Removing online commercial curbs can hurt consumers

30 Apr '16

4 min read

Hong Kong companies active in the e-commerce sector should note that this inquiry could potentially lead to investigations of individual companies, and, once completed, could bring about new marketing opportunities for traders online, the report said.

The inquiry aims at removing barriers to cross-border e-commerce set out in the European Commission's Digital Single Market Strategy. The Commission is asking distributors about more than just vertical restraints; it also wants to gain insight into the market to find companies that artificially carve up markets along national lines and differentiate their prices accordingly.

The target of the inquiry is, after all, to lower restrictions on the sale of goods across national borders within the EU. This target may also result in greater online opportunities within Europe for Hong Kong traders. On 18 March 2016, the Commission already published initial findings on geo-blocking.

Under the current EU rules (“vertical restraints” guidelines), a supplier may require a buyer to adhere to quality standards regarding its internet site or maintain one or more brick-and-mortar shops before engaging in online distribution. The idea is to protect the brand image of a distributor, especially for luxury products. However, the Commission will be against any obligation which dissuades retailers from using the internet at all.

Hong Kong traders active in the luxury industry might be concerned that the current inquiry will lead to a softening of these rules. The complete final report of the Commission is scheduled for the first quarter of 2017. (SH)

Fibre2Fashion News Desk – India