On 27 October 2015, the European Parliament adopted the new Telecoms Single Market legislation without a number of proposed amendments relating to net neutrality. As a result, while the Regulation requires Internet service providers (“ISPs”) to “treat all traffic equally, without discrimination, restriction or interference, independently of its sender or receiver, content, application or service, or terminal equipment,” it provides for the following exceptions to this principle:
- ISPs may offer “specialised services” (e.g., IPTV, high-definition videoconferencing and healthcare services) to the extent that this does not have an impact on the general Internet quality.
- ISPs may decide not to count capacity used in connection with certain sites or applications towards a consumer’s capacity usage (“zero rating”), subject to a non-discrimination obligation.
- ISPs may implement reasonable traffic management measures based on the “different technical quality of service requirements of specific categories of traffic.” These measures should not be based on commercial considerations.
- ISPs will be able to impose traffic management measures to prevent “impending network congestion”.
The four rejected amendments related to these exceptions: network discrimination, equal treatment of all Internet traffic, the potential role of ISPs as gatekeepers, and the use of traffic management other than in connection with congestion.
On 17 June, the UK Competition & Markets Authority (“CMA”) published its report on the commercial use of consumer data collected by companies. The CMA began its review of the issue with a call for information in January.
In short, the CMA concludes that, while consumer data presents some characteristics that sets it apart from other data, these characteristics are not unique to consumer data and the markets in which it is collected and used. As a result, existing competition and market tools are effective to tackle conduct that may give rise to competition concerns in these markets. The German Monopolies Commission reached a similar conclusion in its digital markets report published on 6 June.
Digital markets are currently the focus of much attention in the European Union (“EU”). The European Commission recently unveiled its Digital Single Market Strategy, which incorporates DG COMP’s e-commerce sector inquiry.
The issue of the regulation of digital markets, potentially beyond the application of competition law, is also being discussed at national level. On 1 June 2015, the German Monopolies Commission (“MC”) published its report on digital markets (“Competition Policy: The challenge of digital markets”), with a summary in English. Generally, the MC takes the position that there is no need for a significant modification of the current legal framework, but suggests increased enforcement of the rules. In an interesting coincidence of timing, Commissioner Vestager recently expressed caution about adopting new regulation of online platforms that might be overtaken by market developments. This post provides an overview of the key elements of the MC report. Continue Reading
The Court of Justice of the EU (‘CJEU’) has held that an exclusive choice of forum clause can validly be imposed by so-called “click-wrap” contracts in online B2B transactions (see Case C‑322/14, El Majdoub v. CarsOnTheWeb.Deutschland GmbH). The ruling will make it easier for online businesses in the EU to impose a favorable choice of forum in their online B2B contracts, ensuring that they can sue defendants in courts of their own choosing, rather than the defendants’ local courts.
The general EU-wide rule for B2B contractual disputes is that a defendant must be sued in its local courts only (see “Brussels I” Regulation (Regulation (EC) No 44/2001)). However, parties can waive the default rule by agreement “in writing” (Article 23(1)).
To deal with contracts concluded electronically, Article 23(2) states – in the English version of the law – that any “electronic communication” that “provides” a durable record of the agreement is equivalent to “writing”; the French and German versions refer to the mere “possibility” of a durable record being formed.
There has been some uncertainty as to whether mere hyperlinking to terms and conditions is a “communication”. The case before the Court focused on this point, with the claimant arguing that the relevant terms and conditions should at least have been displayed (automatically) before they placed their order.
Taking a pragmatic view, the CJEU stated that the requirements of Article 23 are met if it is possible to print and save the text of online terms and conditions before a contract is concluded – even if the contractual terms are never actually displayed to the person accepting them. Providing a hyperlink to a printable version suffices.
Although the Brussels I Regulation has been phased out (as of January 10th, 2015, in favor of the ‘recast’ “Brussels Ia” Regulation (Regulation (EU) No 1215/2012)), it is likely that the CJEU’s ruling in El Majdoub will equally apply to the new law, given that the relevant provisions of the new law (now contained in Article 25) are in effect identical to those in Article 23 of the original.
In a Public Notice released this week, the FCC’s Consumer and Governmental Affairs Bureau provided details regarding the procedures by which video programming distributors (including broadcasters and MVPDs) must report video programmers who refuse to provide widely available closed captioning quality certifications.
The procedures described in the Public Notice are an outgrowth of the closed captioning quality rules, which require distributors to exercise best efforts to obtain certifications from each programmer stating that the programmer either (a) complies with the FCC’s new caption quality standards, (b) has adopted and follows the Video Programmer Best Practices set forth in the FCC’s rules, or (c) is exempt from the closed captioning rules (with reference to the specific exemption relied upon). The rules permit distributors to meet their best efforts obligations by locating such certifications on programmers’ websites or other widely available locations.
If a distributor is unable to locate a programmer’s certification on the programmer’s website or other widely available location, the distributor must inform the programmer in writing that it must make its certification widely available within 30 days after receiving the written request. If the programmer does not comply, the distributor is obligated to report the programmer to the FCC, which will be building a list of non-certifying programmers.
The Public Notice describes the procedures that distributors must follow to report non-certifying video programmers pursuant to these rules. Importantly, the Public Notice specifies that such reports must be submitted either (a) within 40 days after the distributor provides written notice to the programmer or (b) by June 4, 2015, whichever is later. The Public Notice also clarifies that it is the video programmer—and not, for example, the programmer’s captioning vendor—that must provide the required certification.
The FCC Media Bureau’s designated May 29, 2015 “Pre-Auction Licensing Deadline” is rapidly approaching. Full power and Class A facilities must be licensed by this deadline in order to be eligible for protection in the repacking process that will be part of the television incentive auction. For these purposes, facilities subject to a pending application for a license to cover the pertinent construction permit will be deemed to be “licensed.”
While Class A licensees may wait until the September 1, 2015 low power digital transition deadline to complete construction and license their digital facilities, those that do not have their digital facilities licensed by May 29, 2015 will be afforded protection in the repacking process based only on the coverage area and population served by their analog facilities. (Class A stations that may be unable to complete construction of their digital facilities by September 1 must seek an extension of the digital construction deadline by tomorrow, Friday, May 1.)
The Regional Court in Hamburg rejected complaints by newspapers Zeit Online and Handelsblatt seeking to have Eyeo GmbH prohibited from selling its AdBlock Plus software. The ruling establishes the important principle that ad-blocking is legal, however there are other cases pending against AdBlock Plus in Germany that suggest that there may be more to come on this issue.
The publishers sought injunctive relief, arguing that AdBlock Plus illegally interfered with their ad-based online business models. AdBlock Plus allows users to block ads by tracking software and malware using a browser plugin which permits some “acceptable ads” to pass through the software’s filter mechanism (the so-called “white-list”). This practice was criticized as being discriminatory by media firms, as Eyeo GmbH gets paid by certain companies to put their ads on the whitelist (i.e. Google, Microsoft and Amazon.com). Users can modify the filter to block all ads.
The Court dismissed the action. The Court concluded that AdBlock Plus does not amount to an anti-competitive restriction of online offers financed through advertising. However, the full reasoning of the Court has not been published yet.
On 20 April 2015 the Dutch Authority for Consumers and Markets (“ACM”) published new guidance regarding its enforcement priorities in relation to distribution agreements, noting that its enforcement efforts will be focused on agreements having the most significant impact on consumer welfare. The 28-page document explains that before opening an investigation, the ACM will first conduct an “initial substantive investigation”, seeking to pre-assess the impact on consumers and the economic effects of any agreement. The ACM will look at the market power of the companies involved, the scope of the agreements and whether retailers are abusing their buying power.
Although it is focused on vertical restraints, the guidance also provides valuable insight into the ACM’s enforcement priorities in the online sector more broadly. One of the case studies discussed in the guidance describes a scenario in which a bicycle distributor puts pressure on his supplier to cut off an online distributor (who was undercutting other distributors’ prices). Illustrating the steps of the “initial substantive investigation”, the ACM indicated that it could consider such a case to be a priority if the bicycle manufacturer holds a significant position on the bicycle market and the exclusion of one online distributor leads to a non-minor restriction on online retail.
The ACM also outlines its position regarding Most Favoured Nation Clauses (MFNs) in the context of sales through online platforms, explaining that MFNs are more likely to hinder new entry by platforms, lead to increased prices for sales on platforms, and reduce efficiencies. The ACM recommends a deeper investigation of MFNs.
The Dutch guidance comes hot on the heels of the Slovak guidance on vertical agreements issued last week and statements by the Head of the Belgium Competition Authority and the Director-General for Competition of the European Commission confirming that vertical restraints (including MFNs) are “high on the agenda” of EU competition enforcers.
The Federal Communications Commission (FCC) has issued a Notice of Proposed Rulemaking (NPRM) in which it proposes satellite television “market modification” rules to implement Section 102 of the Satellite Television Extension and Localism Act Reauthorization Act of 2014 (STELAR). STELAR amends the Communications Act and the Copyright Act to give the FCC authority to modify a commercial television broadcast station’s local television market for purposes of satellite carriage rights. The FCC previously had such authority to modify markets only in the cable carriage context. The FCC also proposes to change the factors relevant to the market modification process. Below, we list some of the tentative conclusions and interpretations on which the FCC seeks comment.
The main effect of a market modification is to expand or contract the areas in which a station may elect mandatory carriage under the must-carry rules. To the extent that a station’s network affiliation or other agreements authorize a station to grant retransmission consent only in the station’s Nielsen DMA, a market modification petition granted by the FCC would not alter the boundaries of that DMA. However, for stations that have elected retransmission consent, a market modification may have implications with respect to the areas in which such stations’ signals may be carried as “local” signals under the copyright laws.
On 2 April 2015, the German Competition Authority (FCO) sent a statement of objections (SO) to Booking.com Deutschland GmbH in relation to its use of “best price” clauses in contracts with hotels in Germany. The FCO takes the view that, following the decision of the Düsseldorf Higher Regional Court confirming the FCO’s decision in proceedings against HRS, Booking.com should cease to use “best price clauses” (i.e., clauses that require hotels to offer hotel booking platforms their best online conditions regarding prices, room capacity and booking and cancellation). The FCO takes the view that such clauses restrict competition between hotel booking platforms, making entry by new platforms more difficult.
The FCO has said that it intends to prohibit Booking.com’s “best price” clauses to establish homogeneous competitive conditions between Booking.com and HSR. Booking.com is currently engaged in settlement discussions with competition authorities in France, Italy and Sweden (in parallel with the German proceedings).
The various hotel booking cases and the upcoming EU e-commerce sector inquiry reflect a growing focus on cross-channel competition online that warrants companies carefully considering restrictions that they impose.