EU Launches Three Antitrust Investigations Into E-Commerce

A View from Constantine Cannon’s London Office

By Richard Pike and Yulia Tosheva

On Thursday, the EU Commission launched three separate investigations into suspected anticompetitive practices in the online sales of consumer electronics, video games and hotel accommodation.

The launch of these investigations does not come as a surprise.  On September 15, 2016, the Commission published a Preliminary Report following its sector inquiry into e-commerce which identified retail price restrictions, discrimination on the basis of location and geo-blocking practices as areas of concern.

During the sector inquiry, the Commission gathered evidence from nearly 1,800 companies operating in e-commerce sales of consumer goods and digital content and analysed around 8,000 distribution contracts.  The inquiry is part of the EC’s wider Digital Single Market Strategy, which was adopted on May 6, 2015.  As this blog discussed, the goal of the Digital Single Market is to ensure better access for consumers and businesses to digital goods and services across Europe, and create a level playing field for digital networks and innovative services.

Consumer electronics

The Commission is investigating whether Asus, Denon & Marantz, Philips and Pioneer have violated EU competition law by restricting the ability of online retailers to set their own prices for widely used consumer electronics products such as household appliances, notebooks and hi-fi products.  The Commission is concerned that the effect of these suspected price restrictions may be aggravated due to the use by many online retailers of pricing software that automatically adapts retail prices to those of leading competitors.

Video games

The Commission is looking into bilateral agreements concluded between Valve Corporation, owner of the Steam game distribution platform, and five PC video game publishers, Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.  The investigation will focus on whether the agreements in question require or have required the use of “activation keys” for the purpose of geo-blocking.  An “activation key” can grant access to a purchased game only to consumers in a particular EU Member State which may reduce cross-border competition within the EU.

Hotels

Following complaints, the Commission is investigating agreements regarding hotel accommodation concluded between the largest European tour operators on the one hand (Kuoni, REWE, Thomas Cook, TUI) and hotels on the other hand (Meliá Hotels).  The Commission stresses that it welcomes hotels developing and introducing innovative pricing mechanisms to maximise room usage but hotels and tour operators cannot discriminate between customers on the basis of their nationality or country of residence.

It is clear that e-commerce remains high on the agenda in Brussels and companies with online distribution channels should be wary of further enforcement action.  It is likely that the Commission will open further investigations after it publishes its Final Report on the e-commerce sector inquiry.  The Final Report is expected in the first half of 2017.

– Edited by Gary J. Malone