Sector inquiry into the Bulgarian e-commerce market
The Bulgarian Commission for Protection of Competition (“CPC”) recently announced the opening of an investigation into the national e-commerce market for consumer goods and services.
The sector inquiry comes as no surprise given the increased dynamics and the rapid growth of consumer e-commerce during the pandemic coupled with certain competition law infringements which were identified and sanctioned by the CPC in recent proceedings, such as:
The CPC has sanctioned a dual pricing model implemented by a distributor of childcare products and its partners. The parties had agreed on different levels and conditions of commercial discounts, depending on the retail channel – an online shop or a physical shop. The lower commercial discounts provided for online shops and the additional conditions imposed on them (e.g. maintaining a stock of the products) in practice prevent online shops from offering lower prices than physical shops and limit the resale of products online. The CPC sanctioned the practice as a restriction by object.
The CPC also sanctioned a price fixing arrangement related to the children’s apparel market. A manufacturer and its subsidiary imposed fixed and minimum resale prices on retailers (both for physical and online shops) and blocked the access of non-compliant retailers to their online platform.
Misuse of customer data
In the course of a price-fixing investigation in 2021, the CPC further observed a potentially problematic practice of a distributor of baby care and mother care products who also organizes pregnancy classes. In the context of the classes, the distributor created a database with the participants’ information, which it then used for online marketing purposes. Data protection rules aside, the CPC considered this practice as a competitive advantage over other distributors on the market and has highlighted such practices as potentially leading to competition law issues, and therefore requiring further examination within the sector inquiry.
Unfair competition practices
Further problematic practices identified by the recent case-law of the CPC concerning the e-commerce market include imitation, misleading advertising and other unfair competition practices. In addition, the CPC has pointed out potential risks relating to the use of algorithms, including personalized pricing, access to consumer personal data and self-preferencing conduct.
In light of this, the CPC determined that a detailed analysis of the functioning of and barriers on the e-commerce market is indispensable for understanding and improving the competitive conditions on the market. While the sector inquiry is still pending, in addition to providing analysis and recommendations, it is also likely to trigger additional individual proceedings in relation to the identified problematic practices on the consumer e-commerce market.