Unfair e-commerce practices in EC firing line

A number of online business practices, which reportedly restrict competition, were coming under the microscope of the European Commission this week, with the release of a report said to identify a number of unfair practices in the e-commerce sector.

The commission said the report allowed it to target its enforcement of EU antitrust rules in e-commerce markets, and had already prompted companies to review their practices.

“Certain practices by companies in e-commerce markets may restrict competition by unduly limiting how products are distributed throughout the EU,” said the commissioner in charge of competition policy, Margrethe Vestager.

“Our report confirms that.

“These restrictions could limit consumer choice and prevent lower prices online.”

At the same time, Vestager said the commission found that there was a need to balance the interests of both online and 'brick-and-mortar' retailers, for the benefit of consumers.

“Our findings help us to target the enforcement of EU competition rules in e-commerce markets.”

The report reportedly confirmed that the growth of e-commerce over the last decade and, in particular, online price transparency and price competition, had a significant impact on companies' distribution strategies and consumer behaviour.

In the report, the EC found that a large proportion of manufacturers decided over the last ten years to sell their products directly to consumers through their own online retail shops, thereby competing increasingly with their distributors.

It also found an increased use of selective distribution systems, where the products can only be sold by pre-selected authorised sellers, allowing manufacturers to better control their distribution networks, in particular in terms of the quality of distribution but also price.

There was also increased use of contractual restrictions to better control product distribution.

Depending on the business model and strategy, such restrictions may take various forms, such as pricing restrictions, marketplace bans, restrictions on the use of price comparison tools and exclusion of pure online players from distribution networks.

“Some of these practices may be justified, for example in order to improve the quality of product distribution,” the commission said in its release.

“Others, however, may unduly prevent consumers from benefiting from greater product choice and lower prices in e-commerce and therefore warrant commission action to ensure compliance with EU competition rules.”