Competition and antitrust in the digital age

OnDemand

May 11 2017

Competition & Antitrust Poland

While the digital economy offers abundant opportunities to customers and retailers alike, it also raises a number of competition concerns, including the impact on bricks-and-mortar businesses, the potential for abuse of market power by major digital platforms and the challenge of fostering online competition while preventing free riding. Competition authorities must evolve and adapt traditional antitrust principles and approaches to meet the challenges of the rapidly changing digital market.

What impact has the rapidly changing digital market had on competition in your jurisdiction, and how have legislators and competition authorities responded?

The fact that more goods than ever are now traded online has meant that the Office for Competition and Consumer Protection (OCCP) has in recent years examined a number of cases regarding online distribution. However, the number of cases regarding the e-commerce sector which have ended with a formal decision has been limited and there have been no high-profile cases.

Two cases concerned a general ban of online sales imposed by suppliers or distributors of:

  • dog and cat food; and
  • children's prams and car seats.

In the first case, the OCCP recognised that the ban on internet sales was an anti-competitive agreement and imposed fines on the supplier and distributors, whereas in the second case the OCCP issued a commitment decision.

A third case, in which the OCCP examined anti-competitive restrictions in the e-commerce sector, concerned the distribution of musical instruments. A supplier had agreed with its distributors the minimum selling price of goods offered online. The OCCP imposed a fine on the supplier only, as it was the instigator and leading party behind the practice.

The OCCP also examined 'Booking.com' in a case concerning most-favoured nation clauses in contracts between hotels and online accommodation booking platforms. However, as the most-favoured nation clauses were voluntarily abandoned in Poland, the authority closed the preliminary investigation without launching anti-monopoly proceedings.

No specific legislative action has been taken to promote competition in online distribution in Poland. The OCCP's approach to behaviour regarding online distribution was not unprecedented when compared with its approach to traditional bricks-and-mortar sales.

In terms of market definition, are online services considered to be in the same market as traditional services in your jurisdiction? What impact has this had on competition?

To date, the OCCP has considered online distribution to be in the same market as traditional bricks-and-mortar distribution. Even in cases in which the practice in question concerned only online distribution (eg, in the abovementioned case concerning musical instruments), the market was defined as comprising both online and bricks-and-mortar sales. According to the OCCP, the abovementioned channels of distribution were complementary, as the same distributors were active in both channels and the prices in one affected those in the other.

This approach to the problem of market definition appears to have had no significant impact on competition, as the OCCP's conclusions regarding anti-competitive behaviour would most probably be the same if online services were considered a separate market from traditional services.

What types of conduct constitute abuse of dominance in the online space and what practices are most likely to catch out unwary online players?

There appear to have been no abuse of dominance cases in the online space in Poland. However, such practices by a dominant company would most probably be regarded as restricting competition as they would in a traditional distribution channel.

What steps are competition authorities in your jurisdiction taking to prevent online retailers and service providers from free riding on the investments of bricks-and-mortar retailers and service providers?

As far as is known, there have been no OCCP decisions or official statements regarding online retailers and service providers free riding on the investments of bricks-and-mortar retailers and service providers.

How can competition authorities best ensure that these steps do not hinder innovation or consumer choice and promote the continued evolution of online services?

Due to a lack of clarity regarding the OCCP's stance on free riding or previous decisions on this issue, it is impossible to elaborate further on this issue.

For further information on this topic please contact Katarzyna Terlecka or Pawel Kulak at Schoenherr Attorneys at Law by telephone (+48 22 223 09 00) or email (k.terlecka@schoenherr.eu or p.kulak@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.

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