European Commission Enacts New Online Sales Rules

The European Commission has enacted highly anticipated antitrust rules regulating online sales.

The rules clamp down on what the EC considers to be permissive distribution agreements that have arisen on occasion between goods manufacturers and resellers, and update regulations adopted prior to the massive growth in the last 10 years in commerce over the Internet.

The new rules are primarily aimed at facilitating online sales, which play a critical role in generating economic growth and integration across borders.  The rules allow manufacturers a relatively free hand in deciding their methods of selling goods in the European market as long as they have less than a 30 percent market share.  However, fixing resale prices remains restricted as harmful to competition.

The revised rules are a result of several influences, according to press reports, that included heavy lobbying from luxury and online goods companies.

Luxury goods manufacturers in particular have been concerned with the cost of maintaining their brand image, and the EC took into account some of their arguments in fashioning the updated regulations.  For instance, some luxury goods manufacturers will be allowed to insist that their goods be sold online only by retailers that also have “bricks and mortar” stores.  Thus, purely online retailers such as Amazon and eBay would be unable to sell these goods directly.

Some industry observers have commented that this lobbying led to a more “watered down” version of the antitrust sales regulations that would have resulted otherwise.  Also, the new EU-wide rules will open up online sales by ensuring that manufacturers cannot discriminate against online shops when setting up their distribution networks.

Tagged in: Antitrust Enforcement, Price Fixing,