Commissioner Margrethe Vestager, in charge of competition policy said: “The Commission has information indicating that Guess, in its distribution agreements, may ban cross-border sales to consumers. One of the key benefits of the EU’s Single Market is that consumers can shop around for a better deal. We are going to investigate Guess’ practices further to ensure that it’s playing by the rules and not preventing consumers from buying products across borders.”

Guess designs, distributes and licenses clothing and accessories. Guess’ apparel is marketed under numerous trademarks, including “GUESS?” and “MARCIANO”.

The Commission will investigate information indicating that Guess’ distribution agreements may restrict authorised retailers from selling online to consumers or to retailers in other Member States. They may also restrict wholesalers from selling to retailers in other Member States.

Companies are generally free to set up the distribution system that best serves them. However these systems must comply with EU competition rules. In particular, consumers must be free to purchase from any retailer authorised by a manufacturer, including across national borders.

Guess’s agreements under investigation may be in breach of EU competition rules (Article 101 of the Treaty on the Functioning of the European Union), which prohibit agreements between companies that prevent, restrict or distort competition within the EU’s Single Market.

In its recent final report on the e-commerce sector inquiry the Commission found that more than one in ten surveyed retailers experienced cross-border sales restrictions in their distribution agreements. Such restrictions limit their ability to sell online to consumers in other Member States.

The formal investigation launched today concerning Guess is a stand-alone procedure that is separate from the e-commerce sector inquiry but follows up on one of the issues identified in the inquiry’s final report.

Background

The e-commerce sector inquiry and other investigations

The Commission adopted the final report on the e-commerce sector inquiry on 10 May 2017 in the context of its Digital Single Market strategy mid-term review. During the inquiry, the Commission gathered evidence from nearly 1 900 companies operating in e-commerce of consumer goods and digital content and analysed around 8 000 distribution and license contracts.

The insight gained from the sector inquiry will allow the Commission to target EU antitrust enforcement in European e-commerce markets on the most widespread, problematic business practices that have emerged or evolved as a result of the growth of e-commerce and that may negatively impact competition and cross-border trade and hence the functioning of the EU’s Digital Single Market.

The full text of the final report can be found here.

In February 2017, the Commission launched three separate investigations to assess if certain online sales practices prevent, in breach of EU antitrust rules, consumers from enjoying cross-border choice and being able to buy consumer electronics, video games and hotel accommodation at competitive prices. These investigations are ongoing.

Procedural background

Article 101 TFEU prohibits agreements between undertakings and decisions of associations of undertakings that prevent, restrict or distort competition within the EU’s Single Market.

There is no legal deadline for bringing an antitrust investigation to an end. The duration of an investigation depends on a number of factors, including the complexity of the case, the cooperation of the companies with the Commission and the exercise of the rights of defence.

The opening of formal proceedings does not prejudge the outcome of the investigation. It relieves the competition authorities of EU Member States of their competence to apply EU competition rules to the practices concerned.

More information on the investigation will be available on the Commission’s competition website, in the public case register under the case number 40428.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Croatia’s broadband scheme will bring faster internet to consumers and businesses that currently do not have it. It will help Croatia to put in place the necessary infrastructure for an information society and contribute to creating a Digital Single Market within the EU.”

Croatia’s current broadband market is characterised by high prices and low take-up rates compared to the EU average. This scheme aims to significantly improve the situation and help Croatia increase its connectivity and meet the targets set out by the Commission in the context of the Digital Single Market.

Backhaul networks, such as the Next Generation Network (NGN) in Croatia, provide the backbone of internet networks and can be thought of as information highways. Next Generation Access (NGA) networks, which can be thought of as more local roads, connect into the NGN.

The previous Croatian broadband scheme, the National Broadband Plan, was approved by the Commission in January 2016 and supported the roll-out of NGA networks in unserved or underserved areas. The purpose of the new measure is to provide sufficient upstream capacity to sustain the previously approved scheme in rural areas.

Croatia’s NGN will be rolled out partly in areas where either no NGN backhaul network exists, or areas where the backhaul infrastructure is insufficient to meet projected needs. No operator has shown any interest to invest commercially in the scheme’s target areas, which were identified by Croatia through a detailed mapping exercise and two public consultations.

The scheme aims to increase the coverage of high speed broadband and provide speeds of 100 Mbit/s symmetrical (i.e. upload and download). It will run until 31 December 2023. The new infrastructure will be financed mainly through the European Regional Development Fund and partly by national funds, and the network will remain in public ownership.

The management of the scheme is attributed to a public undertaking, OiV, which will offer long term leasing agreements on the infrastructure to all interested operators. These operators will subsequently be able to offer connection services to local access providers, which in turn serve end consumers. In this way, the new NGN backhaul network will support the NGA networks previously approved under EU state aid rules.

The Commission assessed the measure under EU state aid rules, in particular its 2013 Broadband Guidelines. These guidelines aim to ensure, amongst other things, that public funding does not take the place of private investment. They also ensure that other service providers can use the publicly funded infrastructure on a non-discriminatory basis. This protects effective competition, which is a key driver for investment and better prices and quality for consumers and businesses.

The Commission concluded that the positive effects on competition in the Croatian broadband market outweigh possible distortive effects on already established operators. It therefore found the Croatian NGN scheme to be in line with EU state aid rules.

Background

In its Communication on Connectivity for a Competitive Digital Single Market – Towards a Gigabit Society 2025, the Commission set a target of internet connections with download/upload speeds of 1 Gigabit of data per second by 2025 for all schools, transport hubs and main providers of public services, as well as digitally intensive enterprises. In addition, all European households should have access to networks offering a download speed of at least 100 Mbps, which can be upgraded to 1 Gigabit already by 2020.

As part of its Digital Single Market strategy, the Commission aims to encourage broadband roll-out, especially in underserved areas, and to ensure a high level of connectivity in the EU. As regards connectivity, Croatia ranks last of the 28 EU Member States. NGA networks are available to 60% of the Croatian households, compared to an average of 76% in the EU, according to the Commission’s Digital Economy and Society Index. On average, only 10% of Croatian households subscribe to it, compared to an EU average of 37%.

The 2013 Broadband Guidelines, which entered into force on 26 January 2013, offer stability and legal certainty for broadband investment. In particular, they reconcile the aims of, on the one hand, encouraging the rapid roll-out of broadband infrastructure with public funds and, on the other hand, minimising the risk of crowding out private investment and creating monopolies. They therefore complement other existing EU and Member States policies in this regard.

The non-confidential version of the current decision will be published under the case number SA.41065 in the State Aid Register on the Commission’s competition website once any confidentiality issues have been resolved. The State Aid Weekly e-News lists new publications of state aid decisions on the internet and in the EU Official Journal.