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

There is an important proviso in Article 101(3) TFEU; under no circumstances can an agreement benefit from an exemption when it affords the undertakings concerned with the possibility of eliminating competition in respect of a substantial part of the products in question. A prohibition threshold is thus determined, beyond which exemption can never be granted, even if the agreement in question meet …

No elimination of competition

There is an important proviso in Article 101(3) TFEU; under no circumstances can an agreement benefit from an exemption when it affords the undertakings concerned with the possibility of eliminating competition in respect of a substantial part of the products in question. A prohibition threshold is thus determined, beyond which exemption can never be granted, even if the agreement in question meets the other conditions of exemption.

Although the provision clearly ties the absence of possibility to eliminate competition to the agreement, in fact the assessment is carried out in the light of the economic power of the undertakings party to that agreement i.e. by looking to their market share, and this requires a definition of the market concerned. An analysis of the practices of the supervisory authorities shows that decisions finding the existence of the possibility of eliminating competition relate, in principle, to agreements where the parties jointly control over 70% of the market, and more often than not, they will have a market share of somewhere between 80% and 90% of the market concerned . However, the scope of the economic power threshold thus defined is relative . In the Commission's view, the detention of a market share of substantially less than 70% may in some cases lead to an elimination of competition .

The Commission sometimes tempers the scope of the prohibition threshold by conducting a qualitative assessment of the importance of the restriction based on the intrinsic characteristics of the agreement. In many decisions, EU authorities offset the findings of the size of the market share controlled by members of the cartel, by taking into account the degree of harmfulness of the provisions in the agreement. Even if an agreement groups together undertakings controlling virtually all of a market, the Commission considers that it does not lead to an elimination of competition where the provisions of the agreement do not totally prevent the members from acting independently. Such is the case when there is no absolute territorial protection  or where operators are free to set their own prices . Conversely, the Commission considers that an absolute territorial protection clause, which prohibits dealers and wholesalers established outside a territory from selling products covered by exclusivity on that territory, would eliminate competition regardless of the market position of the undertakings concerned .

In certain decisions, EU authorities have mitigated the scope of the conclusions on the size of the market share of undertakings which are parties to the agreement by taking into account the degree of market concentration on which the agreement operates. An agreement involving only undertakings with little power tends to eliminate competition when it occurs on a highly concentrated market and is part of a cumulative effect . The exemption is however granted for any agreement on a market on which a sufficient number of competitors with an assured financial capacity persist .

Finally, the significance of forms of competition affected is sometimes likely to modify the assessment. EU authorities take the view that the maintenance of competition through quality could, for certain types of products, offset an elimination of price competition provided, however, that this is not total .

Commission Decisions No 75/358 of 3 July 1975, Stoves and Heaters, LawLex200500005282JBJ; No 80/234 of 5 December 1979, Rennet, LawLex200400002413JBJ; See also Commission Decision No 1999/474 of 16 June 1999, Scottish and Newcastle, LawLex200400002630JBJ: exemption of a beer supply contract containing exclusive purchasing and non-compete obligations, where the supplier, who held only 28 to 29% of the market in question, had no possibility of eliminating competition.

Commission Notice No 2004/C 101/08, OJ C 101 of 27 April 2004, Guidelines on the application of Article 81(3) of the EC Treaty [now Article 101(3)] pt 109.

The Guidelines on Vertical Restraints assert that in assessing the elimination of competition, account must be taken of the relationship between Article 101(3) and Article 102. Article 101(3) must be interpreted as precluding any application of the exception rule to restrictive agreements that constitute an abuse of a dominant position: pt 296.

Commission Decision No 85/559 of 27 November 1985, Ivoclar, LawLex200400002433JBJ.

Commission Decisions No 70/488 of 28 October 1970, Omega; No 77/100 of 21 December 1976, Junghans, LawLex200400003544JBJ; No 85/559 of 27 November 1985, Ivoclar, LawLex200400002433JBJ.

See Case 26/76 Metro v Commission [1977] ECR 1875, LawLex200400002980JBJ; Case 75/84 Metro v Commission [1986] ECR 3021, LawLex200500004031JBJ, para 41. 

Case 26/76 Metro v Commission [1977] ECR 1875, LawLex200400002802JBJ.

European Distribution Law

46. No elimination of competition

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

46. No elimination of competition

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise