EU launches antitrust probe into e-commerce sector

The European Commission wants to make it easier for consumers to shop online across borders

Europe's e-commerce market will be subject to a full-fledged antitrust probe, as part of the European Commission's push to tear down walls between the European Union's 28 national digital markets.

The competition inquiry will look for barriers to online cross-border trade of electronics, digital content, clothing and shoes, the Commission said Wednesday. The probe was proposed by Competition Commissioner Margrethe Vestager in March and is one of 16 initiatives announced Wednesday that the Commission hopes will make the EU a single market for digital goods and services.

The Commission suspects contractual restrictions in distribution agreements prevent retailers from selling goods or services purchased online to customers in other EU countries. The investigation will examine how widespread these barriers are and what effects they have on competition and consumers. "If they are anti-competitive we will not hesitate to take enforcement action under EU antitrust rules," Vestager said in an emailed statement.

Companies including manufacturers, wholesalers and e-commerce retailers can expect to receive a request for information from the Commission in the coming weeks. It expects to publish preliminary findings of the inquiry in mid-2016.

Making cross-border e-commerce easier for consumers and companies is high on the Commission's agenda. It plans to harmonize rules on contracts and consumer protection for online purchases, to boost confidence to shop and sell across borders.

It will also propose measures to make parcel delivery more affordable: 62 percent of companies that try to sell online find excessive parcel delivery costs are a barrier, it said.

Unjustified geo-blocking must also end, the Commission said. Some online sellers deny consumers access to a website based on their location, or re-route them to a local store with different prices. Legislative proposals to tackle unjustified geo-blocking should be ready before the end of the year, it said.

At the same time, it will also reform Value Added Tax (VAT) rules to relieve the administrative burden, especially on small and medium-size enterprises, so that sellers of physical goods to other countries also benefit from single electronic registration and payment.

The e-commerce probe is not the only scrutiny tech companies can expect. As part of its Digital Single Market strategy the Commission will also "comprehensively analyze" the role of online platforms including search engines, social media and app stores.

The probe, to be conducted before the end of the year, will likely target U.S. tech giants such as Google, Apple and Amazon.com. It will consider pricing policies, the transparency of search results, and companies' use the personal information. It ill also examine how platforms promote their own services to the disadvantage of competitors, to the extent these are not already covered by competition law, the Commission said.

This means that the probe will come on top of the Commission's existing antitrust investigation into Google's search services. In April it filed antitrust charges against Google, accusing the company of abusing its dominant position in Internet search services in Europe by systematically favoring its own comparison shopping product. At the same time, it started an antitrust investigation into the bundling of Google apps with the Android mobile OS.

The Commission's digital strategy is meant to lay the groundwork for the future of Europe's digital economy, and as such also includes plans for giving European startups a better chance to grow, and developing pan-continental telecommunications networks.

It also includes a push to reform copyright rules. Before the end of 2015, the Commission will propose ways to reduce the differences between national copyright regimes and allow for wider online access to works across the EU. As part of the reform, people who buy films, music or articles online at home should be able to access to them from other countries. At the same time, enforcement against commercial-scale infringements of intellectual property rights will be stepped up.

Plans should be more concrete by the end of 2016 and will need backing from the European Parliament and the Council of the EU to become reality.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, online payment issues as well as EU technology policy and regulation for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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