In May the European Commission launched an inquiry into on-line sales of consumer goods and digital content in the EU as part of its Digital Single Market strategy.

The EU is the largest e-commerce market in the world with over half of consumers aged 16-24 having ordered goods or services over the internet, up from 30% in 2007.

For on-line shoppers, the most important feature appears to be increased price transparency. The ability to compare prices across a large number of retailers is seen as driving increased price competition for both on and off-line sales but may be adversely affecting competition in areas such as quality, brand and innovation.

Price is also the key competition aspect for retailers, whereas manufacturers thought that quality and brand image were the most important features of competition between brands.

The majority of retailers said they tracked online prices and many would adjust their prices to those of their competitors. As a consequence, more manufacturers were now seeking to sell directly and there was a trend towards selective distribution systems. Distribution agreements increasingly contain restrictions on how retailers should sell or advertise products on-line and a significant number of manufacturers even impose pricing restrictions, and restrictions on selling or advertising on-line or cross-border.

The report also says that certain large retailers are putting pressure on their suppliers to guarantee their profit margins, compensate for losses/lower profits than expected, or otherwise ensure that a certain minimum price is applied.

All of these practices look distinctly dubious in terms of competition law and this is something that the Commission may investigate further.