Author: Luis Blanquez
In this article we describe EU investigations and enforcement actions that arose from the EC’s final e-commerce market study. While the final report itself offers companies doing business in the EU helpful guidance, the Commission’s actual conduct is perhaps an even better indicator of how the EC will implement what it learned.
Since the European Commission published its Final Report, it has opened investigation of about 20 companies.
Below is a summary of the relevant cases that the EC recently opened. We expect additional cases in the future in this area, both at EU and national level.
On February 2, 2017, the EC opened an investigation to analyze bilateral agreements between Valve Corporation, owner of the Steam game distribution platform, and five PC video game publishers: Bandai Namco, Capcom, Focus Home, Koch Media and ZeniMax.
This investigation concerns geo-blocking practices, where companies prevent consumers from purchasing digital content, in this case PC video games, because of the consumer’s location or country of residence. After the purchase of certain PC video games, users need to confirm that their copy of the game is not pirated to be able to play it. This is done with an activation key.
The investigation focuses on whether such agreements require the use of activation keys for the purpose of geo-blocking.
Clothing Company, Guess
On June 6, 2017, the EC opened an investigation against clothing manufacturer Guess. The EC is analyzing whether Guess’s distribution agreements impose cross-border sales restrictions on (i) retailers making online sales to consumers in other Member States, (ii) or wholesalers, selling to retailers in other Member States.
Interestingly, as a result, other clothing manufacturers such as Mango, Oysho and Pull&Bear have now started to review and revise their distribution agreements. Other companies, such as coffee machine manufacturer De Longhi, and photo equipment manufacturer Manfrotto, are doing the same (See here).
Hotel Pricing Discrimination
On February 2, 2017, the EC opened another investigation into hotel accommodation agreements between the largest European tour operators on the one hand: Kuoni, REWE, Thomas Cook and TUI, and Meliá Hotels on the other hand.
The EC encourages hotels to develop and introduce innovative pricing mechanisms to maximize room usage. But the EC is concerned that these agreements may contain clauses that discriminate among customers based on their nationality or country of residence. As a result, customers may not be able to see the full hotel availability, or book hotel rooms at the best prices, simply because of the consumer’s nationality or place of residence.
Licensed Merchandising Products
On June 14, 2017, the EC opened more investigations into the licensing and distribution practices of Nike, Sanrio and Universal studios. These three companies license intellectual property rights to manufacturers of merchandising products such as the Fútbol Club Barcelona, Hello Kitty and Minions merchandise, respectively.
The EC is concerned that these companies, in their role as licensors of rights for merchandising products, may have restricted the ability of their licensees to sell licensed merchandise cross-border and online.
Resale Price Maintenance cases
Consumer electronics manufacturers
The EC has opened another investigation against Asus, Denon & Marantz, Philips and Pioneer. In this case, the EC is concerned that the companies involved might be restricting the ability of online retailers to set their own prices for widely used consumer electronics products such as household appliances, notebooks and hi-fi products.
This is the first resale price maintenance case that the EC has initiated in a long time. Instead, the Member States themselves have scrutinized resale price maintenance at national level during the last decade.
Germany, for example, has recently published a new guidance note on resale price maintenance. The Competition and Markets Authority (“CMA”) in the UK also published additional guidance on these types of pricing agreements in the form of an open letter, a film, a 60-second summary, and case studies.
Indeed, the CMA recently fined National Lighting Company (NLC), a light fittings supplier, £2.7 million for restricting online prices. They also sent out warning letters to others in the industry. In 2016, the CMA also fined two other online companies for resale price maintenance practices: Ultra Finishing Limited (“Ultra”) in the Bathroom fittings sector and ITW Limited in the commercial refrigeration sector.