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

Even though franchise agreements are concluded between non-competing undertakings, they may still be of harm to competition . Confirming the potentially restrictive nature of franchise agreements , the EU authorities have, throughout their decision making, specified which clauses they hold as particularly restrictive. The successive regulations on vertical restraints are the synthesis of the opini …

Restrictive clauses

Even though franchise agreements are concluded between non-competing undertakings, they may still be of harm to competition . Confirming the potentially restrictive nature of franchise agreements , the EU authorities have, throughout their decision making, specified which clauses they hold as particularly restrictive. The successive regulations on vertical restraints are the synthesis of the opinion of the EU authorities on the question (Regulations No 2790/1999 and 330/2010).

The franchisee, as an independent trader, must be able to freely determine its own pricing policy. If the franchisor imposes a minimum price on the franchisee, this constitutes an unlawful agreement. Franchisors may however provide recommended prices to franchisees as long as this does not affect the freedom of the latter to independently set their own resale prices . Recommended prices are accepted by the European authorities in the case of maximum resale prices  provided that there is no evidence of any practice to the effect that the recommended price should be applied . Where the market share of the supplier and of the reseller does not exceed 30%, the regulation exempts the practice of recommending resale prices . Beyond that level, the Commission Guidelines stipulate that the better the supplier's position on the market, the higher the risk that resellers will align their prices. In that case, recommended prices are liable to lead to the fixing of a uniform price level and would be caught be Article 101(1) TFEU.

According to the Commission , the restriction on franchisees' sales may be lawful if it is limited and/or necessary in order in particular to obtain and protect their investment and the franchisees retain passive service rights in other territories and remain free in the determination of their sales prices . This is also the case for prohibitions on the franchisee selling contract products to resellers outside the network, as that type of obligation is inherent to franchise agreements .

With an exclusive purchase clause the franchisee agrees to obtain supplies exclusively from the franchisor. This exclusive purchase obligation covers two possibilities: the franchisor can impose an exclusive supply obligation for the contract goods or services and it may be that the supplier will require resellers to use a designated supply source for the purchase of equipment or improvements to premises. Regulation No 330/2010 qualifies this type of clause as a non-compete obligation . Non-compete obligation limited to five years and which are not tacitly renewable and purchase obligations amounting to less than 80% of the franchisee supplies, regardless of duration, are lawful, provided that the supplier's or the reseller's market share does not exceed 30%. Where above 30%, the guidelines stipulate that the non-compete obligation falls outside Article 101(1) when the obligation is necessary to maintain the common identity and reputation of the franchised network. The duration of the non-compete obligation is also irrelevant as long as it does not exceed the duration of the franchise agreements itself .

Cross supplying involves mutual sales between members of the same network. The ban on cross-supplies due to their limiting of intra-brand competition is, by its nature, restrictive of competition.

Regulation No 330/2010 only expressly provides for a ban on the prohibition of cross-supplies within selective systems. However, according to the Commission, this provision is likely to apply to the franchise agreement which contains a combination of vertical restraints, such as selective distribution and/or brand exclusivity and/or the exclusive distribution or recognized forms thereof . In such cases, the provisions relating to the restriction in question apply to the franchise .

 Case 161/84 Pronuptia [1986] ECR 353, LawLex200500004110JBJ: the need to protect the reputation of the network may not prevent the franchisee from obtaining those products from other franchisees.

Commission Decision No 87/14/EEC of 17 December 1986, Yves Rocher, LawLex200500004449JBJ; No 87/17/EEC of 17 December 1986, Pronuptia, LawLex200500004453JBJ; No 87/407/EEC of 13 July 1987, Computerland, LawLex200400002440JBJ; No 88/604/EEC of 14 November 1988, ServiceMaster, LawLex200500005332JBJ; No 89/94/EEC of 2 December 1988, Charles Jourdan, LawLex200500004474JBJ.

Commission Regulation (EU) No 330/2010 of 20 April 2010, Article 1(d).

Commission Notice No 2010/C 130/01, pt 190(2).

Commission Notice No 2010/C 130/01, pt 189.

Commission Notice No 2010/C 130/01, pt 190.

BUTTIGIEG, Vertical conduct: Resale price maintenance, in Comparative competition law, Edward Elgar, 2015, 245 ; JEDLICKOVA, Resale Price Maintenance and Vertical Territorial Restrictions: Theory and Practice in EU Competition Law and US Antitrust Law, Edward Elgar, 2016.

Commission Decision No 88/604/EEC of 14 November 1988, ServiceMaster, LawLex200500005332JBJ.

Commission Decision No 87/17/EEC of 17 December 1986, Pronuptia, LawLex200500004453JBJ.

Commission Decision No 87/14/EEC of 17 December 1986, Yves Rocher, LawLex200500004449JBJ.

Commission Regulation (EU) No 330/2010 of 20 April 2010, on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, Article 4(a), which retains the possibility for the supplier, "to impose a maximum sale price or recommend a sale price".

Commission Notice No 2010/C 130/01, at pt 191: "The restrictions on selling (contract territory and selective distribution) provide an incentive to the franchisees to invest […] and, if not necessary for, at least help to maintain the common identity, thereby offsetting the loss of intra brand competition".

European Competition Law

131. Restrictive clauses

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

131. Restrictive clauses

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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