EU probes e-commerce in bid to wipe out competition barriers

A European Union watchdog has found that some companies are restricting cross-border e-commerce. Image: Thinkstock.

After four years probing Google's grip on the Internet search market, European Union antitrust regulators set their sights on online barriers that thwart EU shoppers using websites outside their country.

An industry-wide probe into online sales may trigger more competition cases, the European Commission said Thursday.

The EU watchdog said "some companies may be taking measures to restrict cross-border e-commerce" through contracts or technical measures.

"I can go to Italy and buy a pair of shoes but I am unable to do that from my home," EU Competition Commissioner Margrethe Vestager said at a press conference in Berlin.

"If I try to buy on the website I may be redirected" because online traders often discriminate on the basis of customers' residence or Internet address, she said.

Rebooting Europe's digital economy is a focus for regulators concerned that Europeans are failing to seize opportunities to buy, sell or view content across the 28-nation bloc.

Vestager says she'll seek information from broadcasters, manufacturers, online retailers and online platforms about possible legal and technical barriers to wider EU trade.

The EU's e-commerce probe adds to its continuing investigation of Google's search engine, which included complaints from shopping-comparison websites.

There were separate raids on Samsung Electronics, Royal Philips and Metro's Media-Saturn in 2013 and a Metro unit earlier this month over the online sale of consumer electronics.

An industry-wide inquiry is very helpful to smaller web retailers who "are not very willing to point the finger at their suppliers to say they don't like what they do" because they fear retribution, said Leon Moelenberg, a senior policy officer at ECommerce Europe, an industry group, in a phone interview.

"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," Moelenberg said.

"If you protest against them you aren't allowed to sell their products at all."

The EU will also examine limits barring digital content from being shared more widely.

Andrus Ansip, the EU's vice- president for digital issues, said Wednesday that he wanted to abolish so-called geo-blocking of website content across Europe where websites block browsers from another country.

Broadcasters often limit videos of sports or films to viewers in their own nation due to licensing restrictions.

21st Century Fox Inc., Time Warner Inc.'s Warner Brothers unit and other studios are being probed by the EU over licensing deals with pay-TV broadcasters that limit such access to content.

Online content services, such as Apple's iTunes store or Netflix's video streaming, must usually seek national licenses for music or film that can prevent them offering the same catalogue across Europe.

Vestager said Thursday that competition officials are examining geo-blocking in the video-games industry.

The antitrust inquiry adds muscle to national probes into pricing for online hotel reservations and sporting goods that may restrict consumer choice.

The EU previously struck a deal with Apple to cut British prices for iTunes downloads and German and British authorities got Amazon.com to lift restrictions on sales via its online platform.

Both Apple and Amazon are separately facing EU state aid probes into tax arrangements with Ireland and Luxembourg that Vestager has promised to wrap up in the coming months.

The EU also wants to examine whether it needs to draft legislation or other measures to tackle problems with online platforms, it said on Wednesday.

While the EU says low numbers of Europeans shopping from sites based in another country may be problematic, "retailers need to make choices about where they make investments" as serving customers in several nations can add costs, said Jamie Merriman, an analyst at Sanford C Bernstein & Co.

Eurocommerce, a retailers' group, says different national requirements for labelling, safety and consumer rights can also prevent online sellers operating across Europe.

As with the Google case, no one should expect a quick conclusion to the probe.

Preliminary results from the inquiry are due by mid-2016, Vestager said.

EU commissioners will be asked to approve the start of the antitrust inquiry in the coming weeks.

- Bloomberg