EU competition cases involving video games and Barcelona football shirts look like the last big opportunity for antitrust chief Margrethe Vestager to rip down the blocs online barriers to cross-border commerce.
Europes failure to build a fully fledged digital single market is a major grievance among consumers that Vestager has struggled to confront since taking up her post in late 2014.
The fundamental bugbear among EU shoppers and holidaymakers is that businesses overcharge them by demanding divergent prices for everything from washing machines to hotel bookings on a country-by-country basis, rather than allowing a Belgian consumer, say, to order a cheaper alternative from a website in neighboring France.
Vestager has powers to intervene in this domain when she can identify illegal contracts between companies, but she has conspicuously failed to close a landmark case. Although she has opened several investigations into businesses that conspired to segment their online sales into national silos, she has been frustrated at every turn. With only about year left in her post, she now faces a race against the clock to make her decisive breakthrough.
Thats where the video games and the football shirts come in.
“We only have a true single market if I can buy and access goods from anywhere in Europe” — Dita Charanzová, Czech MEP
Four lawyers following the issue said that Vestager should be in a strong position to either seek a settlement, in which the companies commit to far-reaching changes, or alternatively punish the firms with a fine. Two of the lawyers described the cases as “straightforward.” If so, the Commission would be in a position to move toward an endgame after the summer break.
The video game investigation, opened early last year, focuses on whether game-playing platform Steam and five video game publishers agreed to block users from playing games at a cheaper rate available in other EU countries. The implication is that Danish aficionados are refused access to a cheaper Bulgarian version of their latest shoot-em-up war game. Valve, the company behind Steam, did not reply to requests for comment.
In June 2017, Vestager also opened probes into Guess, Nike, Sanrio and Universal trying to restrict their distributors from selling their clothes and accessories in other EU member countries. Nike, which makes the Barcelona shirts, says it is cooperating with the investigation.
Dita Charanzová, a Czech liberal member of the European Parliament, stressed the importance of making an impact in the digital sphere. “We only have a true single market if I can buy and access goods from anywhere in Europe. This includes digital goods and services, like streaming games,” she said.
Stubborn silos
Right from her first speeches, Vestager has stressed that she wants to strip away Europes virtual borders.
“I, for one, cannot understand why I can watch my favourite Danish channels on my tablet in Copenhagen — a service I paid for — but I cant when I am in Brussels,” she said in March 2015.
But overturning those single market barriers in cyberspace and broadcasting proved to be extremely difficult territory.
Vestagers defining probe into antritrust violations of the internal market was supposed to be the Hollywood studios case, in which she charged Sky UK and six major U.S. film studios in July 2015. But that case is proving messy to conclude, mired in complications such as copyright, especially for the online content.
Bas Braeken, partner at Maverick Advocates, said the Danish commissioner would not win the big showcase precedent she sought on the Hollywood case, and would instead have to fudge a compromise. “The Commission will be seeking to save face in this case,” he said.
People following a Commissions case into geographical discrimination on hotel booking, opened in 2017, say that it is also proving far more complex to wrap up than the probe into video games and football shirts.
The only minor win that Vestager has chalked up in this territory is a €10 million fine against Pioneer, a Japanese maker of high-fi equipment. The Commission ruled that the company had prevented its retailers in Europe from selling to other EU countries.
European Commission President Jean-Claude Juncker | Dimitar Dilkoff/AFP via Getty Images
European Commission President Jean-Claude Juncker has set the single market as a political priority. His all-powerful Secretary-General Martin Selmayr strongly advocates using competition tools to enforce the single market, according to a former senior EU official from a Commission Cabinet and a national competition authority official, who both spoke on the condition of anonymity.
Still, although five out of the nine cross-border cases that Vestager has opened involve online sale restrictions, she has appeared more on the front foot when tackling alleged abuses of the single market in traditional and basic industries ranging from Russian gas supply to Belgian beer. In her cases against Russian export monopoly Gazprom and Belgian brewer AB InBev, she has sought to thwart companies segmenting the internal market to dictate the prices.
The Commission insists that it has not been “idle or unsuccessful in the fight against cross-border restrictions”.
A European Commission spokesman added: “In fact, in this term, the Commission has opened, advanced and concluded a very significant number of enforcement initiatives in this area.”
Regulation plus antitrust
A concrete conclusion of the video game and football shirt cases would complement the Commissions regulatory actions in the digital domain.
The EU contemplated cracking down on online geoblocking in the video game sector through its sweeping regulation, which is set to go into force at the end of this year. But the video gaming industry lobbied hard to exclude itself from the scope of the rules, despite pressure from the European Parliament to include them. The rules now mostly target online marketplaces selling into other EU countries.
“Of course, the industry is resisting because partitioning the single market allows them to maximize their profits,” said Agustín Reyna, head of competition at consumer organization BEUC.
But MEPs did manage to squeeze a review clause into the proposal, forcing the European Commission to reassess the inclusion of games around 2020.
Aside from the results in individual probes, Brussels insists that Vestagers political positioning on e-commerce produced a strong pre-emptive effect on multinational companies.
BEUC is in favor of extending the scope of the geoblocking regulation to include copyright-protected content, which would render competition cases such as the video games probe superfluous.
Braeken from Maverick noted how the EU probes into video games, Pay TV and more recently sports distribution rights complemented the geoblocking regulation. The Dutch lawyer said that the Commission has gone a long way in clearing obstacles to its digital single market strategy by combining regulation and antitrust.
But not all observers share his views on the success of the single market. The former Commission Cabinet member said: “The whole thing faded a bit, there seems to be a shift from internal market to platform dominance,” alluding to major fines for Google and other Commission actions against the tech giants.
Aside from the results in individual probes, Brussels insists that Vestagers political positioning on e-commerce produced a strong pre-emptive effect on multinational companies.
Companies such as Mango, Pull & Bear and Dorothy Perkins in the clothing industry, coffee machine producer De Longhi, and photo equipment manufacturer Manfrotto have all reviewed their practices, the Commission announced last year.
“Knowing that you are being watched often make companies change their behaviour even before the end of an investigation or during a sector inquiry,” the Commission spokesman said.
This article is part of POLITICOs new coverage of competition, antitrust and state aid issues, Competition Pro. This coverage includes the Fair Play newsletter every Monday morning. Email [email protected] to request a complimentary trial.
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