October 17, 2016

Speaking at the Stakeholder Conference on Preliminary Findings of the E-commerce Sector Inquiry, in Brussels on 6 October 2016, Commissioner Margrethe Vestager told her audience “for consumers, e-commerce creates enormous possibilities”.  It gives them control as they can compare prices from sellers anywhere in Europe, and shop around to find the best price.

E-commerce is also good for businesses, she said, as it allows for competition and innovation to thrive.

However, Commissioner Vestager said, e-commerce creates challenges for existing ways of doing business.  That was why the Commission launched the e-commerce sector inquiry: to “better understand the challenges and the opportunities”.

The inquiry produced 1800 replies and the Commission has looked at 8000 contracts.

In terms of consumer goods, Commissioner Vestager observed that consumers sometimes want to go to a real, physical shop, to get a feel for the product they are buying.  However, she said, if consumers then return home and purchase the product cheaper online “how can physical shops survive?”

Whatever solutions businesses come up with must not harm competition, she said.  Restrictions on e-commerce can sometimes be appropriate, but “if they’re done the wrong way, then consumers could end up with less choice, and higher prices”.  Commissioner Vestager referred her audience to the Commission’s guidelines on vertical agreements.

As for digital content, Commissioner Vestager noted that, as the inquiry showed, “this isn’t one market, but several”, since different companies sell different content, in different ways, aimed at consumers in different parts of Europe.  Some of those companies are TV broadcasters, expanding their business online.  Others are telecoms companies, moving from providing the wires that content travels through to delivering the content themselves.  And others again are start-ups, whose only business is delivering content online, she said.

What they all have in common, however, is that “they need to show the top football games, or the most popular TV shows” and without the availability of licences for the best content, it is hard to compete.

The inquiry also found that, as reported in March, nearly two-thirds of providers have contracts that require them to geoblock.  Such contracts limit consumers’ freedom to choose the content they want, and restrict cross-border competition.  However, Commissioner Vestager noted, “there could be good reasons for using them in particular markets”.  The Commission therefore needs to “look in detail at specific cases before we reach a conclusion”.

Commissioner Vestager encouraged her audience to respond to the consultation (open until the middle of November) on the inquiry’s preliminary report.  “That way, we can make sure that when we publish the final report, it’s based on the fullest possible evidence. And we can further help companies to assess how to comply with the rules”, she said.  In the end, “it’s up to businesses to make sure their contracts don’t harm competition online”.

In conclusion, Commissioner Vestager said that she did not want to “tell businesses how to distribute their products”. However, she said, whichever way they choose to do it, it must not harm competition and deny consumers the benefits they expect.  The whole idea of the inquiry is “to make sure we get that balance right”, she said, so that “both consumers and businesses can get the most of e-commerce”.  To read the Commissioner’s speech in full, click here.