NMa: no competition-law investigation into web retail industry
The Netherlands Competition Authority (NMa) has insufficient indications to launch a formal investigation into manufacturers and suppliers that supply products to web retailers, according to a recently concluded sector scan. The NMa carried out this sector scan in response to various media reports about suppliers allegedly treating web retailers differently than regular retailers, which could have negative effects for consumers.
Last year, the NMa publicly called for retailers to report any problems they have encountered with regard to web retailing, which has resulted in the NMa receiving 131 indications from retailers. In addition, the NMa sent out two extensive questionnaires in the white goods industry and in the watch industry. Initially, willingness to participate in the questionnaires was quite limited. Only after everyone had received a phone call reminder did the response rate go up. 'This has really surprised me,' chairman of the Board of the NMa Pieter Kalbfleisch says. He continues by saying that 'it has been particularly surprising, because web retailers have repeatedly complained about being faced with unfair practices, and now they had been given the perfect opportunity to submit documents that could serve as evidence. After all, without any evidence, we don't have a case, which means we cannot launch an investigation.'
Most of the reactions to the questionnaires, as well as most of the indications the NMa had received, did not include any documents that could be used as evidence by the NMa, such as contracts, letters, and emails. In the instances that such documents have indeed been included, these documents did not generate enough leads to launch an official investigation into a possible violation of the Competition Act.
Most of the reactions (61 percent) involved resale price maintenance, which, in principle, is prohibited under the Competition Act. Resale price maintenance means that the manufacturer unilaterally imposes on the retailer a fixed retail price or a minimum retail price. There have been insufficient indications to launch an investigation into resale price maintenance practices. Other reactions either involved refusal to supply (27 percent) or the application of different conditions by suppliers (dual pricing, 12 percent). Web retailers have indicated for example that, in contrast to regular retailers, they are faced with higher prices, either directly or indirectly (through bonus systems. In themselves, refusal to supply and dual pricing are not prohibited, considering the freedom of action that any entrepreneur has. However, these forms of vertical agreements can be prohibited, provided there is also a dominant position. There were no clues in the indications nor from the questionnaires that there is any. The NMa would like to remind undertakings that they could also go to a civil court in case they have a dispute with their supplier.
The NMa greatly values receiving indications, preferably supported by documents, from undertakings and entrepreneurs about possible violations of the Dutch Competition Act. Because of such indications, the NMa is able to increase its knowledge of any given industry, and is able to track down violations. The NMa receives about 4,000 indications on an annual basis.