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Antitrust Analysis of Online Sales Platforms & Copyright Limitations and Exceptions

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Abstract

The Competition Act 1998 is a statute exclusively concerned with competition law, which takes effect across the entirety of the United Kingdom. It is not the only statute that concerns competition law—the other major piece of primary legislation is the Enterprise Act 2002, which contains the UK’s merger control rules, rules on market studies and investigations, as well as rules on the investigation and enforcement of certain consumer law matters, and creates a criminal ‘cartel offence’. The Consumer Rights Act 2015, which came into force on 1 October 2015, reformed the UK’s regime for private actions in competition law and expands the jurisdiction of the Competition Appeal Tribunal to hear stand-alone actions for damages.

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Notes

  1. 1.

    The CMA describes itself as an independent non-ministerial department: https://www.gov.uk/government/organisations/competition-and-markets-authority/about. Accessed 25 October 2017.

  2. 2.

    Enterprise and Regulatory Reform Act 2013, with effect from 1 April 2014, section 26(1) and (2).

  3. 3.

    Competition Act 1998, section 54.

  4. 4.

    Ofcom is the successor to five separate communications regulators including the Director General of Telecommunications, which is referred to below and which previously had concurrent competition powers.

  5. 5.

    In this paper, I refer to the CMA to represent the UK authorities generally, but in relation to specific cases I use the name of the actual regulator that took the decision.

  6. 6.

    Health and Social Care Act 2012, section 72.

  7. 7.

    CMA10 (March 2014).

  8. 8.

    OFT 417 (February 2000).

  9. 9.

    OFT 428 (January 2005).

  10. 10.

    OFT 430 (October 2005).

  11. 11.

    OFT 422 (March 2010).

  12. 12.

    See, for example, those between the CMA and: the Northern Ireland Authority for Utility Regulation (May 2014); the Financial Conduct Authority (June 2014); the Civil Aviation Authority (June 2014), the Water Services Regulation Authority (June 2014) and with Ofcom (June 2014).

  13. 13.

    For example, Ofgem, Enforcement guidelines on complaints and investigations (June 2012); Ofcom Enforcement Guidelines: Ofcom’s guidelines for the handling on competition complaints and complaints concerning regulatory rules (July 2012); and Monitor Enforcement Guidance (28 March 2013).

  14. 14.

    For example, Ofwat, Prioritisation Principles: application to the Competition Act 1998 (September 2010).

  15. 15.

    See the Competition Law Practice Direction, stated to be up to date to 10 September 2013 but not reflecting Treaty of Lisbon numbering changes or recent UK competition reform legislation: http://www.justice.gov.uk/courts/procedure-rules/civil/rules/competitionlaw_pd. Accessed 25 October 2017.

  16. 16.

    Council Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 82 and 82 of the Treaty, OJ 2003, L 1, p. 1.

  17. 17.

    See OFT 401, Agreements and concerted practices: Understating competition law at para 4.3.

  18. 18.

    See Commission Notice — Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ 2004, C 101, p. 81.

  19. 19.

    See OFT 423, OFT’s guidance as to the appropriate amount of a penalty at para 1.17.

  20. 20.

    CJEU, case C-375/09 – Prezes Urzędu Ochrony Konkurencji i Konsumentów v Tele2 Polska sp. zoo, now Netia SA w Warszawie, ECR 2011 I 3055.

  21. 21.

    See OFT 401, Market definition: Understanding competition law at para 2.1.

  22. 22.

    European Commission Notice on the definition of the relevant market for the purposes of Community competition law, OJ C 372, p. 5.

  23. 23.

    However, if an agreement has as its object the prevention, restriction or distortion of competition then it is not necessary for the European Commission or the national competition authority to define the relevant market prior to finding an infringement of competition. See ECJ, case T-62/98 Volkswagen AG v Commission, ECR 2000 II 2707, at pts 230 to 232.

  24. 24.

    ECJ, case 85/76 Hoffmann-La Roche v Commission, ECR 1979 461 at pt 41.

  25. 25.

    The European Commission’s view is that a market share below 40% is unlikely to amount to dominance. See Article 102 Enforcement Priorities Guidance, OJ 2009 C 45, p. 7: Vol II, App C14.

  26. 26.

    In case T-336/07 Telefónica de Espaňa v Commission judgment of 29 March 2012, the General Court agreed with the European Commission’s decision that Telefónica de Espaňa’s dominant position in the regional wholesale market in part was possible because of economies of scale and scope of magnitude not available to other operators.

  27. 27.

    EGC, case T-321/05 AstraZeneca v Commission, ECR 2010 II 2805.

  28. 28.

    See case COMP/38113 Prokent-Tomra, [2009] 4 CMLR 101. Available at: http://ec.europa.eu/competition/antitrust/cases/dec_docs/38113/38113_250_8.pdf. In this case the products supplied by Tomra were not part of its customers’ core activities and it was unlikely for customers to place strategic orders to subsidise and actively build up competing suppliers to whom they could then divert their orders. Therefore, the European Commission found there was no countervailing buyer power to affect Tomra’s dominance.

  29. 29.

    See case No. COMP/M.7217, Facebook/WhatsApp, para 99. Available at: http://ec.europa.eu/competition/mergers/cases/decisions/m7217_20141003_20310_3962132_EN.pdf.

  30. 30.

    Commission Staff Working Document, Geo-blocking practices in e-commerce: Issues paper presenting initial findings of the e-commerce sector inquiry conducted by the Directorate-General for Competition, SWD (2016) 70 final.

  31. 31.

    See Eurostat, Digital Single Market: promoting e-commerce for individuals. Available at: http://ec.europa.eu/eurostat/data/database?node_code=isoc_bdek_smi.

  32. 32.

    See Commission Notice: Guidelines on Vertical Restraints, OJ 2010, C 130, p. 1, para 98.

  33. 33.

    Bellamy & Child, European Union Law of Competition, 7th ed, Oxford University Press 2013.

  34. 34.

    See footnote 32 above, para 100.

  35. 35.

    Commission Regulation 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010, L 244, p. 35 (‘Regulation 330/2010’). Regulation 330/2010 came into force on 1 June 2010 and it applies until 31 May 2022.

  36. 36.

    Where an agreement includes a hardcore restriction, the European Commission presumes that the agreement falls within Article 101(1) of the TFEU and not to fulfil the exemption criteria of Article 101(3) of the TFEU.

  37. 37.

    The European Commission distinguishes between active sales and passive sales. Active sales mean actively seeking customers, for example by direct mail or media advertisement targeted at a specific territory or customer group or establishing a branch in a territory that is exclusively allocated to another distributor. Passive sales mean responding to unsolicited customer requests from customers located in a territory exclusively allocated to another distributor. See Vertical Guidelines at p. 13.

  38. 38.

    Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘A Digital Single Market Strategy for Europe’, COM (2015) 192, final.

  39. 39.

    See Government’s response to the Consultation on the Strategic Steer to the Competition and Markets Authority (December 2015). Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/481040/BIS-15-659-government-response-governments-strategic-steer-to-the-competition-and-markets-authority.pdf. Accessed 25 October 2017.

  40. 40.

    See Final report on the E-commerce Sector Inquiry, COM(2017) 229 final. Available at: http://ec.europa.eu/competition/antitrust/sector_inquiry_final_report_en.pdf. Accessed 25 October 2017.

  41. 41.

    According to the European Commission, while this allows customers to find the best deal, it could also result in free-riding behaviour, i.e. use of pre-sale services offered by brick and mortar shops before making an online purchase, or search and compare products online before purchasing in brick and mortar shops.

  42. 42.

    The European Commission found that two-thirds of the retailers used automatic software programmes that adjust their own prices based on competitors’ prices. Moreover, pricing software makes it easier for brand manufacturers to police deviations from recommended retail prices and influence retailers’ pricing policies.

  43. 43.

    See footnote 40 above, p. 7.

  44. 44.

    Case CE/9857-14, Online resale price maintenance in the bathroom fittings sector (10 May 2016). Available at: https://assets.publishing.service.gov.uk/media/573b150740f0b6155b00000a/bathroom-fittings-sector-non-conf-decision.pdf.

  45. 45.

    See footnote 44 above, at p. 7.

  46. 46.

    The CMA noted that Ultra implemented its trading guidelines through a copyright licence for the use of Ultra’s images, which ensured that resellers signed up and adhered to its trading guidelines. Moreover, Ultra regularly monitored resellers’ websites to check they were abiding by the trading guidelines, and threatened or took enforcement actions against non-compliant resellers, such as offering unfavourable terms of supply, ceasing or refusing to supply, or withdrawing the reseller’s right to use its licensed images.

  47. 47.

    See footnote 44 above, at p. 7.

  48. 48.

    Case CE/9856/14, Online resale price maintenance in the commercial refrigeration sector (24 May 2016). The CMA reduced ITW’s fine by 30% for its admission and co-operating with the CMA under a settlement agreement, and agreement to set up a comprehensive competition compliance programme.

  49. 49.

    See footnote 48 above, at p. 6.

  50. 50.

    MFNs tend to be divided into two types: First, Wide MFNs, where the supplier is obliged to provide the buyer with identical or better prices and terms existing through any sales channel; and second, Narrow MFNs, where the supplier is obliged to provide the buyer with identical rates and terms as provided on supplier’s own sales channels.

  51. 51.

    See the press release dated 31 July 2012 issued by the Office of Fair Trading at http://webarchive.nationalarchives.gov.uk/20140402142426/http://www.oft.gov.uk/news-and-updates/press/2012/65-12. Accessed 25 October 2017. Both Booking and Expedia had entered into separate agreements with IHG.

  52. 52.

    Case CE9320/10, Hotel Online Booking (2014), Annex 1 at para 21. Available at: http://webarchive.nationalarchives.gov.uk/20140402182554/http://www.oft.gov.uk/shared_oft/ca-and-cartels/hob-annexe1.pdf. Accessed 25 October 2017.

  53. 53.

    Skyscanner Limited v Competition and Markets Authority, [2014] CAT 16.

  54. 54.

    See press release issued by the CMA on 13 July 2016. Available at https://www.gov.uk/government/news/monitoring-project-launched-in-online-hotel-booking-sector. Accessed 25 October 2017.

  55. 55.

    See the CMA Update dated 6 April 2017, Online travel agents: monitoring of pricing practices results. Available at: https://assets.publishing.service.gov.uk/media/58e61bd5e5274a06b00000e8/update-6-april-2017.pdf. Accessed 25 October 2017. Also, see Private motor insurance market investigation, Final Report (24 September 2014) at para 60, where the Competition Commission, predecessor to the CMA, found that narrow MFN clauses would not raise the same concerns of softening price competition compared with wide MFN clauses.

  56. 56.

    Case CE/9692/12, Amazon online retailer: investigation into anti-competitive practices. Available at: https://www.gov.uk/cma-cases/amazon-online-retailer-investigation-into-anti-competitive-practices. Accessed 25 October 2017.

  57. 57.

    See Final Report, Private motor insurance market investigation, 24 September 2015 at paras 8.32 to 8.8.54. Available at: https://assets.publishing.service.gov.uk/media/5421c2ade5274a1314000001/Final_report.pdf. Accessed 25 October 2017.

  58. 58.

    See footnote 32 above, at para 52.

  59. 59.

    See footnote 32 above, at paras 52 to 54.

  60. 60.

    Speech by Michael Grenfell, CMA Executive Director – Enforcement, ‘Antitrust in the digital age’, Competition Law Forum, 15 November 2016. Available at: https://www.gov.uk/government/speeches/michael-grenfell-on-antitrust-in-the-digital-age. Accessed 25 October 2017.

  61. 61.

    See the CMA’s press release dated 9 June 2016. Available at: https://www.gov.uk/government/news/cma-alleges-breach-of-competition-law-by-ping. Accessed 25 October 2017.

  62. 62.

    CJEU, case C-230/16, Request for a preliminary ruling from Oberlandesgericht Frankfurt am main (Germany) lodged on 25 April 2016 – Coty Germany GmbH v Parfümerie Akzente GmbH (not yet published).

  63. 63.

    See ASICS running shoes: Unlawful restrictions of online sales of ASICS running shoes, Bundeskartellamt (Germany), August 2015.

  64. 64.

    Geo-blocking refers to commercial practices by which online providers prevent users from accessing and/or purchasing goods or digital content offered on their website based on the user’s location or country of residence. Geo-blocking, however, differs from geo-filtering, which involves online providers allowing users to access and purchase goods cross-border, but on different terms and conditions based on the location of the user.

  65. 65.

    See footnote 30 above, at para 66. The current TTBER came into force on 1 May 2014 and they replaced Commission Regulation 772/2004, the old TTBER.

  66. 66.

    Commission Regulation 316/2014 of 21 March 2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements, OJ 2014, L.93, p. 17.

  67. 67.

    TTBER would only apply to technology transfer agreements where the prescribed market share thresholds are met – the combined market share of competing undertakings must not exceed 20% on the affected relevant technology and product market, or the individual market shares of non-competitors must not exceed 30% on the affected relevant technology and product markets.

  68. 68.

    Communication from the Commission, Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to technology transfer agreements, OJ 2014, C 89, p. 3, para 126. The guidelines further state that a period of two years would usually be enough for the licensee to recoup such investment.

  69. 69.

    ECJ, cases 56&58/64 Consten and Grundig v Commission ECR 1966 299, pt 345.

  70. 70.

    ECJ case 258/78 Nungesser and Eisele v Commission ECR 1983 2015, pt 61.

  71. 71.

    CJEU, joined cases C-403/08 and C-429/08 Football Association Premier League Ltd and others v QC Leisure and others and Derek Owen and Karen Murphy v Media Protection Services Ltd, [2012] 1 CMLR 769.

  72. 72.

    Case C-403/08 involved the suppliers of equipment that was sourced from Greece and the licensees of four pubs who had showed the coverage of Premier League matches from an Arab broadcaster. Case C-429/08 related to an appeal by a pub landlady, Karen Murphy, who had shown Premier League matches using Greek decoding equipment.

  73. 73.

    See footnote 72 above, para 140.

  74. 74.

    See footnote 72 above, para 142.

  75. 75.

    See case AT.40023 – Cross-border access to pay-TV, case file. Available at: http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40023. Accessed 25 October 2017.

  76. 76.

    See case AT.40023 – Cross-border access to pay-TV: Paramount, Commitments. Available at: http://ec.europa.eu/competition/antitrust/cases/dec_docs/40023/40023_5274_2.pdf. Accessed 25 October 2017.

  77. 77.

    See press release dated 2 February 2017 issued by the European Commission. Available at: http://europa.eu/rapid/press-release_IP-17-201_en.htm. Accessed 25 October 2017.

  78. 78.

    See European Parliament legislative resolution of 6 February 2018 on the proposal for a Regulation of the European Parliament and of the Council on addressing geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC. Available at: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2018-0023+0+DOC+XML+V0//EN&language=EN. Accessed 11 May 2018.

  79. 79.

    See footnote 60 above.

  80. 80.

    Speech by Andrea Coscelli, CMA Acting Chief Executive, ‘Staying ahead in digital marketplace’, 9 September 2016. Available at: https://www.gov.uk/government/speeches/andrea-coscelli-staying-ahead-in-a-digital-marketplace. Accessed 25 October 2017.

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  1. Watson Farley & Williams LLP, London, UK

    Vineet Budhiraja

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  1. Addleshaw Goddard LLP, London, United Kingdom

    Bruce Kilpatrick

  2. Kobel Avocat Attorney-at-law, Geneva, Switzerland

    Pierre Kobel

  3. Këllezi Legal, Geneva, Switzerland

    Pranvera Këllezi

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Budhiraja, V. (2018). United Kingdom. In: Kilpatrick, B., Kobel, P., Këllezi, P. (eds) Antitrust Analysis of Online Sales Platforms & Copyright Limitations and Exceptions. LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition. Springer, Cham. https://doi.org/10.1007/978-3-319-71419-6_12

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