EU/Competition: Digital agenda and Telecom

Newsletter 10/2020

In a reasoned statement of objections of 30.09.20, the Norwegian Competition Authority raised its concerns against the (horizontal) Schibsted (Finn.no) / Nettbil merger in the sector for internet ads for used cars. The Schibsted-owned Finn.no is the by far largest service in the market and Nettbil is a new participant in the market.

With the upcoming Digital Services Act (DSA), the EU aims to shape the digital economy not only at EEA level but also to be a standard-setter for the rest of the world, as it did with data protection. In a “legislative initiative” report of 28.09.20 from the European Parliament, MEPs request that the proposal addresses and tackles current shortcomings in the online environment in the DSA package, due to be presented by the end of the year. The principle of “what is illegal offline is also illegal online”, as well as the principles of consumer protection and user safety, should become “guiding principles” of the future DSA, according to the EP. The committee recommendations touch upon a wide range of issues, including obligations related to transparency and information for online marketplaces, product safety online, effective enforcement and supervision measures, including fines, the spread of illegal content online, artificial intelligence (AI), and ex-ante regulation to prevent (instead of merely remedy) market failures caused by big platforms. Visit the Commission’s web page on the Digital Services Act here.

As a contribution to the debate on competition enforcement in the digital era and future rules for digital platforms, the Nordic competition authorities published 28.09.20 a joint memorandum setting out the Nordic perspective on issues of competition in digital markets. Visit the report here.

In the EUCJ Schrems II judgment (C-311/18) the court indicated that companies relying on SCCs are responsible for determining whether the recipient country’s law concerning government access to data provides privacy protections meeting EEA legal standards. The EUCJ in Schrems II also invalidated Commission Decision 2016/1250 underlying the EU-U.S. Privacy Shield. The Court found that the Commission’s record underlying Decision 2016/1250 did not establish that privacy protections in U.S. law relating to intelligence agencies’ access to data meet EEA legal standards. Notwithstanding this finding, companies transferring data to the United States under SCCs today are responsible for undertaking their own independent analyses of all relevant and current U.S. law relating to intelligence agencies’ access to data, as well as the facts and circumstances of data transfers and any applicable safeguards, in assessing whether the transfers satisfy EEA law. The United States government has prepared a White Paper, focusing in particular on the issues that appear to have concerned the EUCJ in Schrems II, for consideration by companies transferring personal data from the EEA to the United States. The White Paper provides an up-to-date and contextualized discussion of this complex area of U.S. law and practice, as well as citations to source documents providing additional relevant information. It also provides some initial observations concerning the relevance of this area of U.S. law and practice that may bear on many companies’ analyses. The White Paper is not intended to provide companies guidance about EU law or what positions to take before European courts or regulators. Visit the white paper here.

The Commission published 08.09.20 a Staff Working Document that summarises the findings of the evaluation of the Vertical Block Exemption Regulation (“VBER”), together with the Vertical Guidelines. The evaluation show that the market has changed significantly since the adoption of the VBER and the Vertical Guidelines, in particular due to the growth of online sales and of new market players such as online platforms. These developments have led to a number of changes in distribution models, such as increased direct sales by suppliers and a greater use of selective distribution systems, which allow suppliers a tighter control over resale conditions. Similarly, new types of vertical restrictions, such as restrictions regarding sales through online marketplaces and restrictions on online advertising, as well as retail parity clauses, have become more widespread. Against this backdrop, the evaluation has identified a number of issues with regard to the functioning of the rules. These include the following: (i) Some provisions lack clarity, such as the rules defining agency agreements. (ii) Other provisions are difficult to apply or are no longer adapted to the current business environment, notably when it comes to applying the existing rules to new market players that do not fit into traditional supply and distribution concepts and to new online sales restrictions. (iii) Some gaps are identified in the rules, such as a lack of guidance on how to assess retail parity clauses or restrictions on the use of price comparison websites, and areas that do not refer to case law issued since the adoption of the rules (e.g. the EUCJ’s Coty judgment C-230/16). (iv) There remains significant scope for diverging interpretations of the rules by national competition authorities and national courts, which is an important issue of concern for stakeholders, as it reduces the benefit of the rules. (v) While the evidence suggests that the lists of hardcore restrictions and excluded restrictions are generally appropriate, there may still be scope to further reduce the burden for businesses associated with self-assessing the compatibility of their agreements with Article 101 TFEU / Article 53 EEA. This could be achieved by exempting, in some specific areas of the rules, additional vertical agreements for which stakeholders have indicated that they would normally satisfy the conditions of Article 101(3) TFEU / Article 53 (3) EEA. There is also room for simplification and further cost reduction, notably by reducing the complexity of the rules. Visit DG COMPs dedicated VBER review website here.