HomeInsightsCompetition and Markets Authority responds to European Commission’s E-commerce Sector Inquiry

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Given the importance of the online commerce sector to the UK and the EU economy, the CMA says that effective enforcement of competition laws is “vital to ensure that competition in online markets operates effectively and to the benefit of consumers”.

In the CMA’s view, the existing principles-based competition law framework is sufficient to tackle competition concerns relating to online commerce, and is capable of being applied in the new market contexts created by the digital economy. Nonetheless, it says, it is important for competition authorities to continue to seek to understand better the way in which competition operates, in the online sphere and the competitive impact of particular agreements or conduct in those markets.

Accordingly, the CMA welcomes the insights that the Commission’s Preliminary (and subsequent final) Report provides that aid such assessment. It also agrees with the Commission that each case must be considered on its own merits. Where enforcement is necessary, the CMA says, “it should be timely, well-targeted and expeditious”.

In particular, in the CMA’s view, online vertical restraints can be analysed within the current legal framework of Articles 101(1) and 101(3) of the Treaty on the Functioning of the European Union and the Vertical Agreements Block Exemption Regulation (330/2010/EU), as interpreted together with the Verticals Guidelines. The CMA agrees with the Commission that the broad principles set out in the Regulation, namely that provided that the vertical agreement/concerted practice does not include a hard core or excluded restriction and provided that market share thresholds are not exceeded the restrictions will be automatically exempted, remain appropriate in the current online economy.

However, the CMA says, given the often highly specific nature and competitive impact of particular vertical restraints (both online and offline), the CMA considers on a case by case basis whether to withdraw the benefit of the Regulations if appreciable anti-competitive effects occur and particular practices are not compatible with Article 101(3). Complex issues of law and economics are engaged in such analysis, the CMA says, and it assesses the appropriate response in each case based on legal and economic advice. To read the CMA’s response in full, click here.