The Ripple Effects of Online Marketplace Bans
18 Pages Posted: 15 Nov 2016 Last revised: 26 Dec 2016
Date Written: November 12, 2016
The strive for tighter control of distribution, quality and price - has led an increasing number of producers to include restrictions on the use of online marketplaces in their selective distribution agreements. This paper considers the effects of such restrictions and the legal approach they call for. While acknowledging the legitimacy of proportionate restrictions on distribution, the article illustrates how an absolute ban on the use of online marketplaces has a detrimental effect on market transparency, price competition, entry and expansion. The discussion illustrates how the legitimate interests of producers may be protected through less onerous means, without the increase in consumers’ search costs and the dampening of price competition. With that in mind, it is argued that these restrictions should be analysed on a case-by-case basis and should not benefit from the Vertical Block Exemption. Furthermore, the article considers whether absent proportionality and objective justification, the harmful effect of online marketplace bans, justifies their condemnation as anticompetitive by object.
Keywords: E-Commerce, Online Marketplace Bans, Selective Distribution, Vertical Restrictions, Virtual Competition
JEL Classification: K21, L41, L42, L81
Suggested Citation: Suggested Citation