Has the Commission let slip the watchdogs of war?

E-commerce is no longer the last frontier of antitrust law, but rather the battlefield of a war which is already being fought on many fronts. On the trustbuster’s side, the Bundeskartellamt’s purposeful and self-proclaimed leadership as regards vertical restraints on the use of online marketplaces has recently met with the Commission’s slowly but steadily coming back into play from its initial indolence (as proven by the Preliminary Report on the e-commerce sector inquiry published on 15 September 2016), and its recent alliance with the French authority (whose help the EU watchdog has sought to carry out probes in the e‑commerce sector).

At any rate, the rules of this regulatory game will be set by the judges in Luxembourg, already questioned by the German judiciary whether selective distributors at the retail level can be lawfully barred from enlisting online sale-handling services of third-party platforms discernible to the public, regardless of the supplier’s quality standards (request for a preliminary ruling in case C-230/16). On the undertaking’s side of the house, Amazon has asked to be heard in the case as a golden opportunity to tip the scales in favour of retailer’s freedom to sell products on marketplaces.

Although the focus is clearly placed on retailers’ ability to use marketplaces, until the ECJ delivers its verdict the Italian Autorità Garante della Concorrenza e del Mercato (which seems to like riding high on the Booking.comExpedia wave), has availed of the tense interlude to streamline the online booking sector again by launching a monitoring project. This project aims at gauging the implementation of the commitments made by Booking.com and Expedia in partnership with other nine National Competition Authorities (Belgium, Czech Republic, France, Germany, Hungary, Ireland, Netherlands, Sweden and UK).

This landscape having paved the way for a bit of self-promotion, I will take the opportunity to present my recent publication in the European Journal of Legal Studies with the headline: ‘Price parity clauses: Has the Commission let slip the watchdogs of war? This paper criticises the voyeurism of the Commission vis-à-vis price parity or most-favoured-nation (MFN) clauses, which has led the whilom motor of European integration to forgo a historical opportunity to embrace a common facts‑based and effects-oriented approach that takes advantage of the momentum created by ECJ landmark rulings in Groupement des Cartes Bancaires and Maxima Latvija.[1]

Concerning the enforcement approach proposed by the paper, by-object analysis should only be deemed appropriate where a preliminary assessment of the specific restraint’s degree of harm reveals that the broad MFN clauses[2] in place are a device for either horizontal coordination amongst sellers or vertical price-fixing at the level of platforms. The preliminary degree-of-harm analysis, in turn, should reckon with factors such as the business model, the supply chain level and scope of the clause, the relative market power of sellers and platforms, the concentration of the upstream and downstream markets, the density of the MFN lattice, the proportion of the seller’s overall sales made through the platform, and the availability of other price comparison mechanisms.

Contrariwise, narrow MFN schemes[3] should be subject to a by-effect assessment in view of their limited degree of harm, except where either they are devised to conceal a hub-and-spoke setting or a sufficiently tight weave of narrow MFN clauses produces an effect equivalent to the fixing of a minimum price (this is precisely the theory of harm underlying the only reference to MFN clauses in the Commission’s Guidelines on vertical restraints[4]). At any rate, price parity clauses that do not have as their object to allow for horizontal coordination at the level of sellers (or, in the case of broad MFN clauses, at the level of platforms) should be eligible for exemption under Regulation 330/2010[5] or even considered of minor importance under the de minimis Notice.[6]

Quite on the contrary, the EU trustbuster has unleashed the long-legged but often short-sighted national watchdogs resulting not only in inconsistencies (between the German stark stance and the French-Swedish-Italian ‘orthodox’ solution) but more importantly in a missed opportunity to start moving away from by-object prevalence to a more digital-friendly paradigm in 101 enforcement when it comes to e‑commerce restrictions, whose complexity can only be captured by a case-by-case analysis based on effects.

[1] Cases C-67/13 P, ECLI:EU:C:2014:2204 Groupement des Cartes Bancaires, and C-345/14, ECLI:EU:C:2015:784 Maxima Latvija.

[2] Agreements by virtue of which a seller commits to advertising on an online platform equal or lower prices than listed on competing online platforms.

[3] Agreements in accordance with which the seller is only bound not to offer through its own online, and sometimes also offline, channel lower prices than listed on the platform’s website

[4] Commission, ‘Guidelines on Vertical Restraints’ (Notice) [2010] OJ C130/01, para 48.

[5] Commission, ‘Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices [2010] OJ L102/01.

[6] Commission, ‘Notice on agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the Treaty establishing the European Community (de minimis) [2001] OJ C368/13, para 11(2).

Author: PabloSD

EU, competition and regulation lawyer with experience in law firms (Uría Menéndez, Slaughter and May) and the CJEU. LLM in EU Law and Economic Analysis from the College of Europe (Bruges), master's degree in European Studies from the University of Seville, bachelor’s degree in law and business from the University of Seville. Currently, antitrust counsel at technology multinational company and lecturer at Universidad Carlos III, Instituto Superior de Derecho y Economía, Universidad de Navarra and Instituto de Empresa. Board member at the Spanish Association for the Protection of Competition (AEDC) and editor at Wolters Kluwer World Competition and EU Law Live. All views, thoughts, and opinions expressed in this blog belong solely to the author, and not to the author's employer or any organisation or institution to which the author is associated.

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