Out-Law News 3 min. read

E-commerce sector to be scrutinised by EU competition regulator

The competition authority within the European Commission plans to scrutinise the way digital content and other goods are sold online across national borders within the EU, it has said.

The precise details of e-commerce inquiry will be put to the Commission by competition commissioner Margrethe Vestager in the "coming weeks", but in a statement the Commission said the proposed inquiry would "focus on private – and in particular contractual - barriers to cross-border e-commerce in digital content and goods".

The competition authority said that there are "indications that some companies may be taking measures to restrict cross-border e-commerce" and that its inquiry would look to uncover more information about the alleged practices and how to address them.

The results of the inquiry could influence the contents of legislative proposals the Commission said it intends to set out to "boost the digital single market". Formal competition investigations could also be opened if "specific competition concerns" are identified in the inquiry, it said. EU competition rules prohibit businesses from abusing a dominant market position or entering into agreements with other companies that have the object or effect of restricting competition.

Vestager said: "It is high time to remove remaining barriers to e-commerce, which is a vital part of a true digital single market in Europe. The envisaged sector inquiry will help the Commission to understand and tackle barriers to e-commerce to the benefit of European citizens and business."

Competition law specialist Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said: "Sector inquiries are comprehensive investigations which provide the Commission with insight into structural and behavioral features of the markets it assesses. The Commission's statements suggest that it believes e-commerce markets in general may not be working as well as they could so that it has decided to identify if there are, and if necessary remedy, any potential market barriers."

Competition law expert Sammy Kalmanowicz of Pinsent Masons said: "In recent months it has become increasingly clear that the European Commission as well as national competition authorities, such as the Competition and Markets Authority but also other UK regulators with concurrent competition law powers, have made competition and consumer protection issues in online markets a high priority. More market studies and investigations as well as enforcement activity can be expected via a combination of the Commission and regulators in the UK and other European countries."

The e-commerce inquiry announcement was made as the Commission confirmed that discussions have taken place on a new EU digital single market strategy, which is due to be published in May.

The Commission said that there will be a focus on improving "access for consumers and businesses to digital goods and services" and on creating an "environment for digital networks and services to flourish". It said it also wants to develop a "European digital economy and society with long-term growth potential".

To achieve this, a range of measures will be outlined, including plans to develop uniform "consumer and contract rules" across the EU, simplify VAT rules, update EU copyright laws and prohibit 'geo-blocking', which access to online services and content is restricted on a geographic basis. Reforms to data protection rules are also important for improving consumers' trust in online markets, it said.

A review of telecoms and media rules will also be conducted in an effort to sure they are "fit for new challenges" and incentivise "investment in infrastructure". Moves to better coordinate how spectrum is managed by individual EU countries will also be made, the Commission said.

The Commission also said it intends to "look into the growing importance of online platforms", such as search engines, social media and app stores. "This includes looking at how to strengthen trust in online services through more transparency, how to include them in the online value chain, and to facilitate the swift removal of illegal content," it said.

Measures to help manufacturers "integrate new technologies and manage the transition to a smart industrial system" and embrace the 'industry 4.0' technology-driven new industrial revolution in manufacturing will be another focus of the Commission's work. It will also look for faster development of standards to ensure new technologies can be utilised across different systems, it said.

The Commission said it that it will furthermore look to support new "interoperable e-services" offered by governments and public bodies, help improve EU citizens' "digital skills" and enable EU businesses to harness the potential of 'big data' and cloud computing.

"Large amounts of data are produced every second, created by persons or generated by machines, such as sensors gathering climate information, satellite imagery, digital pictures and videos, purchase transaction records, or GPS signals," the Commission said. "Big data is a goldmine, but it also raises important challenges, from ownership to data protection to standards. These need to be addressed to unlock its potential."

"The same goes for cloud computing, the use of which is rapidly growing: the proportion of digital data stored in the cloud is projected to rise from 20% in 2013 to 40% in 2020. While shared networks and resources can boost our economy, they also need the right framework to flourish and be used by more people, companies, organisations and public services across Europe," it said.

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