful

10 Dual pricing 10 Dual pricing => a retailer is granted different purchase prices, depending on whether it intends to sell the product online or over-the-counter. By increasing the difference between the two prices a manufacturer could prevent dealers from selling through the internet ECJ Pierre Fabre, Art. 4 (c) VBER General presumption of positive effects not possible => cases by case analysis appropriate.

11 Dual Pricing cases 11 Our Dual Pricing-proceedings with internet aspects: Dornbracht high-quality sanitary fittings Gardena gardening products Bosch Siemens Hausgeräte (BSH) household applications

12 Selective distribution 12 Critical competition parameter => offer has to be found easily Importance of intermediates e.g ebay, Amazon Marketplace, idealo (price comparison side), Google (AdWords) Frequently used clauses: Prohibition of the use of third party platforms or price comparison sites Prohibition of the use of brand names at Google "ad words

13 Selective distribution 13 Difficult consideration => scope of the hardcore restriction Principally permitted qualitative requirements ( How? ) might have a quantitative/segmenting effect ( to whom?) Vertical guidelines => equivalence principle: level of requirements should not be higher for online sales preventing sales via internet

14 Selective distribution 14 Ban to use platforms Platforms are attractive for smaller dealers => high traffic without sunk cost Platforms are attractive to customers => high price transparency / low search costs Both strengthens intra-brand competition Free-riding problem in comparison with online shops? Brand image? Hardcore restriction / withdrawal? Two cases in the field of selective distribution: Adidas/ Asics => ongoing

15 Price parity clauses 15 Price parity clauses: the operator of a marketplace obliges dealers of the one market side to offer the opposite market side their most favourable price or conditions if they want to sell over the platform. => Providers, bound by the clause, cannot react to competitive moves by the platforms Indispensable platform is able to maintain an excessive level of commissions the other market side cannot benefit from the lower commissions of competitors => no incentive to switch market wide increased level of commissions / softening of price competition

16 Price parity clauses 16 Typical efficiency justification => Free-riding problem: dealer could use widely known platform to get attention by customers, then bypass the platform fee by offering consumers directly a better price => relevance to be assessed on a case-by-case basis Our Price Parity-cases: HRS (hotel booking site) Amazon (Amazon Marketplace, B2C online retail platform)

17 General remarks 17 E-Commerce causes transformation process in distribution Vertical restraints can hinder this process Our role as a competition authority in such a dynamic environment to keep the markets open for new solutions also in concentrated markets

18 Vertical Agreements: A New Priority in Antitrust Enforcement 18 Thank you! Marcel Balz Bundeskartellamt General Policy Division 06 March 2014