Publication of the European Commission’s final report on the e-commerce sector marks the culmination of a 2-year inquiry looking at competition in EU markets for online sale of consumer goods and digital content. The report draws on evidence gathered from nearly 1900 market players and analysis of around 8000 distribution agreements making this the Commission’s most extensive inquiry to date.
In a nutshell, the Commission’s findings show that the rise of e-commerce has significantly altered consumer behaviour and companies’ distribution strategies. Business reaction to the resulting challenges (and opportunities) has not always been in line with competition rules.
The Commission makes some interesting observations on the impact of price transparency increasing with online trade. Consumers have undoubtedly benefited: they are able to shop around with relative ease pushing greater price competition. However, this transparency has also allowed manufactures and retailers to heavily monitor online prices. The Commission’s concern is that manufacturers are able to identify and potentially punish retailers who deviate from desired price levels. Increased price transparency may also facilitate collusion between retailers by making it easier to detect deviations from the collusive agreement.
Commissioner Vestager’s statement that, “our findings help us to target the enforcement of EU competition rules in e-commerce markets” puts companies operating in the sector on notice. In February this year, the Commission opened three separate investigations into holiday accommodation, PC video games and consumer electronics. We can expect more to follow in the coming weeks and months. Retailers and manufacturers are taking note: a number of major brands in the clothing industry have already reviewed their commercial practices on their own initiative with Mango, Pull and Bear and Dorothy Perkins among them.
For a more in-depth look at the report covering key findings, the competition issues and what companies can expect next click here for a briefing from the competition experts at CMS.