May 12, 2017
The European Commission has published, on 10 May, its final report on the E-commerce Sector Inquiry (the “Final Report”).
The Commission launched the E-commerce Sector Inquiry in May 2015 in the context of its Digital Single Market (“DSM”) strategy, aiming to ensure better access for consumers and businesses to goods and services. During the inquiry, the Commission has gathered evidence from nearly 1 900 companies and analysed around 8000 distribution and licensing contracts. It published its initial findings on geo-blocking in an issues paper in March 2016 and set out its initial findings in the Preliminary Report in September 2016. The publication of the Preliminary Report was followed by a public consultation open to all interested stakeholders. The Final Report is accompanied by a Staff Working Document, which incorporates the views and comments submitted during the public consultation.
The Final Report needs to be read taking into account other initiatives adopted under the umbrella of the DSM strategy, such as the proposed Geo-blocking Regulation (which does not apply to audiovisual services), the Portability Regulation and the proposed Copyright Regulation. In addition, on the same day of publication of the Final Report, the Commission has also adopted its Mid-Term Review on the Implementation of the DSM strategy (“Mid-Term Review”), taking stock of the progress made towards implementation of the DSM and identifying areas where more effort and action are needed.
The Final Report sets out the Commissions’ main concerns and, as stated by Commissioner Vestager, it will help “target the enforcement of EU competition rules in e-commerce markets:” it can therefore give a useful indication of DG Competition’s enforcement priorities, in particular for consumer goods.
The Final Report confirms that the growth of e-commerce and, in particular, increased online price transparency and price competition have had a significant impact on companies’ distribution strategies and consumer behaviour.
The Commission considers that the results of the sector inquiry do not call for a change to the Vertical Block Exemption Regulation (VBER), currently scheduled for 2022, though the data gathered in the course of the Sector Inquiry will serve as an input for the future review process. For the time being, the Commission intends to target the most widespread business practices that in its view may negatively impact the functioning of the DSM. These are likely to be:
The Final Report is considerably more vague with regard to digital content, acknowledging the complex legal and economic context of licensing practices in the content industry. While making it clear that the use of exclusivity is not in itself problematic, the Final Report maintains that access to content, in particular attractive content, is central to competition and identifies certain practices that may make it difficult to gain access to attractive content, such as:
Past inquiries in the energy and pharmaceutical industries resulted in antitrust investigations and so too has the E-commerce Sector Inquiry: the Commission has already opened, in February 2017, three investigations into holiday accommodation, PC videogames distribution and consumer electronics pricing practices. The Final Report, read together with the accompanying press release, seems to hint at the possibility that more investigations are to be expected. Interestingly, the press release names several companies in the clothing industry and other retail sectors that have reviewed their practices, probably under pressure from the Commission. Accordingly, it is now more important than ever that businesses devise their distribution strategies in accordance with the parameters provided by the Final Report and the principles governing the DSM.
 This is “without prejudice” to a pending request for preliminary ruling before the ECJ in Case C-230/16 Coty Germany v. Parfümerie Akzente. The court has been asked whether a ban on using third party platforms in a selective distribution agreement may be compatible with Article 101(2) and whether it constitutes a hardcore restriction under the VBER.
 Case AT.40023 Cross-border access to pay-TV.