Background

Economic theory of vertical restraints

Economic theory and competition law

Should distributors have more protection?

Vertical restraints put to the test of economic analysis

Structure of distribution law - Book plan

General bibliography

Introduction

Localizing the anticompetitive effects

Effect on trade between Member States

Scope ratione loci

Concept of an undertaking

Intra-group agreements

Scope ratione personae

Applicability of competition law to vertical agreements

Definition of the relevant market

Anticompetitive object or effect

Appreciability threshold

Concept of agreement and concerted practice

Prohibition of vertical restraints

Block exemptions

Individual exemptions and rule of reason

Exemption of vertical restraints

Control of vertical restraints

Prohibition

Exoneration

Restrictive agreements

Principle

Applications

Abuse of dominant position

Exclusive purchase/Exclusive supply

Resale outside network

International agreement

Exclusive distribution agreements

Manufacturer's guarantee

Protection of the brand

Protecting the network against third parties

Relations between the parties

Selective distribution

Hardcore restrictions

Individual exemptions

Rule of reason

Prohibition of restrictive agreements and individual exemptions

Distribution of new motor vehicles : Regulation No 330/2010

After-sales : Regulation No 461/2010

Block exemption

Motor vehicle distribution agreements

Merger control

Franchising

Commercial agency and competition

EU harmonization

International agency

Commercial agents

This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

European Distribution Law

Articles 101 or 102 TFEU apply to practices or behavior which “may affect trade between Member States”. The Commission has adopted the Guidelines on the effect on trade concept contained in Articles 101 and 102 TFEU , setting out the principles developed by the courts and providing guidance on the application of the concept of effect on trade in frequently occurring situations.

The concept of trade covers all economic activity regardless of its object  or methods of carrying out such trade , including establishment . It is not limited to traditional exchanges of goods and services across borders . The term “trade” is a broad concept and covers, for instance, money transactions . It is also irrelevant that participants to the agreement had acquired the product from a company belonging to the same group, when it comes from another Member State .

Trade between Member States can be affected whether that trade concerns imports or exports. The source of goods or services has no influence over whether trade between Member States is affected . It is enough that they are commercialized in the internal market as a whole  and that the behavior of the undertakings has repercussions within the Union . A restriction of competition implemented by undertakings of a Member State, even in respect of a non-Member country, affects trade within the Union when it has the effect that trade develops in circumstances other than those that would prevail without it .

The concept of “trade between Member States” implies that there must be cross-border trade involving at least two Member States. However, it is not essential that the agreement or practice affect trade between the whole of two Member States . Articles 101 and 102 TFEU also apply to practices which only produce an effect on a part of a Member State, provided however that the effect on trade flows is appreciable . Consequently, the fact that a vertical agreement to fix minimum resale prices extends to almost all, but not all, of the territory of a Member State does not prevent it from affecting trade between Member States . Measures intended to partition the market of a Member State are, by their nature, likely to affect trade between Member States .

An agreement which does not have appreciable economic effects does not affect trade between Member States nor does it infringe competition within the meaning of Article 101(1) TFEU . According to the Guidelines of 27 April 2004 , in principle agreements are not capable of appreciably affecting trade between Member States when the following two conditions are both met: the aggregate market share on any relevant market by the agreement should not exceed 5%, and turnover of the undertakings concerned in the case of horizontal agreements, and of the supplier in the case of vertical agreements, should not exceed EUR 40 million . A positive presumption of appreciability - which may be reversed by evidence to the contrary - affects those agreements or practices which, by their very nature , are likely to affect trade between Member States, whether the EUR 40 million of turnover and the 5% market share thresholds are exceeded. The presumption is waived when the agreement covers only part of a Member State.

The assessment of the appreciable effect must be carried out in respect of the context and take account of the legal and economic frame of the restriction of competition. Also, in the case of vertical agreements, the possible existence of similar agreements likely to produce a cumulative effect should be examined . In effect, an agreement that only itself produces limited effects may appreciably affect trade between Member States if it is part of a series of similar agreements .

Two conditions must at least be fulfilled to establish an effect on trade between Member States : a sufficient degree of probability on the basis of a set of objective factors of law or fact ; a direct or indirect , actual or potential influence  on the patterns of trade between Member States. 

Agreements or practices, the object of which is the partitioning of the market , affect trade between Member States by their very nature: it is not necessary to verify that there has been an actual effect . The same is true of practices designed to eliminate a competitor established in a Member State . More generally, effect is based on objective factors and the subjective intent of the undertakings concerned is not required . The probability of an effect on trade may depend on several factors which, when taken individually, would not necessarily be decisive . The type of agreement or practice, the nature of the products concerned  and the position and size of the undertakings in question  are all criteria of assessment. The courts must evaluate whether the condition pertaining to effect is met by taking account of the economic and legal context (e.g. the existence of a regulation) . On the other hand, there is no requirement that all the clauses of an agreement must affect trade between Member States : the assessment is general.

The influence on trade flows is objectively assessed. It is irrelevant that the agreement or practice leads to a considerable increase in trade between Member States  or is limited to diverting trade from the direction it would normally have taken .

In practice, even if the condition of appreciable effect on trade between Member States gives rise to divergent interpretations , it is generally assessed very broadly, with the result that EU law is applicable to most distribution contracts in mainland France and the French overseas departments and regions (DROM) .

Commission Notice 2004-C 101-07, Guidelines on the effect on trade concept between Member States contained in Articles 81 and 82 of the Treaty of 27 April 2004.

Concerning raw materials or semi-manufactured products, which are not to be traded within the Union but are intended to be incorporated into a product to be marketed in the Union, see Case 123/83 BNIC v Clair [1985] ECR 391, LawLex200500004010JBJ.

For a market-sharing agreement between competitors, see Commission Decision No 92/427 of 27 July 1992, Quantel International - Continuum/Quantel SA, LawLex200400003676JBJ.

Commission Notice No 2004/C 101/07 of 27 April 2004 pt 21.

Commission Notice No 2004/C 101/07 of 27 April 2004 pt 44.

Case C-211/22 Super Bock Bebidas SA, Judgment of 29 June 2023, LawLex202300008611JBJ.

Case 23-67 Brasserie de Haecht (SA) c. Wilkin-Janssen (Consorts), Judgment of 12 December 1967, LawLex200200004153JBJ.

Case 5/69, Voelk v Vervaecke [1969] ECR 295, LawLex200400002764JBJ.

Commission Notice No 2004/C 101/07 of 27 April 2004 pt 52.

Exceeding by 10% the EUR 40 million turnover threshold or by 2 points the 5% market share threshold over two consecutive calendar years is of no consequence.

Such is the case for import and export agreements or those concerning several Member States. See, Commission Notice No 2004/C 101/07 of 27 April 2004 pt 53.

Case 23/67 Brasserie De Haecht v Wilkin Janssen [1967] ECR 525, LawLex200400002686JBJ; Case C-393/92 Gemeente Almelo and others v Energiebedrijf IJsselmij [1994] ECR I-1477, LawLex200400002880JBJ.

Concerning the provision of services, see Case T-66/92, Herlitz v Commission [1994] ECR II-531, LawLex200400003559JBJ.

Case 27/87 Erauw-Jacquery v La Hesbignonne [1988] ECR 1919, LawLex200500003943JBJ. See also Case C-393/92 Gemeente Almelo and others v Energiebedrijf IJsselmij [1994] ECR I-1477, LawLex200400002880JBJ; also Case T-77/94 VGB and others v Commission [1997] ECR II-759, LawLex200400003640JBJ: in this case the Court stated that an exclusive agreement could not combine with others to have a cumulative effect on competition liable to have an effect on trade between Member States where all the agreements do not relate to the same business activity; see also: Cases T-9/93 and T-7/93 Schöller v Commission [1995] ECR II-1611, LawLex200400003649JBJ; Case C-214/99 Neste [2000] ECR I-11121, LawLex200500004917JBJ.

Commission Notice No 2004/C 101/07 of 27 April 2004 pt 24.

A “foreign” factor may be sufficient for there to be a probability of affecting trade between Member States: Case 243/83 Binon v AMP [1985] ECR 2015, LawLex200500004001JBJ.

See Case 123/83 BNIC v Clair [1985] ECR 391, LawLex200500004010JBJ.

See Case T-141/89 Tréfileurope Sales v Commission [1995] ECR II-791, LawLex200400003654JBJ; Commission Decision No 64/566 of 23 September 1964, Grundig/Consten, not available in English; See joined Cases 56 and 58/64 Consten and Grundig v Commission EEC [1966] ECR 559, LawLex200400002598JBJ; Commission Decision No 85/76 of 7 December 1984, Milchförderungsfonds, LawLex200500004295JBJ; Case 19/77 Miller v Commission [1978] ECR 131, LawLex200500004035JBJ; Case 107/82 R Telefunken AG v Commission [1982] ECR 1549, LawLex200500004559JBJ; Case T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, LawLex200500004913JBJ; Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389, LawLex200400002901JBJ.

For examples of partitioning that may affect trade between Member States: Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 337, LawLex200400002665JBJ: exclusive distribution agreements leading to partitioning of markets of certain products; Case 161/84 Pronuptia [1986] ECR 353, LawLex200500004110JBJ: clauses to share markets between franchisors and franchisees or between franchisees affect intra-EU trade, even if they concern undertakings established in the same country; See Case C-234/89 Delimitis v Henninger Bräu [1991] ECR I-935, LawLex200500003931JBJ: no effect on trade between Member States where an exclusive supply agreement contains an access clause; Case T-62/98 Volkswagen v Commission [2000] ECR II-2707, LawLex200400003580JBJ: measures which have as their object the partitioning of the market of a Member State and cover the whole territory of a Member State, are by nature likely to affect trade between Member States.

Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389, LawLex200400002901JBJ; Case T-147/89 Société métallurgique de Normandie v Commission [1995] ECR II-1057, LawLex202000001990JBJ.

Commission Decision No 72/457 of 14 December 1972, ZOJA/CSC-ICI, not available in English; Cases 6/73 and 7/73 Istituto Chemioterapico Italiano and Commercial Solvents v Commission [1974] ECR 223, LawLex200400002884JBJ; Case T-69/89 RTE v Commission [1991] ECR II-485, LawLex200400002913JBJ.

Commission Notice No 2004/C 101/07 of 27 April 2004 pt 25.

Case C-250/92 Gøttrup-Klim and others Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641, LawLex200400002888JBJ.

See Case 172/80, Züchner v Bayerische Vereinsbank [1981] ECR 2021, LawLex200500004027JBJ: relative to a State measure preventing the provision of services, or even the establishment, of EU operators on the national territory.

Trade between Member States will be more particularly concerned by products for which cross-border trade is easy or which are important for undertakings wishing to set up or develop their activity in other Member States.

See for example Case C-306/96 Javico v Yves Saint Laurent Parfums [1998] ECR I-1983, LawLex200400003612JBJ; Case 22/71 Béguelin Import v G.L. Import Export [1971] ECR 949, LawLex200400002766JBJ.

Case T-77/94 VGB and others v Commission [1997] ECR II-759, LawLex200400003640JBJ: in order to assess whether a rule is liable to affect trade between Member States it must be assessed with regard to the whole of the regulatory framework of which it is part and it is not necessary to examine whether in isolation it would produce such an effect.

Case 193/83 Windsurfing International v Commission [1986] ECR 611, LawLex200400003547JBJ; Commission Decision No 2002/759 of 5 December 2001, Luxembourg Brewers, LawLex200400003555JBJ.

Case T-141/89 Trefileurope v Commission [1995] ECR II-791, LawLex200400003654JBJ; Commission Decision No 64/566 of 23 September 1964, Grundig/Consten, not available in English; Case 56/64 and 58/64 Consten v Commission EEC [1966] ECR 556, LawLex200400002598JBJ; Commission Decision No 85/76 of 7 December 1984, Milchförderungsfonds, LawLex200500004295JBJ.

See in particular No 09-D-36 of 9 December 2009, applying European and French competition law, annuled by CA Paris, Judgment of 23 September 2010, not available in English (refusal to apply European law); Cass. com. 31 January 2012, LawLex201200000155JBJ; CA Paris, 4 July 2013, LawLex201300001068JBJ (application of European and French competition law).

CA Paris, 4 July 2013, LawLex201300001068JBJ, cited above: the referring court of appeal found that there was an appreciable effect on trade between Member States concerning exclusive mobile telephony distribution contracts between the subsidiary of a metropolitan operator and its distributors in the Antille-Guyane area, as the services enabled calls or data to be received or sent from or to all Member States, allow cross-border exchanges and are subject to roaming agreements, while the practices tend to prevent other European operators from setting up in the area, and are likely to affect trade through predatory practices and the creation of barriers to entry that hinder the arrival of other European operators. The appreciable nature of the effect is established by a multi-criteria analysis (practices relating to a wide range of services, implemented by a large group in a dominant position, large market area, volume of sales concerned and desire to prevent the arrival of new entrants). See aslo CA Paris, 28 March 2013, LawLex201300000486JBJ, LPA.

Commission Notice No 2004/C 101/07 of 27 April 2004 pt 19.

Case 172/80, Züchner v Bayerische Vereinsbank [1981] ECR 2021, LawLex200500004027JBJ.

Case 240/82, Stichting Sigarettenindustrie v Commission [1985] ECR 3831, LawLex200400003566JBJ.

Case 27/76, United Brands v Commission [1978] ECR 207, LawLex200400002980JBJ: emphasizing that intra-EU trade may be affected even if the products concerned by the agreements in question are in part imported from third countries.

Commission Decision No 2003/2 of 21 November 2001, Vitamins, LawLex200400003546JBJ.

Cases 6/73 and 7/73, Istituto Chemioterapico Italiano and Commercial Solvents v Commission [1974] ECR 223, LawLex200400002884JBJ: when the holder of a dominant position in the internal market is likely, by the abuse of said position, to eliminate a competitor in the internal market, it does not matter that the behavior concerns the export activity of the competitor, where its elimination will have repercussions on the structure of competition in the internal market.

18. Effect on trade between Member States