27 March 2015

European Commission proposes wide-ranging antitrust inquiry into e-commerce sector

The European Commissioner for Competition, Margrethe Vestager, has announced plans for an EU-wide review of practices in the e-commerce sector. The proposed sector inquiry comes after several high-profile online competition cases and the new Juncker Commission placing the creation of a “digital single market" at the heart of its agenda.  

Breaking down online borders 

The creation of a digital single market where EU consumers can cross borders online is at the top of the agenda for the Commission. There are several dedicated commissioners focusing on a three-pronged strategy of:

  1. Better consumer and business access to digital goods and services
  2. Shaping the environment for digital networks and services to flourish 
  3. Creating a European digital economy and society

Looking at geo-blocking and modernising copyright law fall into the first category, but the Commission is also considering issues in relation to infrastructure investment, modernising telecoms and media rules, 4G roll-out, treatment of personal data and the regulation of online platforms, cloud computing and big data.

Commission sector inquiries

The proposed e-commerce sector inquiry is expected to look at private obstacles to cross-border e-commerce, such as restrictive contractual provisions and geo-blocking and comes in the wake of recent antitrust investigations into Google, online hotel booking and online electronic equipment sales.

Sector inquiries can sometimes be used by the Commission in areas (such as e-commerce) where EU single market integration has faced obstacles. It recently noted that despite a burgeoning e-commerce sector, the EU digital economy is made up of only 4% EU cross-border online services, while US-based online services in the EU account for 57% and national online services account for 39%.  

Although there is no formal procedure laid down for such sector inquiries, the Commission has previously (for example, in investigations into pharmaceuticals, financial services and energy) sent out wide-ranging and often very detailed requests for information to a broad spectrum of industry participants. Recipients are not obliged to reply to these informal requests, but generally compliance is recommended. The Commission may also send out mandatory questionnaires which may incur significant financial penalties for non-compliance. Vestager has stated that the Commission will ask for information from companies across the EU.  

The process of an inquiry can last around 18 months to two years, with a possible interim report narrowing the issues on which the Commission is focusing and a final report setting out its conclusions. The Commission may then decide to open targeted investigations if it uncovers specific anti-competitive practices, using powers available to it such as requests for information, voluntary interviews and dawn raids.

An e-Commission?

The digital EU economy is an area where the Commission is investing significant time and resource into unlocking untapped additional growth which it believes is worth an additional €340 billion. How it attempts to balance the goals of fostering innovation and encouraging SME growth with enforcement and regulatory interventions will become more apparent in the coming months. 

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