Controlling online marketplaces: The unhealthy competitive situation must be addressed promptly  

In Finland and elsewhere in Europe, consumption is increasingly shifting online. Although last year’s statistics show that digital purchases decreased for the second year in a row and the amount of domestic online stores in total sales decreased, digital purchases from Chinese online stores increased by 31 per cent. This is due to the aggressive rush of the Chinese online marketplaces Temu and Shein to the Finnish market.

“The Chinese giants’ low prices are largely based on the lighter regulation or regulation avoidance of online stores and online marketplaces outside the EU in comparison to Finnish commerce. It is also difficult to hold individual sellers accountable for regulating,” says Kari Luoto, the Finnish Commerce Federation’s Managing Director.

The security of products ordered by consumers from online marketplaces and foreign online stores is continuing to be deficient, and this has also been highlighted by European consumer organisations.

“It is imperative that the Member States and the EU Commission invest in the implementation of the new Product Safety Regulation and the supervision of international e-commerce,” says Luoto.

Equally inadequate is the contribution of sellers to the recycling costs of products and packaging delivered to Europe. Additional challenges are caused by the fact that the composition of products and packaging is not always known and they cannot be recycled at all. One solution could be to require online marketplaces serving sellers outside the EU to join producer communities that take care of recycling.

“Operating according to different rules does not only apply to one operator outside the EU, but to many third-country online stores and platforms. Sellers in third countries have been able to enter the single market without regard for European requirements. The authorities should ensure that all operators meet the requirements of the legislation equally,” says Luoto.

Violation of the law designed to protect online buyers

International online marketplaces often attract consumers in questionable ways. In mid-May, 17 European consumer organisations submitted complaints to national authorities and the EU Commission about the aggressively growing Chinese giant Temu.

The organisations are of the opinion that Temu is in breach of the EU’s new Digital Services Act which aims to protect consumers who make online purchases, among other things.

“The marketplace uses manipulative practices and sales techniques, for example. At the Finnish Commerce Federation, we have also discovered that Temu’s marketing can often be considered misleading and that it does not follow the European rules on, for example, communicating discount prices,” says Luoto.

Last Friday, the EU Commission named Temu a very large online platform, which means that, in future, it will have to respond more effectively to, among other things, the sale of illegal goods on the marketplace and report more precisely on what it does.

There are no lasting grounds for the duty-free limit

In the upcoming parliamentary term, equal conditions for competition will need to be further improved by removing, as proposed by the Commission, the duty-free limit for purchases from outside the EU under 150 euros.

“The removal of the duty-free limit should be urgent. In addition, the obligations of online marketplaces and other online platforms must be precisely defined in the new regulation, if proposed,” says Luoto.

It makes a difference where consumers buy their products, as the commerce sector is the largest employer, the largest payer of business taxes and one of the largest investors in Finland. In Europe, 26 million Europeans work in retail and wholesale trade, with one in seven people of working age working in duties in the commerce sector.

“We are calling on the MEPs to be elected to the European Parliament on Sunday to ensure equal conditions for competition in Europe. Ultimately, it is about Finnish jobs and tax euros that end up in Finland,” emphasises Luoto.

For further information, please contact: Kari Luoto, Managing Director, Finnish Commerce Federation, tel. +358 400 688 708, kari.luoto(at)kauppa.fi