EU Investigating eCommerce Trade Practices

The European Union will spend a year studying why online shoppers in the 28-nation Euro zone don’t often buy products outside their own countries in what’s supposed to be a single digital market, the EU’s competition commissioner announced on Thursday (March 26).

The inquiry, which is slated to begin in May and run until mid-2016, will focus on “geoblocking,” the common eCommerce practice of blocking or redirecting customers in one country from buying from online retailers in another. That will put Amazon, Apple, Google and other U.S. tech giants who dominate eCommerce in Europe in investigators’ crosshairs.

“I, for one, cannot understand why I can watch my favorite Danish channels on my tablet in Copenhagen — a service I paid for — but I can’t when I’m in Brussels,” EU Competition Commissioner Margrethe Vestager said, according to the AFP news service. “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?”

Half of all Euro zone consumers shop online, but only 15 percent buy from eCommerce sites outside of their own country, according to the European Commission. Reasons given by consumers include language issues, differing regulatory requirements such as labeling, and high delivery costs as well as anticompetitive behavior and different prices charged for the same goods in different countries, Reuters reported.

That suggests the inquiry will go deeper than just big eCommerce players, many of whom — like individual online retailers — are limited in who they can sell to in agreements dictated by suppliers.

The EU’s broader investigation is likely to help smaller eCommerce merchants who are under the thumb of suppliers and fear retribution if they complain, Leon Moelenberg, a senior policy officer at industry group ECommerce Europe, told Bloomberg News. “It’s hard for them to go to a competition authority to say this company is bothering me with dual pricing, this one doesn’t allow me to sell products online,” he said. “If you protest against them you aren’t allowed to sell their products at all.”

Another source of price differences between countries — wildly varying payment card transaction fees — is already on the way out. This month the European Parliament voted to cap those fees, which ran as high as 1.8 percent in 2013, at 0.2 percent for debit and 0.3 percent for credit transactions.

The EU will also look at digital content suppliers who geoblock websites, music, e-books, video and movies coming from another EU country, said Andrus Ansip, the EU’s VP for digital issues. Broadcasters regularly limit sports events or movies to viewers in their own countries because of licensing restrictions, and online digital streaming companies like Apple and Netflix face the same restrictions. Warner Brothers, 21st Century Fox and other film studios are currently targets of a separate EU probe over those licensing issues.

But while U.S. eCommerce companies won’t be the only targets of the new EU inquiry, some European business leaders clearly want them to be the main focus. Deutsche Telekom chairman Timotheus Höttges, who also spoke at the event in Berlin where Vestager announced the EU geoblocking inquiry, launched a lengthy attack on U.S. Internet companies, The Wall Street Journal reported. Höttges complained that Google, Amazon, Apple and Facebook monopolize customers’ data, operate “closed systems” and — in Amazon’s case — pursue “only size” instead of profit.


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