Competition Law Challenges in E-Commerce
What would you say are the biggest EU policy challenges you face as an online marketplace?
Our business model is designed so that our marketplaces business is successful when our merchants are successful. Therefore, our ability to grow is linked to our users’ ability to grow by leveraging our platform’s reach.
European small businesses are indeed taking advantage of lower trade costs facilitated by our platform. In the EU, 93% of Small, Medium, and Micro-sized Enterprises (SMMEs) using the eBay marketplace in the EU export – in contrast to an average of 26% of traditional firms. These technology-enabled exporters reach on average 18 different countries annually, and 10 of those are EU countries.
However, imperfect government policies and anticompetitive practices in the market can have a powerful effect on SMMBs seeking to use online marketplaces.
Consequently, key constraints to our ability to facilitate increased economic activity of our users in the EU relate to policies and practices which amount to online sales barriers, such as contractual restrictions to the sale of products online. We continuously witness contractual efforts limiting users’ ability to trade on our platforms. For example, an increasing number of manufacturers have in recent years prohibited their retailers from trading online and in particular on online marketplaces.
Such distribution restrictions (marketplace bans) prevent SMEs from growing online; they limit intra- and inter-brand competition, leading to higher prices, limited choice, reduced convenience, and obscurity of information for consumers; and they inhibit effective access to foreign markets, amounting to one form of geo-blocking that prevents consumers and businesses from reaping the benefits of a fully connected DSM.
Also the lack of harmonization in the EU Digital Single Market creates significant cross-border trade barriers for small online sellers. Examples range from differences in consumer protection law, VAT, and parcel delivery regulation, to even waste management, product labelling, and product-specific regulations.
Finally, government policies which do not take into account the specificities of the online marketplace business models decrease our ability to enable our users. For example, sometimes national courts attribute responsibility to eBay for third party infringements on our sites.
What are your thoughts on the preliminary report on the e-commerce sector inquiry?
We welcome the Commission’s recognition of the importance of online marketplaces for small businesses and cross-border trade. The report also shows that marketplace bans prevent a significant number of small business entrepreneurs from selling products on online marketplaces and that these bans harm consumers by limiting choice, increasing prices and hindering cross-border trade. We believe e-commerce should be open for all and support the Commission’s conclusion that platform bans may breach competition rules. We encourage the Commission to launch targeted investigations to enforce its findings.
If you could introduce one change to competition law, what would it be and why?
Competition law should be clear so that companies understand what they can do and what they must not do. The final sector inquiry report and following enforcement actions by the Commission and national authorities will hopefully further clarify the law and remove uncertainty. It must be clear, that manufacturers must not impose platform bans on their authorised sellers and ambiguous wording (for example in the Guidelines) should be removed in case it’s used as a justification. We will thus closely monitor the developments closely and support potential tweaks in the legislative framework in case the authorities’ follow-up actions reveal shortcomings in the law as it stands.
You spoke on our Practical Consequences of Online Selling panel at our Competition Law Challenges in the Retail Sector conference this year. Which specific topics did you enjoy covering?
I discussed the importance of online marketplaces in today’s online commerce landscape and comment in particular on the Commission’s recent findings on online sales restrictions impeding European small businesses from taking advantage of the digital opportunities.
