Monday, March 16, 2009
Posted by D. Daniel Sokol
Stephen Kinsella (Sidley Austin) and Hanne Melin (Sidley Austin) ask Who’s Afraid of the Internet? Time to Put Consumer Interests at the Heart of Competition.
ABSTRACT: The on-going review of the Vertical Restraints Regulation (“VRR”) has brought to the surface a conflict between traditional retail models where the consumer takes a back seat and modern ways of retailing where the consumer is given greater freedom to select the right product at the right price.
So far, the important debate about how vertical restraints should be regulated, particularly in the context of online selling, has been rather hijacked by the concerns of the luxury goods industry. Luxury goods manufacturers present the issue as being whether the internet, as a distribution channel, is suitable for the delivery of a package of services dictated by those manufacturers.
However the real issue is consumer choice. The internet makes it possible for consumer demand to drive competition in terms of product offering and price. There is no doubt that “[c]onsumers have everything to gain from the Internet.”
The fundamental principle that EU competition policy exists to help create a single EU market and serve the consumer is ignored by some interested parties, despite being constantly repeated by the Commission. The purpose of this article is to steer the debate back to what is at the heart of competition policy—consumers’ interests. This requires an understanding of how vertical restraints are regulated in the EU and how online restrictions fit into that framework.