BRUSSELS Feb 18 Ebay Inc (EBAY.O) urged
European regulators to drop a requirement for Internet retailers
to have "bricks-and-mortar" shops, warning it would hurt small
firms, keep prices high and stifle e-commerce.
According to a draft regulation drawn up by the European
Commission and seen by Reuters, suppliers may be allowed to
require that distributors have a "brick-and-mortar" shop before
they can sell online.
The proposed rules would replace existing guidelines
exempting companies from strict EU competition rules under
certain circumstances. Those rules expire at the end of May.
A "brick-and-mortar" provision would hold back e-commerce
growth in Europe over the next decade just when it is at a
"teenage stage", Tod Cohen, eBay's vice president, told
"The direction of the general text is very positive towards
online commerce. (But) this brick-and-mortar provision is
inconsistent with this," he said, saying the requirement would
benefit large retail players at the expense of small players.
"Those who want to engage in price discrimination will have
another tool to do it," said Cohen, who is lobbying the
Commission to drop the proposed rule changes.
Brand owners - often in the high-end or luxury segment - say
the provision is necessary to stop so-called free riders,
competitors who benefit from promotions carried out by brand
name companies, shifting stock online on the back of advertising
of a brand's products and services.
Because "free riders" do not have to pay for the costs of a
shop and related overheads, they can frequently offer brand-name
products over the Internet at discounted prices.
"The purpose of a brick-and-mortar shop provision is to help
retailers invest in luxury shops," said Antoine Winkler, a
partner at law firm Cleary Gottlieb Steen & Hamilton who
represents several brand name companies.
Cohen's criticism echoed that of Amazon (AMZN.O), the
world's largest online retailer.
The brick-and-mortar rule would reduce competition and limit
consumers' choice, Amazon Europe's retail vice president, Greg
Greeley, wrote in the Wall Street Journal earlier this month.
(Editing by Luke Baker)