REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Final report on the E-commerce Sector Inquiry
Date: 2017-05-10
Institutions: Directorate-General for Competition, European Commission
Subjects: competition law, competition policy, consumer goods, copyright, digital technology, distributive trades, electronic commerce, price formation, single market, telecommunications

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 10.5.2017  COM(2017) 229 final   REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Final report on the E-commerce Sector Inquiry {SWD(2017) 154 final}  
 
 
REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN 
PARLIAMENT 

Final report on the E-commerce Sector Inquiry 

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I. 

INTRODUCTION 

(1)  On 6 May 2015, the Commission launched a sector inquiry into the electronic commerce 
(‘e-commerce’)  of  consumer  goods  and  digital  content  in  the  EU  (‘e-commerce  sector 
inquiry’).1  The  e-commerce  sector  inquiry  forms  part  of  the  Digital  Single  Market 
strategy adopted on the same day.2 

(2)  The  Digital  Single  Market  strategy  outlines  several  key  actions  under  three  pillars 
through  which  the  Commission  plans  to  create  a  ‘Digital  Single  Market’.  One  of  these 
pillars  relates  to  ensuring  better  access  for  consumers  and  businesses  to  goods  and 
services via e-commerce across the EU. 

(3)  E-commerce  in  the  EU  has  grown  steadily  in  recent  years.  Today  the  EU  is  one  of  the 
largest e-commerce markets in the world. The percentage of people aged between 16 and 
74  that  have  ordered  goods  or  services  over  the  internet  has  grown  year-on-year  from 
30 % in 2007 to 55 % in 2016.3 

(4)  The  rapid  development  of  e-commerce  affects  consumers  and  businesses  alike.  The  e-
commerce sector inquiry allowed the Commission to obtain an overview of the prevailing 
market  trends  and  gather  evidence  on  competition  barriers  linked  to  the  growth  of  e-
commerce.  It  also  allowed  the  Commission  to  understand  the  prevalence  of  certain 
business practices and their underlying rationale, and ultimately to identify priorities for 
enforcing the EU competition rules. 

(5)  For 

the  purposes  of 

inquiry,  requests  for 

the  e-commerce  sector 

information 
(‘questionnaires’)  were  addressed  to  stakeholders  between  June  2015  and  March  2016. 
1 051  retailers  (‘retailers’);  37  marketplaces;  89  price  comparison  tool  providers;  17 
payment  system  providers;  259  manufacturers;  248  digital  content  providers; 
9 companies  offering  virtual  private  networks4  and  IP  routing  services;  and  30  large 
groups  and  hosting  operators,5  from  28 Member  States,  provided  responses  to  the 
questionnaires.  Respondents  submitted  in  total  2 605  agreements  related  to  the 
distribution of consumer goods and 6 426 licensing agreements related to the distribution 
of digital content. 

1 The sector inquiry was launched pursuant to Article 17 of Council Regulation (EC) No 1/2003 of 16 December 
2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 
4.1.2003, p. 1. 
2  Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  Economic  and 
Social Committee and the Committee of the Regions ‘A Digital Single Market Strategy for Europe’, COM(2015) 
192  final.  For  further  details  on  the  Digital  Single  Market  Strategy,  see  https://ec.europa.eu/priorities/digital-
single-market_en. 
3 See 2016 Eurostat Community Survey on ICT usage in households and by individuals, available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/E-commerce_statistics_for_individuals. 
4 A virtual private network is an encrypted communication channel that can be established between two computers 
or IP-based devices. 
5 Operators which offer online content through agreements whereby such operators host service providers within a 
hosting  environment  with  a  specific  set  of  characteristics,  either  via  software  (‘hosting  online  operator’)  or  via 
hardware (‘hosting device’). 

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(6)  On  15 September  2016,  the  Commission  published  a  Preliminary  Report6  on  the  initial 
findings of the e-commerce sector inquiry. The publication of the Preliminary Report was 
followed  by  a  public  consultation  open  to  all  interested  stakeholders.  The  public 
consultation  ended  on  18 November  2016.  Altogether  66  submissions  were  made  in 
relation to consumer goods and digital content.7 

(7) 

Interested stakeholders also expressed their views at a stakeholder conference in Brussels 
on 6 October 2016. The event provided representatives of different stakeholders with an 
opportunity to put forward their views on the Preliminary Report. 

(8)  This Report is accompanied by a Staff Working Document, the Final Report on the e-
commerce  sector  inquiry  (‘the  Final  Report’)  which  summarises  the  main  findings  of 
the  e-commerce  sector  inquiry  and  incorporates  comments  submitted  by  stakeholders 
during the public consultation. The Final Report is divided into two separate sections: the 
first  section  covers  e-commerce  of  consumer  goods,  while  the  second  focuses  on  e-
commerce of digital content. 

II.  MAIN FINDINGS OF THE E-COMMERCE SECTOR INQUIRY 

2.1 

CONSUMER GOODS 

(9)  The e-commerce sector inquiry covered the product categories most sold online: clothing 
and  shoes;  consumer  electronics;  electrical  household  appliances;  computer  games  and 
software;  toys  and  childcare  articles;  media  (books,  CDs,  DVDs  and  Blu-ray  discs); 
cosmetics and healthcare products; sports and outdoor equipment, and house and garden 
products. Respondents to the questionnaires could also comment on any ‘other’ product 
categories. 

(10)  The results of the e-commerce sector inquiry confirm that the growth of e-commerce over 
the  last  decade  had  a  significant  impact  on  companies’  distribution  strategies  and 
customer behaviour. 

(11)  First,  price  transparency  has  increased  with  online  trade.  Consumers  are  now  able  to 
instantaneously  obtain  and  compare  product  and  price  information  online,  and  switch 
swiftly from one channel (online/offline) to another. While this allows consumers to find 
the best deal online, it may also result in free-riding behaviour: consumers can use pre-
sale  services  of  brick  and  mortar  shops  before  purchasing  the  product  online; 
alternatively,  consumers  can  search  and  compare  products  online  before  purchasing  in 
brick  and  mortar  shops.8  Addressing  free-riding  and  maintaining  the  incentives  for 

6 See SWD(2016) 312 final, available at 
http://ec.europa.eu/competition/antitrust/sector_inquiry_preliminary_report_en.pdf. 
7  The  list  of  the  participants  and  the  non-confidential  versions  of  their  submissions  are  available  at 
http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html. 
8 72 % of the manufacturers responding to the questionnaires explicitly acknowledge the existence of free-riding 
by  online  sales  on  offline  services.  62 %  acknowledge  the  existence  of  free-riding  by  offline  retail  on  services 
(information)  offered  online.  Approximately  40 %  of  retailers  also  acknowledge  the  existence  of  free-riding 
behaviour  both ways.  Approximately  50 %  of  retailers  declare  they  do  not know  whether  such  behaviour  exists 

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retailers to invest in high quality services by creating a level playing field between offline 
and online are key considerations for both manufacturers and retailers. 

(12)  Second, the ability to compare prices of products across several online retailers leads to 
increased price competition affecting both online and offline sales. While such increased 
price  competition  has  beneficial  effects  for  consumers,  it  may  affect  competition  on 
parameters other than price, such as quality, brand and innovation. While price is a key 
parameter  of  competition  between  retailers,  quality,  brand  image  and  innovation  are 
important  in  the  competition  between  brands.  Incentivising  innovation  and  quality,  and 
keeping control over the image and positioning of their brand are of major importance for 
most manufacturers to help them ensure the viability of their business in the mid to long 
term.9 

(13)  Third, increased price transparency allows companies to monitor more easily their prices. 
A  majority  of  retailers  track  the  online  prices  of  competitors.  Two  thirds  of  them  use 
automatic software programmes that adjust their own prices based on the observed prices 
of  competitors.  With  pricing  software,  detecting  deviations  from  ‘recommended’  retail 
prices takes a matter of seconds and manufacturers are increasingly able to monitor and 
influence  retailers’  price  setting.  The  availability  of  real-time  pricing  information  may 
also trigger automatised price coordination. The wide-scale use of such software may in 
some situations, depending on the market conditions, raise competition concerns. 

(14)  Fourth, alternative online distribution models  such  as  online marketplaces  have  made  it 
easier for retailers to access customers. Small retailers may, with limited investments and 
effort, become visible and sell products through third party platforms to a large customer 
base  and  in  multiple Member  States.  This  may  however  clash  with  the  distribution  and 
brand strategies of manufacturers. 

(15)  These  market  trends  significantly  affect  the  distribution  and  pricing  strategies  of  both 
manufacturers  and  retailers.  As  a  reaction  to  increased  price  transparency  and  price 
competition, manufacturers have sought greater control over distribution networks, with a 
view to better controlling price and quality. This translates into an increased presence of 
manufacturers  at  the  retail  level  and  increased  recourse  to  agreements  or  concerted 
practices between manufacturers and retailers (‘vertical restraints’), affecting competition 
among  retailers  selling  the  same  brand  (‘intra-brand  competition’).  The  Final  Report 
provides indications of the following most typical market trends:  

and less than 10 % claim that such customer behaviour does not exist. The claimed significantly higher costs of 
offline  services  lead,  however,  to  much  stronger  concerns  regarding  free-riding  by  online  retailers  on  offline 
services (see Section 4.1 of the Final Report). 
9  Both  manufacturers  and  retailers  were  asked  to  rate the most  important parameters  of  competition  in  terms  of 
their  importance.  Manufacturers  consider  product  quality,  brand  image  and  the  novelty  of  the  product  the  most 
important, with price being ranked between the fourth and sixth most important factors. Retailers, however, rank 
price  as  either  the  most  or  the  second  most  important  parameter  of  competition  throughout  all  the  sectors.  The 
range of brands, availability and quality are listed as the next three most important parameters of competition (with 
variations amongst different sectors) (see Section 2 of the Final Report). 

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(i) 

(ii) 

A large proportion of manufacturers decided in the course of the last ten years 
and in reaction to the growth of e-commerce, to sell their products directly to 
customers  through  online  retail  shops,  thereby  competing  increasingly  with 
their own independent distributors.10 

to 

recourse 

increased 

‘selective  distribution  systems’,11  where 
An 
manufacturers  set  the  criteria  that  retailers  must  meet  to  become  part  of  the 
distribution  network  and  where  all  sales  to  unauthorised  retailers  are 
prohibited.  Manufacturers  explicitly  acknowledge  that  they  use  selective 
distribution  as  a  reaction  to  the  growth  of  e-commerce  as  it  allows  them  to 
better control their distribution networks, in particular in terms of the quality 
of  distribution  but  also  price.  The  results  of  the  e-commerce  sector  inquiry 
indicate that both the number of selective distribution agreements and the use 
of selection criteria have increased significantly over the last ten years.12 

(iii) 

An  increased  recourse  to  vertical  restraints  that  allow  for  a  greater  control 
over  the  distribution  of  products.  Depending  on  the  business  model  and 
strategy,  restraints  may  take  various  forms,  such  as  pricing  restrictions, 
marketplace (platform) bans, restrictions on the use of price comparison tools 
and the exclusion of pure online players from distribution networks. 

2.2   DIGITAL CONTENT 

(16)  The e-commerce sector inquiry focused on the online provision of audio-visual and music 
products.  It  involved  both  digital  content  providers,  which  offer  digital  content  to 
consumers  or  provide services  for  third  parties  to  offer  content  to  consumers,  and  right 
holders. 

(17)  The  information  gathered  during  the  e-commerce  sector  inquiry  indicates  that  online 
transmission  (i.e.  the  possibility  for  consumers  to  access  digital  content  online)  has 
changed  the  way  digital  content  is  accessed  and  consumed,  providing  new  business 
opportunities  both  to  established  operators  and  new  entrants.  Online  transmission  is 

10 Manufacturers were asked what concrete measures they had taken to react to the growth of e-commerce in the 
last 10 years. 64 % of the manufacturers reported that they opened own online retail shops. 3 % reported that they 
took the decision to fully integrate distribution activities (see Section 3.1 of the Final Report). 
11 Article 1(e) of the Vertical Block Exemption Regulation (‘VBER’; 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,  OJ  L  102,  23.4.2010,  p.  1.)  defines  ‘selective 
distribution system’ as ‘a distribution system where the supplier undertakes to sell the contract goods or services, 
either  directly  or  indirectly,  only  to  distributors  selected  on  the  basis  of  specified  criteria  and  where  these 
distributors undertake not to sell such goods or services to unauthorised distributors within the territory reserved 
by the supplier to operate that system’. 
12 Manufacturers were asked what concrete measures they had taken in response to the growth of e-commerce in 
the last 10 years. Nearly 20 % reported they had introduced selective distribution systems (where they did not have 
one before), 2 % extended the existing systems to new types of products, and nearly 40 % introduced new criteria 
in  their  distribution  agreements  on  how  to  sell  or  advertise  their  products  online  (see  Section  3.1  of  the  Final 
Report). 

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encouraging  innovation  and  experimentation  in  digital  content  markets,  resulting  in  a 
variety of new service offerings and business models. 

(18)  Online  transmission  allows  for  lower  transmission  costs  per  user  compared  to  other 
transmission  technologies,  such  as  terrestrial  transmission.  It  also  provides  more 
flexibility  and  scalability  than  other  transmission  technologies,  such  as  satellite 
transmission. Online transmission  further allows  digital content  providers to  create user 
interfaces  that  can  be  accessed  on  multiple  devices  in  a  seamless  way  and  are  easily 
adaptable. 

(19)  The  results  of  the  e-commerce  sector  inquiry  indicate  that  the  key  determinant  for 
competition in digital content markets is the availability of the relevant rights. The online 
transmission  of  copyright-protected  digital  content  requires  the  acquisition  of  rights  in 
order  to  lawfully  market  the  content  —  typically  including  the  right  to  transmit  via 
internet, broadband or cable technologies, and to allow users to stream or download the 
content  via  a  receiving  device.  Over  time,  complex  licensing  practices  have  developed. 
They reflect the desire of right holders to exploit fully the rights they hold, and the need 
for  digital  content  providers  to  remain  competitive  by  offering  attractive  content  that 
meets consumer demand and reflects cultural diversity within the European Union. 

(20)  When  analysing  the  competitive  landscape  in  digital  content  markets,  it  is  important  to 
understand  how  rights  are  commonly  licensed.  Rights  can  be  split  up  in  different  ways 
and can be licensed, either on an exclusive or a non-exclusive basis, for a certain territory 
and/or for certain transmission, reception and usage technologies. 

(21)  The results of the e-commerce sector inquiry indicate that there are three main elements 
as regards the scope of the rights that are commonly used in licensing agreements: 

(i) 

(ii) 

technology  and  usage  rights:  these  include  the  technologies  that  the  digital 
content providers may lawfully use to transmit the content and allow the user 
to receive it, including the modalities of access; 

release  and duration  rights: these  refer  to  the  ‘release  window  or  windows’, 
meaning  the  period  during  which  the  digital  content  provider  is  lawfully 
entitled to offer the product; and 

(iii) 

geographic  rights:  these  relate  to  the  geographic  area  or  areas  in  which  the 
digital content provider may lawfully offer the product. 

(22)  Rights may be licensed using any combination of these elements, either on an exclusive 
or non-exclusive basis. Licensing agreements typically do not allow for the unrestricted 
use  of  the  licensed  rights  but  come  with  explicit  terms  and  conditions.  Contractual 
restrictions in licensing agreements are therefore not the exception but the norm in digital 
content markets. 

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III.  MAIN COMPETITION CONCERNS 

3.1 

CONSUMER GOODS 

(23)  The  main  competition  concerns  highlighted  by  the  e-commerce  sector  inquiry  can  be 

summarised as follows. 

3.1.1  Selective distribution 

(24)  The  current  Vertical  Block  Exemption  Regulation  (‘VBER’)  exempts  qualitative  and 
quantitative  selective  distribution  agreements  from  the  prohibition  under  Article 101(1) 
TFEU,  provided  that  the  market  share  of  both  the  supplier  and  the  buyer  each  do  not 
exceed  30 %.  This  exemption  applies  regardless  of  the  nature  of  the product  concerned 
and  regardless  of  the  nature  of  the  selection  criteria,  provided  they  do  not  contain 
hardcore restrictions13 (as listed in Article 4 of that Regulation). 

(25)  The  results  of  the  e-commerce  sector  inquiry  do  not  call  for  a  change  to  the 
Commission’s  general  approach  to  qualitative  and  quantitative  selective  distribution  as 
reflected in the VBER. Selective distribution may, however, facilitate the implementation 
and  monitoring  of  certain  vertical  restraints  that  may  raise  competition  concerns  and 
require scrutiny. 

(26)  For  example,  more  than  half  of  the  manufacturers  require  in  their  selective  distribution 
agreements, for at least part of their products, the operation of a brick and mortar shop by 
retailers,  thereby  excluding  pure  online  players  from  the  distribution  of  the  concerned 
products. 

(27)  Most of these brick and mortar requirements seek to promote competition on distribution 
quality.  At  the  same  time,  certain  brick  and  mortar  requirements  essentially  aim  at 
excluding pure online players from the selective distribution network, without enhancing 
competition  on  other  parameters  than  price,  such  as  the  quality  of  distribution  and/or 
brand  image.  As  a  result,  while  acknowledging  that  brick  and  mortar  requirements  are 
generally covered by the VBER,14 certain requirements to operate at least one brick and 
mortar  shop  without  any  apparent  link  to  distribution  quality  and/or  other  potential 
efficiencies may require further scrutiny in individual cases. 

3.1.2  Restrictions on selling and advertising online 

(28)  The  results  of  the  e-commerce  sector  inquiry  provide  an  overview  of  the  prevalence  of 

certain vertical restraints faced by online retailers. 

13 Where such hardcore restrictions are present in vertical agreements, the agreements are presumed to fall within 
Article 101(1) TFEU and are unlikely to fulfil the conditions of Article 101(3) TFEU. However, companies are not 
prevented from claiming efficiencies and demonstrating that the conditions of Article 101(3) TFEU are fulfilled 
(see paragraph 47 of the Guidelines on Vertical Restraints, OJ C 130, 19.5.2010, p. 1,‘Vertical Guidelines’). 
14 As set out in paragraph 176 of the Vertical Guidelines, the benefit of the VBER can be withdrawn where the 
characteristics of the product are such that the requirement to operate a brick and mortar shop does not bring about 
sufficient efficiency enhancing effects to counterbalance a significant reduction in intra-brand competition. Where 
appreciable anti-competitive effects occur, the benefit of the VBER is likely to be withdrawn. 

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Proportion of retailers with contractual restrictions, per type of restriction 

(i)  Pricing restrictions/recommendations 

(29)  Pricing restrictions/recommendations are by far the most widespread restrictions reported 

by retailers. 

(30)  Under the EU competition rules, manufacturers should not take any actions that interfere 
with  the  freedom  of  retailers  to  set  their  final  prices  to  customers  by  making  a 
recommended  retail  price  or  a  maximum  retail  price  equivalent  to  a  minimum  or  fixed 
price. Agreements that establish a minimum or fixed resale price or price range (‘resale 
price  maintenance’)  are  a  restriction  of  competition  by  object  under  Article  101(1) 
TFEU15 and a hardcore restriction within the meaning of Article 4(a) of the VBER. 

(31)  At the same time,  the practice  of  recommending a  resale price or requiring a retailer to 
respect a maximum resale price is exempted by the VBER provided that the market share 
thresholds set out in that Regulation are not exceeded and that the recommendation does 
not  amount  to  a  minimum  or  fixed  resale  price  as  a  result  of  threats,  pressure  or 
incentives.16  Price  recommendations  are  considered  important  to  communicate  quality 
and brand position. 

(32)  Various  comments  from  retailers  point  to  recourse  to  resale  price  maintenance  by 

manufacturers. 

(33)  Both manufacturers and retailers frequently monitor online retail prices, often by  means 
of pricing software. As a result, it is now easier to detect deviations from manufacturers’ 
pricing  recommendations.  This  could  allow  manufacturers  to  retaliate  against  retailers 
that deviate from the desired price level. It may even limit the incentives for retailers to 
deviate  from  such  pricing  recommendations  in  the  first  place.  Increased  online  price 
transparency  may  also  facilitate  or  strengthen  collusion  between  retailers  by  making  it 

15  See  for  example  judgment  in  SPRL  Louis  Erauw-Jacquery  v  La  Hesbignonne  SC,  27/87,  EU:C:1988:183, 
paragraph 15. 
16 See paragraph 226 of the Vertical Guidelines. 

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easier to detect deviations from the collusive agreement. This, in turn, could reduce the 
incentives for retailers to deviate from the collusive price by limiting the expected gains 
from such deviation. 

(34)  Several  respondents  to  the  e-commerce  sector  inquiry,  including  in  the  public 
consultation, criticised the current EU rules on dual pricing. Manufacturers are generally 
prohibited  from  charging  different  wholesale  prices  for  the  same  products  to  the  same 
retailer (hybrid retailer) depending on whether the products are intended to be sold online 
or offline.17 

(35)  Dual pricing is often viewed by stakeholders as a potentially efficient tool to address free-
riding.  They  argue  that  dual  pricing  may  help  to  create  a  level  playing  field  between 
online and offline sales, taking into consideration differences in the costs of investments. 
Comments  in  relation  to  dual  pricing  point  to  the  need  for  a  more  flexible  approach  to 
performance-related  wholesale  pricing.  A  more  flexible  approach  would  allow  for 
differentiation between sales channels, depending on the actual sales efforts, and would 
encourage hybrid retailers to support investments in more costly (typically offline), value 
added services. 

(36)  At the same time, some comments also reveal a potential misunderstanding of the rules 
on  pricing  practices  where  the  manufacturer  sets  a  different  (wholesale)  price  for  the 
same  product  to  the  same  (hybrid)  retailer,  depending  on  the  resale  channel  through 
which the product is to be sold (offline or online) and practices where the manufacturer 
sets a different (wholesale) price for the same product to different retailers. 

(37)  The Final Report clarifies that charging different (wholesale) prices to different retailers 
is generally considered a normal part of the competitive process.18 Dual pricing for one 
and the same (hybrid) retailer is generally considered as a hardcore restriction under the 
VBER.  Moreover,  the  Final  Report  points  to  the  possibility  of  exempting  dual  pricing 
agreements  under  Article  101(3)  TFEU  on  an  individual  basis,19  for  example  where  a 
dual pricing arrangement would be indispensable to address free-riding. 

(ii)  Restrictions on selling on online marketplaces 

(38)  The question on the extent to which restrictions limiting the ability of retailers to sell via 
online  marketplaces  (‘marketplace  restrictions’  or  ‘platform  bans’)  may  raise  concerns 
under the EU competition rules has attracted significant attention in recent years in some 
Member States. A reference for a preliminary ruling on this question is currently pending 
before the Court  of Justice.20 One of  the aims of  the e-commerce  sector inquiry  was to 

17 See paragraph 52(d) of the Vertical Guidelines. The Vertical Guidelines however allow for a fixed fee to support 
actual sales efforts in the offline (or online) channel. 
18  Unless  different  wholesale  prices  to  (online)  retailers  have  the  object  of  restricting  exports  or  partitioning 
markets.  
19 See paragraph 64 of the Vertical Guidelines. 
20 In Case C-230/16 Coty Germany GmbH v Parfümerie Akzente GmbH (‘Coty Germany’), the Higher Regional 
Court of Frankfurt am Main has essentially asked the Court of Justice whether a ban on using third party platforms 

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better  understand  the  prevalence  and  characteristics  of  marketplace  restrictions  and  the 
importance of marketplaces as a sales channel for retailers and manufacturers. 

(39)  The results of the e-commerce sector inquiry show a rather scattered picture: 

(i)  More  than  90 %  of  respondent  retailers  use  their  own  online  shop  when 
selling online. 31 % of respondent retailers sell via their online shops as well 
as on marketplaces, while only 4 % of the respondent retailers sell online only 
via  marketplaces.  While  own  online  shops  therefore  remain  the  most 
important  online  sales  channel  for  retailers,  the  use  of  marketplaces  has 
increased over time. 

(ii)  Marketplaces  play  a  more  important  role  in  some  Member  States  such  as 
Germany  (62 %  of  the  respondent  retailers  use  marketplaces),  the  United 
Kingdom (43 %) and Poland (36 %) compared to other Member States such 
as (Italy 13 %) and Belgium (4%). 

(iii)  Marketplaces are more important as a sales channel for smaller and medium-
sized  retailers  while  they  are  of  lesser  importance  for  larger  retailers.  The 
results show that smaller retailers tend to realise a larger proportion of their 
sales via marketplaces than the larger retailers. 

(40)  18 % of retailers report having agreements with their suppliers that contain marketplace 
restrictions.  The  Member  States  with  the  highest  proportion  of  retailers  experiencing 
marketplace restrictions are Germany (32 %) and France (21 %). Marketplace restrictions 
encountered in the e-commerce sector inquiry range from absolute bans to restrictions on 
selling on marketplaces that do not fulfil certain quality criteria. Restrictions on the use of 
marketplaces  are  mostly  found  in  selective  distribution  agreements.  They  typically 
concern branded goods, but are not limited to luxury, complex or technical goods. 

(41)  The information obtained in the e-commerce sector inquiry indicates that the importance 
of  marketplaces  as  a  sales  channel  varies  significantly  depending  on  the  size  of  the 
retailers, the Member States concerned, and the product categories concerned. As a result, 
the  findings  indicate  that  marketplace  bans  do  not  generally  amount  to  a  de  facto 
prohibition on selling online or restrict the effective use of the internet as a sales channel 
irrespective of the markets concerned. The findings of the sector inquiry also indicate that 
the  potential  justification  and  efficiencies  reported  by  manufacturers  differ  from  one 
product to another. 

(42)  As  a  result,  without  prejudice  to  the  pending  preliminary  reference,  the  findings  of  the 
sector  inquiry  indicate  that  (absolute)  marketplace  bans  should  not  be  considered  as 
hardcore restrictions within the meaning of Article 4(b) and Article 4(c) of the VBER. 

in a selective distribution agreement may be compatible with Article 101(1) TFEU and whether such a restriction 
constitutes a hardcore restriction within the meaning of Article 4(b) and/or Article 4(c) of the VBER. 

11 

 
                                                                                                                                                                                             
(43)  This does not mean that absolute marketplace bans are generally compatible with the EU 
competition  rules.  The  Commission  or  a  national  competition  authority  may  decide  to 
withdraw  the  protection  of  the  VBER  in  particular  cases  when  justified  by  the  market 
situation.21 

(iii)  Geographic restrictions to sell and advertise online 

(44)  Cross-border e-commerce has the potential of contributing to the integration of the EU’s 
internal  market,  as  consumers  may  find  it  easier  to  purchase  products  from  another 
Member State online, rather than cross the border and buy products in brick and mortar 
shops. 

(45)  However,  it  is  frequently  not  possible  for  consumers  to  make  cross-border  online 
purchases  because  retailers refuse to  sell to  customers  abroad,  for  example  by  blocking 
access to websites, re-routing customers to websites targeting other Member States or by 
simply  refusing  to  deliver  cross-border  or  to  accept  cross-border  payments.  These 
measures  are  known  as  ‘geo-blocking’.  Geo-blocking  can  be  distinguished  from  ‘geo-
filtering’ measures, i.e. commercial practices whereby online retailers allow consumers to 
access  and  purchase  goods  or  services  cross-border,  but  offer  different  terms  and/or 
conditions if the customer is in a different Member State. 

(46)  The results of the e-commerce sector inquiry indicate that most manufacturers distribute 
their products in at least 21 Member States, while only a limited proportion (4 %) supply 
them in only one Member State. 

(47)  While  products  are  typically  sold  throughout  the  EU,  36 %  of  respondent  retailers 
reported  that  they  do  not  sell  cross-border  for  at  least  one  of  the  relevant  product 
categories in which they are active. 38 % of retailers collect information on the location 
of  the  customer  in  order  to  implement  geo-blocking  measures.  Geo-blocking  most 
commonly  takes  the  form  of  refusal  to  deliver  goods  to  customers  in  other  Member 
States, followed by refusals to accept payments from such customers. 

(48)  Geo-blocking  measures  based  on  unilateral  decisions  by  non-dominant  companies  fall 
outside  the  scope  of  Article  101  TFEU,  whereas  geo-blocking  measures  based  on 
agreements  or  concerted  practices  between  distinct  undertakings  may  be  caught  under 
Article 101 TFEU. The European Courts have on several occasions held that agreements 
or  concerted  practices  which  are  aimed  at  partitioning  markets  according  to  national 
borders  or  which  make  the  interpenetration  of  national  markets  more  difficult,  in 
particular those which are aimed at preventing or restricting parallel exports, have as their 
object the restriction of competition pursuant to Article 101(1) TFEU.22  

21 See Article 29 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules 
on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 4.1.2003, p. 1. 
22 See, for example, judgment in Établissements Consten S.à.R.L. and Grundig-Verkaufs-GmbH v Commission of 
the  European  Economic  Community,  56/64  and  58/64  and  judgment  in  Football  Association  Premier  League 
and Others, C-403/08 and C-429/08, EU:C:2011:631, paragraph 139. 

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(49)  The  majority  of  geo-blocking  measures  in  relation  to  consumer  goods  result  from 
unilateral  business  decisions  of  retailers  not  to  sell  cross-border.  However,  more  than 
11 % of retailers indicated that they have contractual cross-border sales restrictions in at 
least one product category in which they are active. 

(50)  Certain of these territorial restrictions may raise competition concerns. 

(51)  First, contractual restrictions of the territory into which a distributor may sell the relevant 
goods  are  generally  considered  a  hardcore  restriction  of  competition  under  the  VBER, 
with only a limited number of exceptions.23 

(52)  The  VBER  distinguishes  in  this  context  between  active  and  passive  sales  restrictions.24 
Active  sales  restrictions  are  allowed  insofar  as  they  concern  sales  into  an  exclusive 
territory  reserved  for  the  supplier  or  allocated  by  the  supplier  to  another  distributor, 
whereas passive sales restrictions provide absolute territorial protection and are normally 
unlawful.25 Within a selective distribution system, neither active nor passive sales to end-
users may be restricted. 

(53)  Second,  territorial  restrictions  limiting  retailers’  ability  to  actively  and  passively  sell  to 
customers  outside their Member  State  may  also  raise  concerns.  For  example,  certain  of 
the  reported  active  sales  restrictions  are  not  limited  to  territories  that  have  been 
exclusively allocated to other distributors or reserved for the supplier. Moreover, certain 
suppliers  operating  a  selective  distribution  system  across  several  Member  States  are 
reported to have limited the ability of authorised retailers to sell to all customers within 
the territory where the selective distribution system is applied. 

3.1.3  The use of data in e-commerce 

(54)  The  e-commerce  sector  inquiry  did  not  focus  in  particular  on  data-related  competition 
concerns. However, its findings confirm that the collection, processing and use of large 
amounts of data (often referred to as ‘big data’26) is becoming increasingly important for 
e-commerce.  

(55)  On the one  hand,  data  can be a valuable asset  and analysing large volumes  of data can 
bring  substantial  benefits  in  the  form  of  better  products  and  services,  and  can  allow 
companies to become more efficient. 

23 See Article 4(b) VBER. 
24  ‘Active  sales’  means  actively  approaching  individual  customers  by,  for  instance  direct  mail,  including  the 
sending  of  unsolicited  e-mails,  or  visits;  or  actively  approaching  a  specific  customer  group  or  customers  in  a 
specific territory through advertisement in media, on the internet or other promotions specifically targeted at that 
customer  group  or  targeted  at  customers  in  that  territory.  Conversely,  ‘passive  sales’  generally  mean  sales  in 
response to unsolicited requests from individual customers including delivery of goods to such customers. 
25   They may only in exceptional circumstances be compatible with Article 101 TFEU; see for example paragraph 
61 of the Vertical Guidelines.  
26 Such ‘big data’ may depending on the circumstances be subject to the application of Regulation (EU) 2016/679 
of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to 
the  processing  of  personal  data  and  on  the  free  movement  of  such  data,  and  repealing  Directive  95/46/EC 
(‘General Data Protection Regulation’), OJ L 119, 4.5.2016, p. 1–88. 

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(56)  On  the  other  hand,  the  results  of  the  e-commerce  sector  inquiry  confirm  the  increased 
relevance  of  data  and  point  to  possible  competition  concerns  relating  to  data-collection 
and usage. For example, the exchange of competitively sensitive data, such as on prices 
and  sold  quantities,  between  marketplaces  and third  party  sellers  or  manufacturers with 
own shops and retailers may lead to competition concerns where the same players are in 
direct competition for the sale of certain products or services. 

3.2 

DIGITAL CONTENT 

(57)  The results of the e-commerce sector inquiry confirm that one of the key determinants of 
competition  in  digital  content  markets  is  access  to  licensing  rights  to  content,  and  in 
particular to attractive content. The availability of online rights is largely determined by 
the decision of a given right holder on whether to license them and, if relevant, on their 
scope, as defined in the licensing agreements. 

(58)  Licensing  agreements  between  right  holders  and  digital  content  providers  use  complex 
definitions to precisely define the scope of rights. It is also common for rights to be split 
up  in  the  same  or  in  different  licensing  agreements,  particularly  in  terms  of  their 
technological, temporal and territorial scope. 

(59)  Exclusivity  is  widely  used  in  relation  to  the  licensed  rights  since  access  to  exclusive 
content  increases  the  attractiveness  of  the  offer  of  digital  content  providers.  The 
Commission considers that the use of exclusivity is not problematic in and of itself. 

(60)  The  main  competition  concerns  identified  in  the  e-commerce  sector  inquiry  relate  to 

certain contractual restrictions in licensing agreements. 

(i) 

Scope of licensed rights 

(61)  Right holders tend to split up the rights into several components, and license part or all of 
them to different content providers in different Member States. The scope of the licensed 
rights,  as  determined  by  the  licensing  agreement,  might  vary  as  regards:  (i)  the 
technology used to distribute and access content, in terms of transmission, reception and 
usage technologies; (ii) the product release and/or the duration of the licensed rights; and 
(iii) the territorial scope. 

(62)  Bundling  technology  rights  is  also  common.  Rights  for  online  transmission  of  digital 
content  are  to  a  large  extent  licensed  together  with  the  rights  for  other  transmission 
technologies.  Agreements  submitted  by  digital  content  providers  indicate  that  online 
rights in particular are most often licensed together with rights for mobile transmission, 
terrestrial transmission and satellite transmission. 

(63)  Bundling  rights  for  online  transmission  with  rights  in  other  transmission  technologies 
protects exclusive rights to a digital content product and thus confers to a single content 
provider  the  possibility  to  use  them  in  relation  to  the  same  product.  Any  alternative 
allocation  of  rights  would  imply  that  different  content  providers  can  offer  the  same 
product. 

14 

 
(64)  However,  bundling  online  rights  may  hinder  existing  operators  and  new  entrants  from 
competing and developing new innovative services, which in turn may reduce consumer 
choice. Bundling may be of particular concern when it leads to a restriction of output, in 
situations where online rights have been acquired but are not, or are only partly, exploited 
by the licensee. 

(ii)  Territorial restrictions and geo-blocking 

(65)  Online  rights  are  to  a  large  extent  licensed  on  a  national  basis  or  for  the  territory  of  a 
limited number of Member States which share a common language. This is particularly 
prevalent in relation to content types  that may contain premium products, such as sport 
(60 %), films (60 %) and fiction TV (56 %). 

(66)  Digital content providers often use geo-blocking measures.27 The vast majority of digital 
content providers (68 %) restrict access to their online digital content services from other 
Member  States,  and  59 %  of  them  do  so  because  of  contractual  restrictions  in  the 
agreements  with  right  holders.  Geo-blocking  is  most  prevalent  in  agreements  for  TV 
series (74 %), films (66 %) and sport events (63 %). It is less prevalent in agreements for 
other digital content categories such as music (57 %), children’s TV (55 %), non-fiction 
TV (51 %) and news (24 %). 

(67)  There are, however, differences across Member States and content sectors when it comes 
to the prevalence of geo-blocking. In some Member States only a minority of respondents 
use  geo-blocking,  while  in  others  the  vast  majority  of  respondents  do  so.  Certain 
operators  appear  to  use  geo-blocking  more  than  others.  This  leads  to  differences  in  the 
extent to which geo-blocking is implemented in the EU. 

(iii)  Duration of licensing agreements 

(68)  The  duration  of  licensing  agreements  is,  together  with  the  technological  and  territorial 
scope  of  the  agreement,  a  key  component  of  rights  licensing.  Relatively  long  contract 
durations are common, with more than 50 % of agreements lasting more than 3 years and 
23 % of them more than 5 years. Contractual relationships tend to last even longer, with 
average  durations  of  more  than  10  or  even  20  years,  possibly  as  a  result  of  clauses 
favouring their extension. 

(69)  The fact that contracting parties often decide to contract again or renew or extend existing 
licensing agreements instead of concluding contracts with new parties is likely to make it 
more difficult for new players to enter the market. It may also make it harder for existing 
operators  to  expand  their  current  commercial  activities,  for  example  into  other 
transmission  means  such  as  online,  or  into  other  geographical  markets.  Certain 
contractual  clauses  may  facilitate  the  extension  of  an  existing  exclusive  licensing 
agreement  such  as  automatic  renewal,  first  negotiation,  first  refusal,  price  matching  or 
similar clauses. 

27 See paragraph 49 above. 

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(iv)  Payment structures and metrics 

(70)  While  the  payment  structures  for  non-premium  content  (such  as  news  and  non-fiction 
TV) vary greatly, right holders licensing attractive content tend to make use of payment 
structures  such  as  advance  payments,  minimum  guarantees  and  fixed  fees  per  product 
irrespective of the number of users. These practices implicitly privilege more established 
content  providers,  which  are  typically  able  to  commit  to  greater  levels  of  investments 
upfront. 

(71)  The  results  of  the  e-commerce  sector  inquiry  raise  the  question  of  whether  certain 
licensing  practices  may  make  it  more  difficult  for  new  online  business  models  and 
services to emerge. It also raises the issue of whether these practices make it harder for 
new  or  smaller  players  to  enter  existing  markets  or  to  grow  and  expand  their  activities 
into other markets, and whether these licensing practices are justified. 

(72)  Any  assessment  of  certain  licensing  practices  under  the  EU  competition  rules  has  to 
consider the characteristics of the content industry, the legal and economic context of the 
licensing  practice  and/or  the  characteristics  of  the  relevant  product  and  geographic 
markets. 

IV. 

POLICY CONCLUSIONS OF THE E-COMMERCE SECTOR INQUIRY 

(73)  With  the  growth  of  e-commerce,  certain  business  practices  that  raise  competition 
concerns  have  emerged  and  others  have  evolved.  It  is  important  to  avoid  diverging 
interpretations  of  the  EU  competition  rules  with  regard  to  business  practices  in  e-
commerce  markets  which  may,  in  turn,  create  serious  obstacles  for  companies  to  being 
active, in  a compliant manner, in  multiple Member States, to  the detriment of a Digital 
Single Market. 

(74)  The  VBER  expires  in  May  2022,  and  the  results  of  the  e-commerce  sector  inquiry 
confirm that there is no need to anticipate its review. The large amount of data and related 
information  gathered  in  the  course  of  the  e-commerce  sector  inquiry  and  any  guidance 
that  results  from  follow-up  enforcement  action  will  however  serve  as  an  input  for  that 
future review process. 

(75)  In  the  light  of  the  results  of  the  e-commerce  sector  inquiry,  the  Commission  will 

therefore: 

(i) 

target  enforcement  of  the  EU  competition  rules  at  the  most  widespread  
business practices that have emerged or evolved as a result of the growth of e-
commerce and that may negatively impact competition and cross-border trade 
and hence the functioning of a Digital Single Market; 

(ii) 

broaden  the  dialogue  with  national  competition  authorities  within  the 
European  competition  network  on  e-commerce-related  enforcement  to 
contribute  to  a  consistent  application  of  the  EU  competition  rules  as 
regards e-commerce-related business practices. 

16