Nearly 2,000 brands – across industries ranging from fashion to electronics – prohibit or impede Internet sales in Europe, creating a major impediment to the spread of eCommerce, a survey published today shows.
Berlin-based Federal Association of eCommerce (BVOH) questioned more than 7,000 small online merchants to gather its findings for its Choice in eCommerce initiative. More than half of Europe’s online retailers complain about losing sales and a fifth say they lose more than a quarter of their sales each year due to the restrictions.
Frankly this is an issue which goes back years. Half a decade ago eBay handed in a petition of 750,000 signatures to the EU Parliament complaining about restrictive trade practices and nothing much has changed since then.
BVOH is handing the survey results tomorrow in person to the European Commission Competition authority. It is also sending the survey results to over 800 members of both the European Parliament and German Bundestag.
Under EU rules issued in 2010, brand owners seeking to protect their image and exclusivity can bar online retailers without bricks-and-mortar outlets from distributing their products under updated EU antitrust rules. But the European Commission said it would closely monitor developments and opened a sector inquiry last year.
Most Common Restrictions imposed by Brands
The full list of brands and the restrictions they impose is available online. The most common restrictions are:
- Due to unlawful pricing policy the retailer is not free to set their own sales prices; penalties are threatened if they fail to comply with specifications, e.g. by applying recommended retail prices.
- The manufacturer or the brand imposes marketplace bans which prohibit the retailer from using online marketplaces for the resale of products.
- Cross Border Trade blocking prohibits the retailer from selling the products internationally.
- Marketing activity blocking prohibits the retailer from placing their products onto price comparison portals or using the brand name in advertising.
- Refusal to supply is the refusal of the manufacturer to supply its range, either partially or in whole, to online retailers.
- Service deterioration means that consumers who acquire items online can expect poorer service – such as in the terms of the guarantee – than with products purchased over the counter.
“The European Union promises to enable ‘better access to goods and services’ with its “Digital Single Market Strategy,” BVOH President Oliver Prothmann said. “But so far nothing has been done to counter the negative effects of vertical restraints although these are an intrinsic hindrance to internal market strategy.”
The BVOH is calling on EU member states to take a position in the next weeks on the topic and to emphasise the relevance of online marketplaces for consumers and online retailers and to prohibit sales restrictions imposed by manufacturers and brands.