Economic effects of online marketplace bans

The retail sector is a fundamental component of the EU economy. At its heart is a large variety of micro, small and medium enterprises (SMEs) which compete to serve the evolving needs of European consumers and make up 52 percent of EU retail.

Consumers are nowadays shopping in a multitude of ways and use a variety of different channels. Online shopping now complements shopping in traditional brick and mortar stores. Unsurprisingly, retailers are flocking to have online presence (and thus become e-tailers), since this is how consumers now spend an increasing share of their time.

To establish and grow this online presence a large share of SME retailers leverage online marketplaces – websites and mobile apps that allow independent retailers to transact with consumers via the online marketplace platform. SMEs find this sales channel particularly convenient as it allows them to sell online with a fraction of the IT costs that would otherwise be needed to set up and run an own website shop – while attaining a consumer reach (domestic and cross-border) that an own website shop would find it hard to achieve.

Retailers (including for their online activity) depend on players that are upstream in the value chain and supply products to them on a wholesale basis – with many of these products being branded goods. However, a fast-increasing number of large brand owners have started to impose contractual restrictions, called online marketplace bans (OMBs) as part of their selective distribution policies. These bans prevent SME e-tailers’ from using online marketplaces to sell products of the brand imposing the ban.

In this study we contribute to this important policy debate via two steps:

The study is commissioned by eBay