EU to launch probe into e-commerce to remove competition barriers

27 Mar 2015


The European Commission (EC), the executive arm of the European Union (EU), will launch an inquiry into the e-commerce sector to remove competition restrictions that have been preventing cross-border sale of goods.

''We are designing this sector inquiry with one main goal in mind. We intend to identify what hampers competition in e-commerce when sales straddle national borders,'' competition commissioner Margrethe Vestager said in a release yesterday.

It is not well known why people are reluctant to shop abroad, the commissioner said.

Apart from language barrier and different national rules, it is apprehended that companies themselves undermine cross-border trade by erecting technical barriers such as geo-blocking, which prevents consumers from accessing certain websites on the basis of their residence, or credit-card details.

At a press conference in Berlin, the commissioner seemed to point finger at the likes of e-commerce giants Amazon, Netflix and others which may limit deals or contents depending on where the consumer is located.

''I, for one, cannot understand why I can watch my favourite Danish channels on my tablet in Copenhagen – a service I paid for – but I can't when I am in Brussels. Or why I can buy a film on DVD back home and watch it abroad, but I cannot do the same online,'' Vestager said.

A consumer trying to buy a pair of Italian shoes on the website, may be redirected because online traders often discriminate on the basis of customers' residence or web address, she said.

''We want to focus on the barriers to the cross-border sale of goods and digital content erected by private companies, especially in their distribution contracts,'' the commissioner added.

The process will involve gathering information from a large number of firms in every country of the EU, manufactures, merchants of goods sold online and the companies that run online platforms such as price-comparison and marketplace websites.

EC has conducted similar inquiries in the past in sectors such as energy, financial services, and pharmaceuticals which turned useful for the competition law and general legislation, the commissioner said.

In 2010, the commission had initiated a probe into internet giant Google Inc's alleged abuse of its dominant position in search market for preferential treatment of its own search products, such as travel or shopping search, above its rivals. Complaints were filed by the likes of Microsoft, Tripadvisor and Yelp. The case remains still unresolved.

The proposed e-commerce inquiry is closely linked to the overall strategy of the EC in advancing the digital single European market.

''Several EC departments are working on the digital single market at the moment. Understanding and facilitating cross-border online commerce is an important part of the contribution of the competition department,'' Vestager said.

''We simply cannot miss the opportunities offered by technologies that – in principle – are indifferent to the borders between countries and continents.''

 She further added that a well-functioning digital single market could add about €340 billion to the GDP of the EU.

EU's vice-president for digital issues Andrus Ansip said Wednesday that he wanted to abolish so-called geo-blocking of website content across Europe.

The commissioner proposes the inquiry to begin in May and expects preliminary findings in mid-2016.

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