Regulatory Divergence in Online Practices: Impact on Competition

1. LIDC Congress 2014 – Torino Marc Abenhaïm Sidley Austin LLP 19 September 2014

2. Introduction • “New” practices online may, or may not, distort competition. • However, divergent regulatory approaches to one and the same type of business practices online do distort competition within the internal market. • The same online practices necessarily call for uniform – or at least consistent – regulatory responses across the 28 Member States.

3. Online practices, pan-European economic models & different regulatory approaches: what stimulates competition, what distorts it? My problem today:

4. Outline • Divergent regulatory approaches between national competition authorities: the case of MFC clauses • Divergent responses between national competition-like provisions and Art. 101 TFEU: the example of online reverse auctions

5. Divergent regulatory approaches to MFC clauses • MFC clauses: definition(s) • The online booking cases – a regulatory “patchwork” • The German approach: one prohibition decision, currently under appeal, and a parallel investigation into the same practices • The UK approach: one negotiated outcome, also currently under appeal • Other Member States : multiple investigations underway

6. Divergent regulatory approaches to MFC clauses • Considerable scope for divergent approaches to: • the decision to intervene; • the substantive legal analysis; • the type of procedure; and • the possible outcomes. • Internal market objective & need for consistency • Consistency and Art. 11(6) Reg. 1/2003. • Consistency and case allocation.

7. Divergent regulatory approaches to MFC clauses • Divergences & consequences: • if, for one and the same issue, regulatory approaches vary across Member States, the online booking industry might be forced to move away • from a single, pan-European economic model, towards… • a fragmented network of different terms & conditions.

8. Reverse auctions: divergence between national law & EU competition law • Online reverse auctions (or “E-procurement”) • Definition • Pro-competitive aspects • Art. L 442-10 French Commercial Code • provides for the nullity … • ... of agreements potentially compatible with Art. 101 TFEU

9. Reverse auctions: divergence between national law & EU competition law • Compatibility with Art. 3(2) of Reg. 1/2003? • The principle: an agreement authorized under Art. 101 TFEU may not be prohibited under national law, and vice versa. • The exception: national legislation, which protects other legitimate interests “[i]n so far as such national legislation pursues predominantly an objective different from that of protecting competition on the market.” • Does Art. L 442-10 “predominantly” pursue an objective different from that of competition?...

10. Conclusion Various competition authorities are tackling the same issue, and the Commission has no obligation to take up the case… National “specificities” potentially conflicting with Art. 101 TFEU… Is this all really doing any good for the EU’s internal market?

11. Marc Abenhaïm Sidley Austin LLP 19 September 2014 Thank you.