If you had been in Brussels over the last few weeks, you will have witnessed an unusual phenomenon. Special envoys from the heart of competition enforcement in Brussels have been sallying out, rather like an evangelising force, carrying the good news of open engagement on a sector inquiry. Witness therefore a number of events in the European capital and further afield on the e-commerce sector inquiry.
Members of the Digital Single Market task force (name apparently about to change according to some officials) will be kept very busy for the next couple of years analysing this market to come up with recommendations for change, unifying guidelines or maybe even enforcement action. FTI Consulting is following developments closely and hosted its own event this week to a full house. So, what are the main points to retain from all the events that take place all over Brussels? To begin with, the main focus of the European Commission’s inquiry will be vertical restraints in distribution agreements affecting online cross-border sales. More than 2000 retailers and manufacturers of the main e-commerce goods as well as online platforms in all 28 Member States will be receiving questionnaires. Clothing, shoes and accessories, consumer electronics and digital content are the main targeted products and services. Questionnaires will be sent out during the course of June.
The focus is to gain a more comprehensive understanding of the market, as well as the dynamics and restrictions through a fact-finding process. The platform bans, in particular, may have large economic impact and devastating effects on e-commerce, as the German Bundeskartellamt concluded, referring to the German regulator’s 2014 investigations into Adidas and Asics. 6% of the middle and small-size enterprises who want to sell online go bankrupt and 15% go into solvency because of the bans.
This inquiry will be somewhere in the middle of the pharma and energy inquiries in terms of size and scope and it is only interested in the ‘hard data’ that companies will be providing. The beauty of this sector inquiry lies in its flexibility: it will be fact-finding but it is being conducted in a very open way with companies even being asked to contribute voluntarily. Compared to previous inquiries, the Commission is actively seeking participation.
The preliminary report followed by a public consultation will be out mid-2016 and companies can expect the final report on the first quarter of 2017.
Claire Harris is Senior Director and heads FTI Consulting’s competition team in Brussels, Maria Tsoni is Senior Consultant in the competition team.