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

The Commission defines restrictions by object as those “which in light of the objectives pursued by the Community competition rules have such a high potential of negative effects on competition that it is unnecessary for the purposes of applying Article 81(1) [101(1) TFEU] to demonstrate any actual effects on the market”  as they have by their very nature the potential of restricting competition . …

Concept

The Commission defines restrictions by object as those “which in light of the objectives pursued by the Community competition rules have such a high potential of negative effects on competition that it is unnecessary for the purposes of applying Article 81(1) [101(1) TFEU] to demonstrate any actual effects on the market”  as they have by their very nature the potential of restricting competition . According to the Court of Justice, “[t]he distinction between “infringements by object” and “infringements by effect” arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition” . 

Restrictions by object are those which pursue an objective the very nature of which is so serious or harmful that their negative impact on the functioning of competition is clear beyond doubt, there being no need therefore to assess their potential  or, even less so, their apprecible effects on the market . Included in that category are “hardcore cartels” referred to in the OECD's 1998 Recommendation , i.e. anticompetitive agreements, anticompetitive concerted practices, or anticompetitive arrangements by competitors “to fix prices, make rigged bids (collusive tenders), establish output restrictions or quotas, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce”. The Commission in its communication on the application of Article 81(3) [101(3) TFEU] of the Treaty lists several examples of restrictions by object: price fixing and market-sharing, as well as the “hardcore restrictions” which are prohibited under the block exemption regulations and their guidelines . Hardcore restrictions are excluded in principle from eligibility for block exemption, but, can they, in some circumstances, qualify for an individual exemption? The Commission's answer to this is nuanced; as an agreement containing a hardcore restriction is presumed to fall under Article 101(1), it considers that it is unlikely to meet the conditions of Article 101(3). However, it reserves for undertakings "the possibility of demonstrating the existence of pro-competitive effects under Article 101(3) of the Treaty in a given case.” .

The Commission has expressly excluded restrictions by object from the scope of application of the De Minimis Notice . Enshrining the case law of the Court of Justice,  the text emphasizes that although the existence of a restriction by object does not preclude  parties from demonstrating that the conditions set out in Article 101(3) TFEU are met, practice shows that restrictions by object are unlikely to fulfill all four conditions.The Court of Justice for its part has warned against any broader interpretation of the concept of a restriction of competition "by object": the EU courts must establish that the practices at issue present a sufficient degree of harm to competition .

According to the Court, vertical agreements may involve a restriction of competition by object, even if they are, by their very nature, often less harmful to competition than horizontal agreements . 

Systems of selective distribution, insofar as they aim at the attainment of a legitimate goal capable of improving competition in relation to factors other than price, therefore constitute an element of competition which is in conformity with Article 101(1) TFEU. A clause in a selective distribution agreement requiring sales of cosmetics and personal care products to be carried out in a physical space where a qualified pharmacist must be present, resulting in a ban on the use of the internet for those sales, amounts to a restriction by object within the meaning of Article 101(1) TFEU. This type of agreement could however qualify for an indidvidual exemption under Article 101(3) if the conditions for exemption set out in the article are fulfilled . The Court has also emphasized that a vertical agreement which may fall into the category of “hardcore restrictions” within the meaning of the Vertical Restraints Regulation does not ipso facto constitute a "restriction of competition by object": the court is not relieved of the obligation to verify whether it presents a sufficient degree of harmfulness to competition . Finally the EU court has held that vertical agreements between, on the one hand, insurance companies and, on the other, car dealer/repair shops or an association representing them, that link the remuneration for the car repair service to that for the car insurance brokerage, can amount to a restriction of competition by object where the independence of both activities is necessary to prevent competition from being eliminated or seriously weakened on one of the two markets concerned .

Commission Communication No 2004/C 101/08 Guidelines on the application of Article 81(3) [101(3) TFEU] of the Treaty, pt 21.

Commission Communication No 2004/C 101/08, pt 21.

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

Case C-439-09 Pierre Fabre Dermo-Cosmétique, Judgment of 13 October 2011, LawLex201200000028JBJ.

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

Case C-32/11 Allianz Hungária Biztosító Zrt, Judgment of 14 March 2013, LawLex201300000361JBJ.

Case C-209/07 Beef Industry Development Society Ltd, Judgment of 20 November 2008, ECR 2008 p. I-8637, LawLex200900000070JBJ.

Case C-67/13 P Groupement des cartes bancaires, Judgment of  11 September 2014, LawLex201400000940JBJ.

Case C-226/11, December 2012, Expedia, Judgement of 13 December 2012, LawLex201200002452JBJ.

Recommendation of the Council concerning Effective Action Against Hard Core Cartels of 25 March 1998, C(98)35 final.

Commission Notice CE 2004/C 101/08, pts 21 to 23. In the case of horizontal agreements restrictions of competition by object include price fixing, output limitation and sharing of markets and customers; as regards vertical agreements the category of restrictions by object includes, in particular, fixed and minimum resale price maintenance and restrictions providing absolute territorial protection, including restrictions on passive sales.

Guidelines on Vertical Restraints No 2010/C 130/01, pt 181. The examples given in points 183 to 184 are so restrictive of competition that it is unlikely they would be eligible for individual exemption. See also Case C-501/06 P GlaxoSmithKline [2009] ECR 2009 p. I-9291, LawLex201000003668JBJ.

Commission Communication No 2014/C 291/01, pt 13; Guidance on restrictions of competition “by object” for the purpose of defining which

agreements may benefit from the De Minimis Notice, revised version 3 June 2015.

Case C-67/13 P Groupement des cartes bancaires, BNP Paribas, BPCE, Société Générale SA, Judgment of 11 September 2014 LawLex201400000874JBJ.

European Distribution Law

29. Concept

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

29. Concept

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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