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

An exclusive purchase agreement may constitute an unlawful agreement through its effects  if it restricts the access of the supplier's competitors to the market . Thus, an exclusive purchase agreement between a production cooperative bringing together more than 90% of the producers from one Member State, and its members which contains a pecuniary obligation in the event of withdrawal or exclusion, has a restrictive effect on competition . This is also the case for agreements which oblige the producer to compensate the distributor for direct sales exceeding a certain level and provide for quotas , or which prohibit imports and exports .

Exclusive supply contains the risk of eliminating competing buyers from the market as they are unable to access the contract goods. The negative effects on competition depend on the size of the purchaser's market share on downstream and upstream markets and on the scope and duration of the exclusive supply obligation. Exclusive supply is liable to appreciably harm competition where the market share of the buyer on the downstream market (where he sells his products) and on the upstream market (where he buys the products) exceeds 30%. Similarly, foreclosure effects are to be feared where, even though the share of the buyer on the upstream market is below 30%, the share on the downstream market exceeds that threshold and the exclusivity relates to a particular use of the product. Such effects are all the more likely where the buyer is in a dominant position on the downstream market . A supply agreement which contains an access clause allowing the reseller to obtain supplies in other Member States can escape the prohibition as it does not affect trade between Member States within the meaning of Article 101(1) . A negative prejudice prevails for agreements containing a supply obligation that is of more than five years' duration due to the foreclosure effect they have on the market. 

According to the Guidelines, there is a risk of foreclosure when the supplier is in a weak position and the buyer is in a strong one . The existence of entry barriers at the supplier level, the commercial stage and the nature of the product are all relevant to establishing whether there is actual foreclosure  .

Case C-234/89 Delimitis v Henninger Braü (AG) [1991] ECR I-935, LawLex200500003931JBJ.

Commission Decision No 78/172 of 21 December 1977, Spices, LawLex200400002398JBJ: an exclusive purchase agreement between one of the largest producers in the EU and a reseller representing virtually all large self-service stores distributing over 30% of the products, restricts competition between producers by preventing producers of other brands from selling their product through those distributors.

Case 61/80 Coöperatieve Stremsel-en Kleursefabriek [1981] ECR 851, LawLex200500004084JBJ. 

Commission Decision No 79/934 of 5 September 1979, BP Kemi - DDSF, LawLex200400002404JBJ.

Commission Decision No 91/50 of 16 January 1991, IJsselcentrale, LawLex200400002467JBJ: the maintaining, within a joint subsidiary of electricity producers with control of the grid, of a general prohibition on the importation and exportation of electricity is restrictive of competition where the legislation in force authorizes imports for purposes other than public supply and totally liberalizes exports.

Guidelines on Vertical Restraints of 2022, at pt 323.

Case C-234/89 Delimitis [1991] ECR I-935, LawLex200500003931JBJ.

Guidelines on Vertical Restraints, pt 325.

Guidelines on Vertical Restraints, pt 326 et seq.

Conditions of lawfulness

50. Conditions of lawfulness