Buying from other countries to get easier as EC competition boss prepares to grill retailers

Europe's competition commissioner is launching an inquiry into what's keeping Europeans from buying goods and services online from vendors in European countries outside of their homeland.
Written by Liam Tung, Contributing Writer

The European Union's competition commissioner is launching an inquiry into contractual restrictions that prevent consumers in one market from buying goods online in another.

Europe's new antitrust commissioner Margrethe Vestager on Thursday told guests at a conference hosted by Germany's competition authority that Google's dominance in search isn't the only competition issue hampering the growth of Europe's economy.

The EU's digital single market is meant to mean consumers in the EU are part of the same internal market, but the reality still falls well short of its aims, Vestager highlighted yesterday, announcing she will launch a fact-finding mission to discover whether companies are using distribution contracts to restrict online retailers across borders.

While Europeans often travel abroad within the EU to buy goods and bring them home, purchasing from other countries online within the union remains difficult.

"Think of a French tourist who buys a pair of Italian shoes in Rome. Why is she re-routed to a French website when she tries to buy them online from home?" Vestager asked.

The inquiry will investigate the sale of digital and physical goods, as well as looking into content rights-holders, TV broadcasters, manufacturers, online merchants, and online platforms such as price comparison sites and online marketplaces.

Vestager said a well-functioning digital single market could add about €340bn to the GDP of the Union - roughly the GDP of her home country, Denmark.

The commission highlighted that in 2014, half of all EU consumers shopped online, yet 15 percent of them bought online from a seller based in another EU country.

Barriers include national law and language, Vestager said, but noted that restrictions are often contractual and controlled through geo-blocking, which locks consumers into websites and prices based on their location or credit card details.

"Restrictions like these are often the result of arrangements that are included in contracts between manufacturers and content owners on one side and their distributors on the other," she said.

The announcement of the inquiry came a day after the EC said it would in May unveil new proposals for a single digital market, targeting cross-border online retail, parcel delivery charges, geo-blocking, copyright law, and VAT arrangements.

"We are designing this sector inquiry with one main goal in mind: we intend to identify what hampers competition in ecommerce when sales straddle national borders," said Vestager.

"We want to focus on the barriers to the cross-border sale of goods and digital content erected by private companies, especially in their distribution contracts. We also want to focus on the areas where e-commerce is most used."

Earlier this month, European Commission officials raided several online consumer electronics retailers over concerns they may have worked together to restrict the availability of products and raise their prices. The Commission made similar visits to different companies late in 2013.

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