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

Franchising agreements are covered by Regulation No 330/2010 . Whereas before they were subject to a very detailed specific regulation , they are barely mentioned in the new regulation and then only indirectly within a definition of know-how  and the rules covering post contractual non-compete clauses which are indispensable to protect know-how transferred by the supplier to the buyer .
The Guidel …

Block exemption

Franchising agreements are covered by Regulation No 330/2010 . Whereas before they were subject to a very detailed specific regulation , they are barely mentioned in the new regulation and then only indirectly within a definition of know-how  and the rules covering post contractual non-compete clauses which are indispensable to protect know-how transferred by the supplier to the buyer .

The Guidelines only briefly touch on developments relating to franchises . They are defined as the granting of a commercial method, consisting of, “licenses of intellectual property rights relating in particular to trademarks or signs and know-how for the use and distribution of goods or services” together with, “commercial or technical assistance”. According to the regulation , most obligations found in franchise agreements can be considered as necessary for the protection of intellectual property rights  or to maintain the common identity and reputation of the franchised network and therefore fall outside the scope of Article 101(1) TFEU. Such agreements also, “usually contain a combination of different vertical restraints concerning the products being distributed, in particular selective distribution and/or non-compete and/or exclusive distribution or weaker forms thereof” .

Article 3(1) of Regulation No 330/2010 presumes that agreements are lawful where they contain no hardcore restrictions as long as the supplier's or the reseller's market share does not exceed 30% of the relevant market . Beyond that level of market share, the agreement can only be exempted under a rule of reason or through an individual exemption.

Clauses purporting to impose resale prices , prohibit parallel sales  or prohibit passive sales  are hardcore restrictions - known as black clauses - and lead to the whole of the agreement being excluded from the benefit of the block exemption. Post contractual non-compete obligations, or for the duration of the agreement  are classified as red clauses in the regulation : their validity is subject to certain conditions, which, unless they are fulfilled, exclude the clause in question from the benefit of the exemption . Territorial exclusivity can only be limited in its scope: it can only be combined with the selection of distributors (and thus a resale outside the network prohibition) if active and passive sales are not restricted , except for location clauses, which suppliers may still impose on distributors .

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. This regulation goes along the Commission Notice No 2010/C 130/01, Guidelines on vertical restraints.

EC Regulation No 4087/88 of 30 November 1988, OJ L 359, 28.12.1988.

Article 4(b) of Regulation No 330/2010. See also Commission Decision No 89/94/EEC of 2 December 1988, Charles Jourdan, LawLex200500004474JBJ.

The non-compete obligation concluded for the duration of the contract takes, relative to franchise agreements, the form of an exclusive supply obligation. 

Non-compete obligations must be of fixed duration and cannot exceed five years; for franchises, the guidelines stipulate that the duration of the non-compete obligation is also irrelevant as long as it does not exceed the duration of the franchise agreement itself (Commission Notice 2010/C 130/01, Guidelines on vertical restraints at pt 66); post-contractual non-compete obligation should be limited to one year after the expiry, but its duration may be indefinite if it concerns a restriction on the use and disclosure of know-how that has not fallen into the public domain. 

Commission Notice 2010/C 130/01, Guidelines on vertical restraints at pt 190, referring to the system of selective distribution when the franchise agreement includes this type of vertical restriction: Article 4(c) prohibits the restriction of active or passive sales to end users by the members of a selective distribution system operating as retailers on the market.

Restrictions can be imposed on the dealer's ability to determine the location of his business premises. Thus, selected dealers may be prevented from running their business from different premises or from opening a new outland in a different location: Commission Notice 2010/C 130/01, Guidelines on vertical restraints, at pt 54.

Commission Notice 2010/C 130/01, Guidelines on vertical restraints, at pts 189 et seq.; on franchise, at pts 43 et seq.; on know-how, at pt 92 on the assessment of market share in case of franchise, at pt 148 on the relation between know-how and the non-compete obligation.

Points 45 and 89 et seq. of the Guidelines.

Article 1(f) of Regulation No 330/2010 now includes know-how within intellectual property rights.

Where there is an exclusive supply obligation, it is the buyer's market share that must be taken into account.

Article 4(a) of Regulation No 330/2010. See also Case 161/84, Pronuptia [1986] ECR 353, LawLex200500004110JBJ.

European Competition Law

132. Block exemption

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Les décisions de justice citées dans ce paragraphe :

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132. Block exemption

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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