How has the growth of ecommerce affected cross-border retailing in Europe?

Retailers are increasingly expanding their online operations across Europe as a way to propel growth. However applying competition law rules to this changing retail landscape can be challenging.

Rona Bar-Isaac, competition partner at Addleshaw Goddard, says: “Traditional anti-competitive restrictions such as price fixing, setting resale prices and restricting the territories and customers where products can be sold are still issues [for bricks-and-mortar,] but the online world presents new risks.”

There are a few practical points retailers should be aware of when expanding their online presence in the EU.

Firstly, preventing sales to customers from other EU countries is not permitted – including geo-blocking measures preventing customers from accessing a retailer’s site in a different country, techniques to redirect customers only to the websites of retailers in the same country, and terminating transactions because credit card data shows they are in a different country.

While some laws apply across the EU, other retail policies vary from country to country. For example, geo-blocking sales through online marketplaces is allowed by some, whereas others – such as Germany – consider it anti-competitive.

Diverging approaches from competition authorities therefore make managing a multichannel, pan-European distribution network difficult.

Online tools, such as using algorithms to charge different prices, may also come under the microscope.

“Competition authorities are only just beginning to think about them, but any automated mechanism which has the potential to allow retailers to collude or otherwise infringe competition law is likely to attract the authorities’ interest,” says Bar-Isaac.

“The spotlight is firmly on possible restrictions to internet selling – online retailing is a major factor in increasing cross-border competition, so suppliers and retailers should remain alert to competition authorities’ approaches to new developments.”