I was delighted today to join a panel at the GCR live Brussels 2017 conference to discuss competition law in online markets. With the opinion of Advocate General Wahl due in the Coty appeal case soon, it a good time to be thinking about restrictions on online sales, and in particular restrictions on distribution via online market places such as Ebay, Amazon, and price comparison sites.

At present EU case law is in a muddle. German courts have found bans on selling ASICs trainers on Ebay and Amazon illegal, whereas the European Commission agrees with Coty that such a restriction is not necessarily problematic. The EU courts will decide soon.

I argued today that concerns about online restrictions stand on two pillars in EU competition law.

– first, there is a competition concern – that restrictions might limit competition in the downstream market, particularly where the internet provides an innovative and more efficient channel for distribution;

– second, there is a single market concern – it’s worth remembering that the vertical guidelines are explicit about the special status of the internet as an enabler of the single market, and that “limitations on the possibilities for consumers to purchase goods or services in any Member State they may choose” is a theory of harm in its own right.

 The prohibition of an outright ban on internet sales in EU competition law stands on both these pillars. This is what makes the marketplace ban issue so interesting.

Why? Because there isn’t really a strong case to suggest that online marketplaces do a better job at enabling cross-border sales and single market integration. Both a distributor owned website and an online marketplace are reachable from across the whole EU.

The question then is whether marketplaces are worthy of special protection based on the competition pillar alone? Well, I can think of two special things about online marketplaces compared to other forms of online distribution:

– first, they are potentially an enabler of greater inter-brand competition (because they bring together multiple competing brands on a single platform); and

– second, they potentially lower barriers to entry in distribution (and much has been made by the marketplaces themselves on how they help SME distributors).

My question is whether online marketplaces end up being protected by the same kind of caution that has resulted in the outright ban of resale price maintenance (RPM)? Remember that the main underlying economic justification for banning RPM is to ultimately to make sure that brand owners themselves face the maximum amount of competition, in recognition of the role that disruptive distribution channels can play in making that happen.

We might find out soon.