Internet Sales and Contractual Restrictions of Competition Law Lessons learnt from the EU e- Commerce Sector Inquiry

Transcription

1 Internet Sales and Contractual Restrictions of Competition Law Lessons learnt from the EU e- Commerce Sector Inquiry

2 Some examples Nespresso.gr (499) Delonghi Nespresso Lattissimo Pro

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5 Statistics on e-commerce in the EU and Greece The EU is the world s largest e-commerce market Over 53% of EU consumers have ordered goods or services over the internet in 2015 Only 15% shopped online from a seller in another MS More than 50% experienced in accessing digital content cross-border In 2015, Greece ranked 24 th in the percentage of enterprises conducting e-sales. Only 23.4% ordered goods and services over the internet 8.7% shopped online from another MS 59.9% accessed video-sharing websites (e.g. YouTube) Source: 2015 Eurostat data, Flash Eurobarometer 411 (2015), Eurostat Community Survey on ICT usage in households and by individuals 2014 and Hellenic Statistical Authority surveys on the Use of Information and Communication Technologies by households and individuals (ICT) / 2016

6 EU e-commerce sector inquiry Article 17 of Regulation 1/2003 Launched on May 6, 2015 Emphasized in Goods: Questionnaires sent to 2,000 manufacturers, retailers, marketplace providers and price comparison tool providers Digital content: 8,000 distribution & licensing agreements analyzed, VPN Why: To put Europe in the forefront of digital economy ( Digital Single Market Strategy ) and reduce company erected barriers to cross-border e-commerce within the EU through competition law (greater choice lower prices for consumer)

7 Preliminary Report September 15, 2016 Relevant to all companies selling goods online or distributing digital content, including companies outside the EU o Vertically integrated manufacturers do not fall within the scope of competition law Low concentration in all sectors involved Most agreements fall under the Block Exemption Dominant position, not likely

8 The Preliminary Report initial findings: Consumer goods Price transparency / price monitoring : a double edged sword Free-riding: online retailers benefit from brick-andmortar operators at zero cost Increase of direct retail activities by manufacturers (own online shops) Increase of exclusive and selective distribution Power of retailers 40% of retailers geo-block

9 The Preliminary Report initial findings: Digital content 70% of digital content operators geo-block The ability to secure licenses from copyright holders a possible barrier to entry The digital content covered: films, sports, children TV, TV fiction, non-fiction TV, news and music Pay-TV is not covered by the Report

10 Geo-blocking/Geo-discrimination Mystery shopping : investigation of e-commerce websites 2/3 of providers geo-block or geo-discriminate The majority of websites do not let consumers buy from another EU country (only 1 in 3) Consumers are geo-blocked at different stages of online shopping More frequent for physical goods than for services Outside competition law if it is a retailer unilateral decision Proposal for a Regulation of the European Parliament & of the Council on geo-blocking and other forms of discrimination based on customers nationality, place of residence or place of establishment within the internal market (COM (2016) )

11 Article 101 TFEU 1 Law 3959/11 Anticompetitive agreements: all agreements and concerted practices between undertakings [ ] which have as their object or effect the prevention, restriction or distortion of competition

12 Online distribution systems Online platforms run by and selling goods of the manufacturer Online platforms selling goods manufactured by third parties Purely online platform retail distribution or auction of goods

13 Vertical Guidelines Restrictions on online sales Restrictions on passive sales - hardcore Restrictions on passive online sales may take the following form: Blocking or re-routing customers Inability to perform transactions due to credit card s origin Agreement to limit online sales Agreement on higher prices for goods that shall be resold online

14 Vertical Guidelines Restrictions on online sales Restrictions that may be allowed on online sales: Agreement to a minimum (in volume or value) amount of offline sales Setting quality standards for a website or a sale s transaction Agreement to limit online marketing or advertising addressed to certain customers: Banners on third party websites, which appear on the customer due to her location Agreements entered into with search engines and online advertising companies in order to advertise before users in a certain geographical area

15 The Preliminary Report Contractual restrictions of distribution agreements of consumer goods Price Restrictions - hardcore restrictions, case-by-case examination Territorial restrictions hardcore restrictions Restriction in cross-border sales Restriction of active sales outside a specific territory, irrespective of assignment to other distributors Restriction of passive sales in territories that have been assigned exclusively to other distributors In selective distribution systems in each MS, the restriction of the ability of authorized distributors to sell actively or passively to final consumers in these MS

16 The Preliminary Report Contractual restrictions of distribution agreements of consumer goods (2) Restrictions of online sales Restriction of sales on own website Restrictions of promotion in price comparison tools permissible quality standard Restrictions of online advertising problematic Restriction of sale in digital markets e.g. Amazon, ebay remains unsolved The restrictions of resale in the markets does not constitute a hardcore restriction, provided it is not absolute (EU) case-by-case examination However, it is necessary to justify the restrictions according to article 101(3) (Addidas) State of play: Whether a prohibition as a quality condition is permissible is examined by the CJEU (Coty, C-230/16)

17 The Preliminary Report Contractual restrictions of e-commerce in license agreements of digital content Restrictions on the technology used for transmission, the timing of release and the territory problematic for new entrants Geo-blocking a priority Long-term exclusive license agreements soft exclusivity Bundling of Online rights with other technologies Catalogue differences between MS (Content unavailability) Payment structures (e.g. upfront payments, fixed/flat fees) further barrier to entry or expansion Experimentation, innovation and provision of same content on a non-exclusive basis EU Commission approval Distancing from the per Member State and/or per right model EU Commission approval

18 EU case law Film Studios investigation (UK, 2016) Online Retail Sales platforms (UK and Germany, 2013) price parity terms horizontal cooperation issues Hotel booking online (UK, 2014) Most Favoured Nation clauses (MFN) & price parity The Football Association Premier League (UK, 2011) portability of subscriptions Adidas Bundeskartellamt (2014) Asics Bundeskartellamt (2014) Casio OLG Schleswig (2014)

19 EU pending investigations Valve and five PC game publishers (Bandai Namco, Capcom, Focus Home, Kock Media, Zenimaz) EU Commission announced on a formal investigation for possible geo-blocking anticompetitive agreements i.e. agreements preventing consumers from using digital content (PC video games) due to consumer s location or country of residence The use of activation keys could be in breach of competition law by reducing parallel trade

20 HCC decisions Dia (2008) Resale Price Maintenance (RPM) Carrefour (2010 RPM and restriction of cross supplies Germanos (2014) RPM, restriction of cross supplies, and illegal non-compete clauses Roma Pizza RPM, single banding, and illegal noncompete clauses Booking.com & EXPEDIA (2015) Restriction of pricing policy of online travel agents

21 EU e-commerce sector inquiry: next steps Final report Q1 of 2017 Possible amendment of EU Block Exemption Regulation on distribution (Reg. 339/2010) or Vertical Guidelines Supplementary Guidelines / explanatory documents on antitrust issues in cross-border e-commerce interaction with copyright/ip law Possible triggering of formal antitrust infringement investigations Competition enforcement measures to be based on a case-by-case assessment analysis of potential justifications for identified restrictions Scrutiny of selective distribution arrangements by the authorities Compliance - Review of existing distribution contracts and online sales practices and alignement with EU competition rules

22 Thank you for your attention