The EU Commission focuses on the misuse of intellectual property rights in latest e-commerce competition enforcement
The EU Commission has flexed its muscles yet again to enforce the competition rules in the e-commerce sector, announcing on 9th July 2019 that it had fined Sanrio 6.2 million for banning traders from selling licensed products featuring Hello Kitty or other characters owned by Sanrio into other countries within the EEA (Commission Press Release IP/19/3950).
E-commerce and the digital markets are fast becoming one of the EU Commission's top priorities in enforcement activities as the pan-European regulator gets to grips with the digital distribution revolution.
The Sanrio case was started in the aftermath of the E-commerce Sector Inquiry in June 2017. The European Commission also started investigations at the same time into certain licensing and online distribution practices of Nike and Universal Studios.
In March 2019, the Commission finalised its case against Nike, fining them 12.5 million for engaging in similar cross-border trading bans to Sanrio. The investigation against Universal Studios is still ongoing.
Closely allied to these cases was the recent Guess decision. This also dealt with the use of intellectual property rights (IPRs) by a manufacturer to hinder or limit cross-border sales.
Started at a similar time to the Sanrio case the Guess case involved an investigation into the distribution agreements and practices of clothes manufacturer, Guess, to assess whether it illegally restricted retailers from selling cross-border to consumers within the EU Single Market.
Among the Commission's conclusions were that Guess' distribution agreements restricted authorised retailers from using the Guess brand names and trademarks for the purposes of online search advertising and restricting the ability of retailers to sell outside their allotted territories.
Through these and other tactics the agreements allowed Guess to partition European markets. This deprived European consumers of one of the core benefits of the European Single Market, namely the possibility to shop cross-borders for more choice and a better deal.
Licensed merchandising products are extremely varied (e.g. mugs, bags, bedsheets, stationery, toys) but all carry one or more logos or images protected by IPRs, such as trademarks or copyright. Through a licensing agreement, one party (a licensor) allows another party (a licensee) to use one...