The New Commission Must Make Online Sales Restrictions A Priority

BY CCIA Staff
November 20, 2014

Completing the digital single market to support Europe’s increasingly connected economy will be a top priority for the new Juncker-led Commission. While Commission officials embark upon formulating new policies aimed at invigorating the digital economy, increased attention should be paid to the very practical obstacles blocking a healthy online economy and harming small businesses and consumers.

Onlines sales restrictions of all kinds constitute one obstacle. More precisely, so-called platform bans are arguably the biggest impediment to e-commerce in Europe. In a nutshell, platform bans are anti-competitive clauses imposed by manufacturers on their resellers. These clauses prohibit sellers from using popular online platforms like Allegro, eBay or Amazon to sell their products. Sellers are typically allowed to sell through their own online shop — but not through their online shop on an online platform.

That is a huge problem for sellers. The reason is simple: most consumers will simply not know about a particular seller’s online shop and would be unlikely to find it online given the large numbers of individual shops on the Internet. Popular platforms, in contrast, enable sellers to offer their products to millions of potential customers who regularly shop through them. Sellers benefit from an easy opportunity to enlarge their customer base exponentially, while consumers benefit from increased choice, transparency and price competition. And the numbers speak a clear language: the majority of sellers’ online sales are made through popular marketplaces.

Platform bans, however, stand in the way of this win-win situation. Manufacturers stick to their selective distribution agreements that discriminate against platforms. This summer, the German competition authority issued a negative opinion against Adidas and declared these anti-competitive practices as illegal. As a result, Adidas amended the conditions for online sales repealing platform bans. Unfortunately, a survey prepared by the Choice in eCommerce initiative shows that not much has changed for sellers. Manufactures are not deterred from banning their products from platforms.

This is not to say that all selective distribution agreements must be prohibited. There are good reasons for them, but what is unacceptable is a discrepancy between the factual situations in offline and online retail. Most consumer goods, if they do not happen to be luxury products, are usually found in a great variety of bricks-and-mortar shops. Some shops are certainly more specialized than others and some will certainly be more brand-enhancing than others. There is no reason to keep the vast majority of consumer goods that enjoy a wide retail distribution from online platforms – particularly if the manufacturer has in principle agreed to online distribution.

Accordingly, the new Commission should pursue two objectives. First, action to curb on online sales restrictions. Europe cannot afford a situation in which the development of e-commerce, one of the most dynamic sectors in our economy, is held back by anti-competitive and hardly justifiable practices. The discrimination of the online element in commerce needs to be put to an end. Secondly, the equivalence principle which already exists for offline and online sales needs to benefit platforms, too. The general rule is very simple: the requirements for online sales cannot be stricter than for offline sales. This rule already exists under EU law. Now is the time to extend it to platforms. Thus, as soon as online platforms fulfil all requirements applicable to online sales, there is no reason why they should be excluded (read discriminated) as a distribution channel. European sellers and consumers would surely appreciate a Commission addressing this widespread, practical problem.

Related Articles

CCIA Welcomes the EU’s Risk-Based AI Proposal, Urges Further Clarifications

Apr 21, 2021

Brussels, BELGIUM — The European Commission today presented its Artificial Intelligence (AI) framework which includes an AI-specific Regulation. The regulation prohibits certain practices and introduces comprehensive requirements for “high risk” systems before their introduction to the EU market. Other requirements include informing users when they are interacting with an AI system, e.g. via chatbots. Fines…

CCIA Welcomes New Momentum towards Global Tax Reform at G20 Finance Ministers Meeting

Feb 26, 2021

Brussels, BELGIUM — A meeting of G20 Finance Ministers today showed strong signs of broad support for reaching an agreement this year on global tax reforms through the OECD  negotiations. This was the first meeting with incoming U.S. Treasury Secretary Janet Yellen, who stated the U.S. “was committed to the multilateral discussions on both pillars…