The European Commission has announced a formal investigation into the distribution practices of designer clothing company Guess, which is suspected of restricting retailers from selling cross-border to consumers in the EU.
The European Commission is determined that consumers should be able to buy online from across the EU. More than half of us are now shopping online, but relatively few are buying from elsewhere in the EU and many consumers face barriers when trying to do so, according to the Commission’s recent e-commerce report. To some extent, this may reflect consumer choice or retailers’ own decisions about where they wish to sell.
What the Commission is concerned about is brands restricting retailers from making cross-border sales. If Guess does impose such restrictions on its retailers, it won’t be the only high profile brand to do so. This is the fourth investigation of resale restrictions announced by the Commission this year, and we can almost certainly expect more.
High profile consumer brands are likely to be the main target for the Commission, with large fines likely for the most serious infringements. For any that haven’t already done so, it really is important that businesses review their practices now.
In its recent final report on the e-commerce sector inquiry the Commission found that more than one in ten surveyed retailers experienced cross-border sales restrictions in their distribution agreements. Such restrictions limit their ability to sell online to consumers in other Member States.