Pills of competition law: Aspen, Uber and e-commerce

uber

These are busy days for EU competition law.

Today, the European Commission has come back to the old good pharmaceutical market and opened an investigation against Aspen for having charged excessive prices on its “off-patent” drugs (the same case has already been decided in Italy by the Italian Competition Authority in 2016, see here). This may be seen as a follow up to Margrethe Vestager’s recent speeches against excessive prices (here and here). However, even more recently, Advocate General Wahl delivered an opinion where he stated that excessive pricing may occur only in regulated markets with high barriers to entry, since in a free and competitive market high prices would attract new entrants and would not give rise to competitive issues (§ 48, see here for further remarks). Therefore, a question arises: where are the barriers to entry in the Aspen case, insofar as Aspen does not own any patent (already expired for years) and third parties are free to access the market?

Moving to another hot case, last week Advocate General Szpunar wrote, in an Opinion delivered to the Court of Justice of the European Union, that UberPop, a service whereby non-professional private drivers transport passengers using their own vehicles, is not an information society service, but rather a transport service. It is relevant to note that under art. 1(2) of the Directive 98/34/EC, an information society service is “any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services”. Isn’t that the kind of service provided by Uber?

Should the CJEU agree with the AG’s Opinion, Uber would be obliged to comply with the regulatory requirements imposed by each Member State to transport companies (i.e.: obtaining the same licences and authorisations to which taxi services are subject). Indeed, under Article 2(2)(d) of the Directive 2006/123/EC, free circulation of services within the EU does not cover services in the field of transport.

AG Szpunar defined UberPop as “a service that connects, by means of mobile telephone software, potential passengers with drivers offering individual urban transport on demand”. However, although the legal requirements laid down by art. 1(2) of the Directive 98/34/EC are apparently met, the circumstance that Uber exerts control over the minimum safety conditions (i.e.: providing training programmes to the drivers, inspecting the roadworthiness of the vehicles and their compliance with the provisions on mandatory insurance) and the fact that it calculates the price to be paid by passengers (80% of which goes to the driver) is, in Szpunar’s view, enough to include Uber’s service in the non-existent category of the “composite services”, namely services comprising electronic and non-electronic elements, standing outside the scope of the definition of information society service. It is also not clear why platforms for the purchase of flights or hotel bookings are not viewed as composite services in the Opinion, but rather as services which remain economically independent from the airlines and the hotels and which deserve, therefore, to be considered as information society services.

Perhaps because Uber is “a case apart”, as recognized by AG Szpunar himself at the very begin of his Opinion, the text appears slightly biased, with most of the footnotes referring to papers and articles which negatively depict the app (even so, congratulation to my friend Prof. Guido Noto La Diega to be cited by the AG, which is always a reason for pride). Moreover, the efficiencies arising from the safety checks (i.e.: avoiding harm to the passengers) and from the payment system adopted by Uber are not considered in the Opinion, despite having been widely claimed by Uber. Also the European Commission seems to have adopted a more reasonable position than the AG during the Court hearing, having stated that the issue should be dealt with on a national basis. Perhaps, this position is even too moderate, since the legislative definition of information society service appears clear and Uber meets it.

If Aspen and Uber were not enough, there is more. On May 10, the European Commission published its long awaited final report on the e-commerce sector inquiry, which is focused on two main issues: consumer goods and digital contents. We are talking about blank spaces, on a competition law perspective, that the Commission would like to fill.

With regard to the consumer goods, the Commission highlights the following market trends:

(i) a large proportion of manufacturers decided over the last ten years to sell their products directly to consumers through their own online retail shops, thereby competing increasingly with their distributors;

(ii) increased use of selective distribution systems, where the products can only be sold by pre-selected authorised sellers, allows manufacturers to better control their distribution networks, in particular in terms of the quality of distribution but also price;

(iii) increased use of contractual restrictions to better control product distribution. Depending on the business model and strategy, such restrictions may take various forms, such as pricing restrictions, marketplace (platform) bans, restrictions on the use of price comparison tools and exclusion of pure online players from distribution networks.

With regard to digital contents, the Commission found that almost 60% of digital content providers who participated in the inquiry have contractually agreed with right holders to “geo-block”.

The Commission has recently opened three investigations in the e-commerce sector, and according to the policy conclusions of the sector inquiry, it might probe his findings again in the near future. Moreover, on the issue of geo-blocking, the Commission left the competitive assessment open to a case-by-case approach, which would also include an analysis of potential justifications for restrictions that have been identified.

marco.lobue@belex.com

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