Fiona Carlin, Partner, Baker McKenzie
Vertical restraints
Can the competition rules keep up with market trends?
THE SECTOR IS EVOLVING AT A PACE THAT REQUIRES A FLEXIBLE REGULATORY REGIME.
The European Commission is reviewing the EU competition rules governing distribution that expire in 2022. As Fiona Carlin, Partner, Baker McKenzie will explain at this year’s summit, the debate on how to reshape the law in this important area raises important technical questions but also political questions about Europe’s ability to foster innovation and ensure its longer-term competitiveness. We asked her what the “Big Picture Questions” are.
Does the binary approach of defining lawful/unlawful restraints in the supply chain harm innovation incentives in Europe?
That’s a valid concern though it is hard to point to real world evidence. The sector is evolving at a pace that requires a flexible regulatory regime.
How will the debate about data ownership evolve in Europe?
There are many interesting questions to be answered and this domain will be a major policy battleground within Europe and beyond. Are customer data a legitimate tradable commodity? Do the competition rules have a role to play in relation to data privacy, data mobility, and the Internet of Things/connected and smart appliances?
Should the competition rules be relaxed to allow more collaboration between suppliers and retailers around sustainability? How bold will the European Commission be in forging its “Green Deal”?
Circular economy initiatives, common investments in specialised recycling infrastructure, the use of block chain systems and product tracers are legitimate areas for cooperation.
What are the key technical questions?
One key question concerns what’s called “dual distribution”. Where a supplier sells directly to the market and via independent resellers, should its agreements with the latter continue to be covered by the safe harbour as is the case today? Or should exchanges of information in this context be analysed under the stricter horizontal rules treating supplier and resellers as competitors?
Do bricks & mortar stores need additional protection?
Given the dramatic changes on the high street (retailer bankruptcies, empty stores in prime locations), many would argue that a more intentional approach is needed.
Should the rules be relaxed to allow suppliers to charge different prices for retailers selling both online and offline to better incentivise brick & mortar investments?
Key questions revolve around online sales, selective distribution systems, price fixing, market share thresholds, and evolving supply chain trends. On all of these questions, there are strong views in favour or against. The stakeholder consultation process underway will be critical in shaping the retail environment for consumer goods, including the electrical retail sector, for the decade to come.
