E-commerce: the FCA publishes a study on the application of competition law in the sector

By Thomas Oster, Alexandre Vuchot, Florence Leroux

06-2020

E-commerce is an essential distribution channel with specific features to which the competition authorities had to adapt. The French Competition Authority (the FCA) has therefore deemed it useful to publish a study entitled "Competition & e-commerce" which presents an analysis of the competition dynamics in the e-commerce sector and a summary of the anti-competitive practices that may arise in that sector. In this study, the FCA describes its own activities and those of other competition authorities (European Commission, Bundeskartellamt, etc.) in this area.

This study is the latest of a series of thematic studies published by the FCA (e.g. on loyalty rebates) with the aim of increasing "further education about competition". The study is fully in line with the objectives that the FCA has set for the year 2020, the "Digital" sector being listed as its main priority.

The study gives an overview of the various competition issues raised by the development of e-commerce, but does not provide any new information in terms of competitive analysis but will undoubtedly constitute a reference guide for companies active in the sector.

Inclusion of e-commerce in the competitive analysis of the distribution sector

The study highlights the impact of e-commerce on distribution models, with the emergence of (i) new types of players ("pure players", "click & mortar"), (ii) new products/services that could not exist before the massive use of digital services (music streaming, video on demand, online price comparison, online advertising, etc.) and (iii) new consumer behaviours who frequently use digital tools in their purchasing process.

The study also recalls that the growth of e-commerce has led the FCA to adapt its analytical framework to assess the various competitive constraints, in particular by identifying more and more frequently relevant markets which cover both online and offline sales.

Overview of anti-competitive behaviours in the e-commerce sector

The study identifies the main types of behaviours considered to be anticompetitive by the FCA over the past few years and in particular:

  • The implementation by suppliers/manufacturers of tariff-related (resale price maintenance, price differentiation between distribution channels, etc.) or non-tariff-related anticompetitive practices (prohibition of online sales, prohibition of referencing on marketplaces or price comparison sites, etc.) aimed at limiting the development or attractiveness of online sales of their products in order to promote offline distribution.
  • The development of practices aimed at reducing the competitive intensity between e-commerce operators. The study focuses in particular on price parity clauses in the hotel sector, abuse of dominance (exclusivity, tied sales, etc.) or abuse of economic dependence of companies affiliated to marketplaces.
  • The risks associated with a number of emerging forms of behaviours with a more uncertain anticompetitive nature are also identified by the FCA, in particular those associated with the use of algorithms or big data.

While the study provides a very comprehensive list of competition law infringements, it is surprising not to find in this list the restrictions imposed by some suppliers on their distributors to use search advertising tools such as Google Ads, a practice that the Commission found illegal in its Guess decision at the end of 2018.

In conclusion of its study, the FCA states that it believes its current analytical framework is flexible enough to capture behaviours that are specific to the e-commerce sector. However, it stresses the need to develop further technical, legal and economic expertise in this area, in particular through the creation of dedicated units within competition authorities. In this respect, the FCA has set up a Digital Economy Unit in early 2020.

The publication of this study comes at a time when many reflections are under way regarding the adaptation of competition rules to the development of digital technologies, as illustrated by the consultation launched by the Commission on 2 June and open until 8 September 2020 on the possibility of adopting a new competition tool allowing the early use of interim measures to prevent anticompetitive practices and situations of abuses.

The study (in French only) is available here – an English version will soon be published on the FCA's website.

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