European Union: European Commission Launches E-Commerce Sector Inquiry

The European Commission (the "Commission") has launched a sector inquiry of the e-commerce sector in Europe.1 This is a far-reaching competition review of the sector by the European Union ("EU") competition authority, bringing potentially significant changes to rules and regulations related to selling online in Europe. The inquiry also carries the risk of enforcement action against individual companies for breaches of the EU antitrust rules. It will affect the activities of all international companies engaged in online selling into and within the EU, regardless of their physical location.

The sector inquiry forms part of a new wider Digital Single Market Strategy by the Commission, which was launched by the Commission on the same day.2 The Digital Single Market Strategy (the "Strategy") identifies and proposes actions to address a number of public (i.e., regulatory) barriers that hinder cross-border e-commerce. The Strategy has the three main objectives of achieving better access for consumers and businesses to digital goods and services across Europe, creating the right conditions and a level playing field for digital networks and innovative services to flourish, and maximizing the growth potential of the digital economy.

The ambitious Strategy sets out 16 specific actions that the Commission will deliver by the end of 2016. These include reviews of regulations relating to copyright, telecoms, e-privacy and data protection, cybersecurity, standards and interoperability, cloud services, VAT, parcel delivery costs, geo-blocking, and consumer protection. The sector inquiry is one of the action points and is designed to identify potential competition concerns affecting European e-commerce markets.

What are Sector Inquiries?

Sector inquiries are competition investigations by the European Commission into sectors of the economy when it believes that a sector is not working as well as it should. The Commission uses the information obtained during an inquiry to understand the market better and decide whether and what action is required to address structural or behavioral competition concerns.

An inquiry is not a formal antitrust investigation of individual companies, although the Commission later may decide to bring enforcement action against individual companies for specific breaches of competition law that it finds. Consequently, a sector inquiry risks being something of a "fishing expedition." For example, when the Commission carried out a pharmaceuticals sector inquiry, it resulted in a number of individual enforcement actions in relation to patent settlements ("pay for delay"). In contrast, in another sector inquiry into business insurance, there was no subsequent enforcement action.

To date, the Commission has undertaken sector inquiries in a small number of sectors, including financial services and energy, and the e-commerce inquiry is the first since the pharmaceuticals sector inquiry during 2008 and 2009. In contrast, in the UK, equivalent market studies and market investigations have been used more extensively over recent years to review the effectiveness of competition in markets, including notably the ongoing investigations in the energy and retail banking sectors.

What are the Concerns about the E-Commerce Sector?

The European Commission is primarily responsible for enforcing the EU antitrust rules, alongside national competition authorities. The main focus of the Commission is on detecting and preventing anticompetitive agreements or practices that hinder cross-border trade between EU Member States. Restrictions on EU cross-border sales have been the subject of enforcement action in the past, leading to the establishment of legal principles and guidelines. There are very few restrictions that lawfully can be placed by a supplier on a reseller's ability to sell goods and services freely across the EU.

But markets have shifted online to a very significant extent over recent years, and the Commission is concerned that barriers have been put in place that prevent or discourage cross-border selling online. The Commission estimates that this costs consumers €11.7 billion per year. The Commission has estimated that 50 percent of EU citizens shopped online in 2014, but only 15 percent bought something online from another EU Member State, and the rate of cross-border online sales is not growing as quickly as domestic online sales.

The Commission has undertaken a number of antitrust investigations and has identified certain online sales barriers arising from practices and agreements in some specific sectors. For example, it recently announced dawn raids against a number of companies that sell consumer electrical and electronic products online. It now wishes to undertake a "more thorough and systematic view of the market" as a whole.

The Commission accepts that there may be cultural and language barriers, as well as commercial decisions and consumer preferences, that discourage cross-border online selling. However, it believes that there are significant barriers put in place by suppliers and resellers deliberately to limit it. As a consequence, the law and guidance on vertical restrictions especially in the online sector is to some extent out of date and has not kept up with the fast-moving market. There may also be national regulations or legislation in place that themselves create barriers.

National Investigations

There has been a variety of antitrust enforcement activity at the EU level and in individual Member States, and the EU sector inquiry provides the Commission an opportunity to provide a more coherent EU-wide policy and guidance to Member State competition authorities and companies. For example:

UK. The Competition and Markets Authority ("CMA") also has announced that digital markets will be one of its enforcement priorities over the next year, 2015 into 2016. It has ongoing research projects to monitor how selective distributors of branded goods are restricted from selling online, including through third-party platforms. The CMA is also carrying out economic research on the use of vertical restrictions generally, including restrictions on online selling, and the reasons for them. The UK has brought various enforcement actions against restrictions on online sales including in relation to mobility scooters, e-books, and online hotel bookings. It has also scrutinized price parity and price relativity agreements in relation to Amazon Marketplace and the sale of private motor insurance on price comparison websites.

France. In 2011–2012, the French Competition Authority (the "Authority") conducted its own sector inquiry into e-commerce and announced that it would "keep a close eye on the development of competition on and through the Internet." Since that time, the Authority has remained committed to monitoring the e-commerce sector. It has recently targeted price parity clauses imposed by online hotel booking platforms (i.e., clauses under which online platforms require hotels to make at least as favorable offers as those offered on competing platforms as well as through other distribution channels), outright bans of online sales in selective distribution systems maintained by cosmetic and hi-fi suppliers, and potential abuses of a dominant position in an offline market aimed at limiting the development of online competition (e.g., for online horserace betting and online sales of train tickets).

Germany. The Federal Cartel Office ("FCO") has made the online sector one of its enforcement priorities and has taken action in a number of well-publicized cases. The FCO also has stated it would "not be concerned" if enforcement action in Germany turns out to be more aggressive than it currently is in other Member States. In the online hotel booking sector, it prohibited certain most favored nation clauses that the online booking platform HRS had imposed on hotels, and the FCO has recently issued formal charges against on similar grounds. After years of scrutiny and negotiation, Amazon yielded to the FCO's concerns and discontinued requiring price parity clauses in its agreements, which set a precedent for other Member States that followed suit. adidas also deleted restrictions on sales through online market places in its distributor agreements, and the FCO has recently discontinued its settlement negotiations with ASICS and might issue formal charges later this year. In several other cases, the FCO has imposed fines on manufacturers that have tried to impose minimum prices, provided rebates or used discriminatory terms of sales in order to discourage online sales, and/or ordered such manufacturers to discontinue such practices (e.g., sleeping mattresses, household products, gardening tools, bathroom fittings). In one of those cases, an online distributor was awarded follow-on damages of €1 million in a case that went up to the Federal Civil Court. The FCO has also recently requested information from certain OEM car makers to explain their terms for online distribution and levied fines on a manufacturer of portable navigation devices for imposing resale price maintenance in relation to online sales.

Areas of Focus for the Sector Inquiry

The EU Commissioner for Competition Policy, Margrethe Vestager, has indicated that the Commission is initially interested in three areas:

Contractual Arrangements. The Commission will review barriers to the cross-border sale of goods and digital content put in place by private companies, especially in their distribution contracts. There are the more obvious restrictions already addressed by the Commission's guidelines on vertical agreements such as outright bans on internet sales, limiting the proportion of overall sales made online, or charging a distributor a higher price for goods to be sold online than for products sold in a "bricks and mortar" store. But there may be more indirect ways in which consumers are discouraged from purchasing goods online cross-border such as opaque or excessive delivery charges, or requiring a consultation or demonstration of the product in person. Nevertheless, there can also be justifiable reasons such as language barriers and commercial decisions by individual companies. The Commission stated that 32 percent of retailers refuse to sell to customers in other countries due to contractual restrictions.

Technical Practices. The Commission will investigate practices such as "geo-blocking," where a consumer may be prevented from accessing certain websites or content or making a purchase on the basis of their IP address location, residence, or credit card billing address, or may be automatically redirected to domestic websites with different prices. The Commission is currently investigating the alleged geo-blocking of online video games and is also investigating territorial restrictions on pay-TV broadcasters, i.e., licensors of movies restricting broadcasters from allowing subscribers outside the relevant country from viewing content.

National Laws and Regulations. The Commission will also review laws and regulations in individual Member States relating to payments, copyright, data protection, standards, labelling and value added tax ("VAT") which may in themselves create barriers to cross border trade.

The main objective of restrictions on cross-border sales usually is to maintain different price levels in different Member States. Differential pricing across Europe is not generally of itself anticompetitive but may come under scrutiny if accompanied by agreements containing restrictions on how the products or services are sold online across EU borders. The Commission will also look for evidence of limited trade between Member States, lack of new entrants on the market, price rigidity, and other circumstances that suggest competition may be restricted or distorted.

Potential Outcomes, Timetable, and Next Steps

There is no legislative timetable for sector inquiries. Previous inquiries have lasted for between two and three years. The Commission has said that it intends to publish a report setting out its preliminary findings in mid-2016. The final results of the sector inquiry will be published in a report during the first quarter of 2017. The report itself does not impose remedies but will serve as a reference point for the Commission to decide what actions to take. Alongside the Digital Single Market Strategy, these could include:

  • Changes to EU legislation to harmonize certain national laws on issues ranging from copyright to VAT;
  • Requirements on Member States to bring their national laws or regulations in line with existing EU legislation;
  • Enforcement action against individual companies for breaches of EU competition law; and
  • Revised guidelines.

The Commission has wide-ranging powers of investigation. The initial stage of the investigation is likely to involve detailed data and document production requests. The Commission intends to cast a wide net in terms of asking for information from a large number of companies and trade associations across the EU, including holders of digital content rights, broadcasters, manufacturers, wholesalers, and online retailers, including online platforms (price comparison websites and marketplaces). The Commission said that it will focus on product and service sectors where e-commerce is most widespread such as electronics, clothing, and shoes, as well as digital content.

The information requests may include general questions about the national regulatory and legislative provisions, the structure of the market, and identities of key suppliers and customers, but they may also ask for copies of distribution and supply agreements and sensitive pricing information. Responding to these requests can be an onerous process, and there may be a short time period to respond. The Commission will usually issue a voluntary request in the first instance. It is generally advisable to cooperate, as a failure to respond may lead the Commission to issue a mandatory request, and a failure to respond to that may lead to fines. Care should also be taken in how responses to substantive questions are drafted, as fines may be imposed for any incorrect, misleading, or incomplete information. It is also possible that the Commission could undertake dawn raids (as it did in the pharmaceutical sector inquiry).

What Can Companies do to Prepare?

  • Watch out for information requests from the Commission and respond within time limits;
  • Review existing contractual and informal arrangements in the distribution chain for compliance;
  • Consider EU privilege when taking legal advice; and
  • Put in place a preparation plan for dawn raids.


1. May 6, 2015, European Commission, Press Release, "Antitrust: Commission Launches E-Commerce Sector Inquiry."

2. May 6, 2015, European Commission, Press Release, "A Digital Single Market for Europe: Commission Sets Out 16 Initiatives to Make It Happen."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions