EU Launches Antitrust Investigations of Top Ecommerce Companies

Ecommerce is rapidly overtaking traditional stores as the platform of choice for our everyday transactions.

Yet as ecommerce becomes bigger business year on year, the potential for major players to sail close to the wind when it comes to protecting their slice of the pie rises with it.

The growth of ecommerce has led to a flood of new businesses entering the arena. After all, barriers to entry are negligible, secure ecommerce platforms are simple to optimise and the rewards can be significant.

Bearing all this in mind, perhaps it should come as no surprise that the European Union Executive has reported an increase in major players using contractual restrictions to control product distribution in an effort to restrict competition, which might be in contravention of European antitrust rules.

Ecommerce cart store

Two Year Investigation

Competition Commissioner Margrethe Vestager confirmed that the EU has been investigating antitrust activities in the Ecommerce sector for the past two years as part of its Digital Single Market Strategy, which is designed to promote and facilitate ecommerce across Europe.

As part of its investigations, the Commission gathered approximately 8,000 licences and distribution agreements, along with supplementary information from a wide range of vendors, manufacturers, ecommerce platforms, price comparison websites and a number of other sources.

The findings

The EU inquiry found strong evidence of business practices that unfairly hinder cross border sales and ecommerce.  Specifically, it found manufacturers using selective distribution strategies to specific sellers, and restricting the ability for online retailers, big and small, to sell their products.

This gives the manufacturers better control over pricing and distribution, but it also means the products become less appealing to overseas customers, who have to find more cost-effective alternatives from elsewhere.

Similarly, it found evidence that more than half of digital content providers have agreements in place with the copyright holders to use geoblocking to charge different prices to access their music, games or TV shows on the basis of their geographical location, a practice that the EU severely frowns upon.

Next steps

The conclusions drawn from this initial inquiry will allow the EU to launch targeted antitrust investigations across the EU market.

The elimination, or at least significant reduction of these practices would spell good news for customers and businesses alike, particularly if it opens up sales in the lucrative Chinese market, where there is an enormous appetite for western goods and entertainment. This could present a great opportunity for EU vendors, and the European economy as a whole.