European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

With the entry into force of Regulation No 2790/1999 of 22 December 1999, came the question of the future of the rule of reason. Due to the fact that the block exemption applies to all vertical agreements, does this mean that the rule of reason is simply suppressed or does it still have some influence alongside such a broad exemption? Although the rule of reason should logically apply to all agree …

Rule of reason

With the entry into force of Regulation No 2790/1999 of 22 December 1999, came the question of the future of the rule of reason. Due to the fact that the block exemption applies to all vertical agreements, does this mean that the rule of reason is simply suppressed or does it still have some influence alongside such a broad exemption? Although the rule of reason should logically apply to all agreements regardless of the market share controlled by the participating undertakings before the question of the exemption is considered, it is likely that it will only figure where the agreement does not benefit from the presumption of lawfulness set out in the Regulation on vertical agreements.

In the Metro case , the Court of Justice set out for the first time the conditions of lawfulness of selective distribution in respect of Article 101(1) TFEU. It thereby confirmed that the prohibition does not apply to this mode of distribution - with no need for an exemption - provided that, “resellers are chosen on the basis of objective criteria of a qualitative nature relating to the technical qualifications of the reseller and his staff and the suitability of his trading premises and that such conditions are laid down uniformly for all potential resellers and are not applied in a discriminatory fashion”. The rule of reason only comes into play in the case of a qualitative selection of resellers. Prior to the adoption of the “new generation” regulations which look more favorably upon quantitative selection, the Court of Justice  considered that a criterion of authorization that is directly or indirectly dependent on the number of authorized resellers was, on the contrary, caught by Article 101(1) unless it could be exempted. Indeed, quantitative selective distribution limits the potential number of authorized resellers more directly, by, for example, imposing a minimum level of sales , limiting the number of resellers depending on the number of inhabitants , or requiring a technical qualification which limits the number of points of sale .

The General Court has said in subsequent decisions that the restrictive nature of selection criteria must not go beyond what is necessary, that an improvement must be made to competition and that the interest of the consumer must be taken into consideration . Selection criteria are effectively only objective insofar as they are not disproportionate when giving consumers what they need in terms of advice and service. The requirement of proportionality implies that such criteria are directly related to the nature of the product and vary according to its nature . This includes not only high quality and high-tech goods  but also any product with properties that warrant a specific mode of distribution  and selective repair systems . Concerning luxury goods in particular, the Court of Justice has held that a selective distribution system primarily aimed at preserving their luxury image complies with Article 101(1) TFEU, provided that resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion, and that the specified criteria do not go beyond what is necessary. In application of those principles, it found that the prohibition imposed by a supplier on its authorized distributors to use, in a discernible manner, third-party platforms or marketplaces for the internet sale of luxury goods was appropriate to ensure that the products are exclusively linked to authorized distributors in the minds of consumers. Such a prohibition is also an appropriate means for the supplier to ensure that its products will be sold online in an environment that corresponds to the qualitative conditions that it has fixed given the absence of any contractual relationship with the platform enabling the supplier to require compliance with the quality criteria. Lastly, it does not go beyond what is necessary for the attainment of the objective of the preservation of their luxury image, where the contract clause does not contain an absolute prohibition to sell the contract goods online, but applies solely to the internet sale of the contract goods via third-party platforms which operate in a discernible manner towards consumers . On the other hand, the EU authorities do not consider the impervious nature of a selective distribution network to be a condition of its validity, since inflexible and tightly sealed distribution systems would be contrary to the objectives of Article 101 TFEU . 

Case 26/76 Metro v Commission [1977] ECR 1875, LawLex200400002980JBJ; Case 31/80 L'Oréal v De Nieuwe AMCK [1980] ECR 3775, LawLex200400002967JBJ.

Case 31/80 L'Oréal v De Nieuwe AMCK [1980] ECR 3775, LawLex200400002967JBJ; Case 86/82 Hasselblad v Commission [1984] ECR 883, LawLex200500005391JBJ: the brand image of a product can in itself constitute a factor for the differentiation of relevant markets; Commission Decision No 92/33/EEC of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; No 92/428/EEC of 24 July 1992, Parfums Givenchy system of selective distribution, LawLex200500004686JBJ, the specific nature of luxury cosmetics justifies the use of selection criteria relative to the presence of qualified retailers, the specialized commercial environment of the point of sale and the requirement of storefront displays; Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ; Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

Case C-230/16 Coty Germany GmbH, Judgment of 6 December 2017, LawLex201800000317JBJ.

Case 26/76 Metro v Commission [1977] ECR 1875, LawLex200400002980JBJ; Case C-376/92 Metro v Cartier [1994] ECR I-15, LawLex200500005061JBJ; Case C-306/96 Javico v Yves Saint Laurent Parfums [1998] ECR I-1983, LawLex200400003612JBJ; Commission Decision No 85/559/EEC of 27 November 1985, Ivoclar, LawLex200400002433JBJ.

Commission Decision No 76/159/EEC of 15 December 1975, SABA, LawLex200400002389JBJ.

Case 243/83 Binon v AMP [1985] ECR 2015, LawLex200500004001JBJ.

Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ and Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

The product must have particular characteristics justifying a specific mode of distribution: See Commission Notice No 2010/C 130/01, at pt 175 confirming that principle.

Commission Decision No 76/159/EEC of 15 December 1975, SABA, LawLex200400002389JBJ; No 77/100/EEC of 21 December 1976, Junghans, LawLex200400003544JBJ; No 83/610/EEC of 5 December 1983, Murat, LawLex200400002426JBJ; No 85/616/EEC of 16 December 1985, Villeroy & Boch, LawLex200400002436JBJ; Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ; Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ; Case T-712/14 Confédération européenne des associations d'horlogers-réparateurs, Judgment of 23 October 2017, LawLex201700001708JBJ: holding that the complexity of the mechanisms of prestige Swiss watches constitutes an objective justification for the establishment of selective repair networks.

Case 26/76 Metro v Commission [1977] ECR 1875, LawLex200400002980JBJ: highly technical product; Commission Decision No 83/610 of 5 December 1983, Murat, LawLex200400002426JBJ: specific nature of jewelry items; No 84/233/EEC of 18 April 1984, IBM personal computer, LawLex200500005320JBJ, specific character of high-tech computer products; No 85/616/EEC of 16 December 1985, Villeroy & Boch, LawLex200400002436JBJ: specific character of ceramic tableware which is very durable; No 92/33/EEC of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ: luxury goods; No 92/428/EEC of 24 July 1992, Parfums Givenchy system of selective distribution, LawLex200500004686JBJ; Paris, 8 June 2005, LawLex200500009989JBJ: highly complex skincare products.

Case T-712/14 Confédération européenne des associations d'horlogers-réparateurs, Judgment of 23 October 2017, LawLex201700001708JBJ: provided that resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion, it is not necessary to verify whether the establishment of the network has the effect of eliminating all competition.

European Competition Law

120. Rule of reason

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

120. Rule of reason

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise