EUrovision leads the way in both song contests and antitrust inquiries into the e-commerce sector

Published On 09/06/2015 | By Josh Gottlieb | Consumer protection, Enforcement

In recent years, despite a continual increase in the number of goods and services being traded over the internet in Europe, there has been relatively slow growth in cross-border online sales within the EU. In 2014, around 50% of EU consumers shopped online, however only 15% purchased goods or services online from a seller based in an EU country other than their own. While this is due, in part, to language barriers, consumer preferences and legislative differences across the EU, there is also an indication that these discrepancies are being caused by certain companies restricting cross-border online trade. Consequently, on 6 May 2015, the European Commission (“EC”) launched an antitrust inquiry into the e-commerce sector in the EU, in order to attempt to identify and address such anti-competitive behaviour.

The basis of the inquiry was further elucidated by Margrethe Vestager, European Commissioner in charge of competition policy, who said:

“European citizens face too many barriers to accessing goods and services online across borders. Some of these barriers are put in place by companies themselves. With this sector inquiry my aim is to determine how widespread these barriers are and what effects they have on competition and consumers. If they are anti-competitive we will not hesitate to take enforcement action under EU antitrust rules.”

The sector inquiry focusses principally on goods and services where e-commerce is most prevalent, such as electronics, clothing and shoes, and digital content. It is said that the findings of the inquiry will allow for better enforcement of competition law within the EU, including the use of territorial restrictions in distribution agreements that prevent retailers from selling their goods and services online to customers located in an EU country other than their own.

The EC expects to publish a preliminary report in mid-2016 for consultation, with the final report to follow in early 2017. The press release from the EC regarding the sector inquiry can be found here.

The sector inquiry complements the EC’s broader plan, detailed in its Digital Single Market Strategy Paper, which was also released on 6 May 2015. The Paper identifies numerous regulatory barriers that encumber e-commerce between EU countries. It proposes to address these barriers and create an environment in which online goods and services can be seamlessly accessed by consumers, regardless of their nationality or country of residence.

The European Commission slightly differs to the Australian Competition and Consumer Commission (“ACCC”) in its approach to e-commerce in the Asia-Pacific region, as elucidated by Rod Sims at the National Consumer Congress. The ACCC is primarily concerned with ensuring the safety of goods and services being imported to Australia from around the region, as well as representations made about the quality and content of those goods and services.

Such issues arise due to the differing standards around the world coupled with Australian consumers’ increasing use of e-commerce, and were addressed in the Harper Review. The Review suggested that the concerns raised in submissions regarding relaxing parallel import restrictions, including consumer safety, counterfeit products and inadequate enforcement, could be directly addressed through regulation and information. Consequently, the Final Report recommended that restrictions on parallel imports should be removed unless it can be shown that the benefits to the community outweigh the costs and that the objectives can only be achieved by restricting competition. In that sense, just as Australia participated in its first Eurovision song contest last month, it appears Australia is also heading in the same direction as the EU in the context of the removal of parallel import restrictions.

Image credit: Jorge Franganillo / flickr / CC BY 2.0 (cropped and remixed to B&W)

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