European Commission e-commerce sector inquiry

What is the focus, what do companies have to expect and what are the consequences?

On 6 May 2015, the European Commission launched a sector inquiry in the e-commerce sector. The Commission wants to investigate whether and what barriers to cross-border online trade with goods and services exist. The sector inquiry is part of the strategy consisting of a total of sixteen initiatives for a “Digital Single Market” in the European Union.

What is the focus?

According to the Commission’s press release, the sector inquiry is to focus on online trade with clothing, shoes and electronics, as well as digital content. Online trade is particularly widespread in these areas.

In recent years, Germany has also seen a series of proceedings in which competition authorities have classified contractual arrangements between manufacturers and their distributors as restrictive practices. Notable examples of these are the prohibitions of the use of online trading platforms for the distribution of goods, rebates and conditions which disadvantage online traders, as well as most favoured nation clauses.

What do companies have to expect?

Carrying out a sector inquiry does not mean that there is any concrete suspicion that specific companies have infringed antitrust laws. Rather, such an inquiry serves to initially identify any barriers to competition in general.

At the beginning of the sector inquiry the Commission will first of all contact a large number of companies in the e-commerce sector in Europe and request them to answer a questionnaire, which is likely to be very comprehensive. Companies are not obliged to respond if this inquiry is conducted on the basis of a simple request for information. If companies decide to participate actively in the inquiry, however, they are obliged to provide answers which are truthful and are not misleading. An obligation to respond to the inquiry only exists if the Commission issues a formal decision to request information. If these obligations are not complied with, the Commission can impose fines and penalties.

What are the consequences?

The Commission may engage in more detailed inquiries after assessing the responses to the questionnaires. Additional investigative measures may be undertaken, in particular if the Commission has obtained any indication of potential serious infringements of European competition law.
According to the Commission’s plans, a preliminary report is to be prepared and submitted for public consultation by the middle of 2016. The sector inquiry is scheduled to be completed at the beginning of 2017.

Due to the medium and long-term impact the responses of the companies have, a careful review of the questions and the formulation of the answers is advisable. Manufacturers of goods and digital content should take advantage of this opportunity to not only check their online trading practices, but also the impact of contractual provisions. If these are capable of restricting online trade, it is advisable to take a critical look at whether these provisions can be justified. In cases of doubt, contractual amendments should be seriously considered.