Apr 22, 2015

Last month the Financial Times reported that Brussels plans to launch a competition probe into the tactics of large eCommerce companies to examine whether retailers are attempting to limit cross-border trade to push up prices. Europe's competition watchdog has said that companies charging online shoppers higher prices for the same goods depending on where they live could be breaking the law.

Tactics employed include geoblocking which can prevent customers from using their credit card overseas or in some cases, from even visiting such websites. This can also occur in online services as well with consumers being prevented from using services such as BBC iPlayer or Netflix when they are travelling.

EU Competition Commissioner Margarethe Vestager said she 'expected to complete a general investigation by mid-2016' adding that it could lead to later cases against specific companies.

Europe as a bloc is the world's biggest economy, but despite its 500 million potential consumers it largely remains a divided continent of 28 distinct economies, especially when it comes to media and the Internet. Vestager, who has taken a hard line on anti-trust cases just six months into the job, said the probe would "focus on the barriers to the cross-border sale of goods and digital content erected by private companies."

Her investigation will examine why prices can vary so dramatically between the country-specific websites of retailers such as 'Amazon' and 'Apple'. It will cover digital content such as films, TV series, music and games, and physical goods such as computers and designer clothes.

"It has become normal to travel from Germany to Poland, say, and take back home the goods you have bought during your trip," Vestager said on Thursday. "Unfortunately, buying goods online is a lot more difficult. It sounds like a paradox, but we still have a number of digital borders. It is high time we removed these barriers, which keep Europe's digital markets fragmented.
"European consumers should be able to access goods, content and other services no matter where they live and travel in Europe."

A truly single eCommerce market could be good news for UK shoppers, who are typically charged some of the highest prices in Europe. An iPhone 6 on Apple's Spanish website, for example, is £30 cheaper than the identical model on the UK Apple store.
Amazon sells Beats headphones for £113 in Germany, but the same item costs £169 on Amazon.co.uk. A Spotify premium subscription in the UK costs £9.99, but in Germany it costs €9.99 - £2.70 less.

Vestager said: "Consumers must be allowed to look for the best deals online wherever they want. Contractual bans of so-called passive online sales are therefore considered hardcore restrictions of competition."
So is this good news or not?

Stuart Hill, CEO of wnDirect said: "The reality is the internet allows customers to freely check the prices of a multitude of physical goods and services. There are a lot of web savvy consumers out there and they know all too well about price differences and the brands that reinforce them using the tactics described. I think it can only be a positive thing to create an even playing field. Not only does it motivate fair competition it will also create enhanced brand loyalty and trust as customers no longer feel cheated but, instead, more respected. Although it will be interesting to see how retailers respond and whether they increase their European prices to the highest price point or not. So generally, yes, I think it makes perfect sense…how it is implemented will be interesting!"