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

Vertical agreements between exclusive distributors and suppliers must not restrict the commercial freedom of resellers to set their own resale prices as they see fit. The direct or indirect imposition of minimum retail prices is traditionally held to be seriously damaging to the rules of competition. A resale price maintenance (RPM) clause constitutes a restriction of competition by its object and …

Resale price maintenance

Vertical agreements between exclusive distributors and suppliers must not restrict the commercial freedom of resellers to set their own resale prices as they see fit. The direct or indirect imposition of minimum retail prices is traditionally held to be seriously damaging to the rules of competition. A resale price maintenance (RPM) clause constitutes a restriction of competition by its object and in principle cannot be exempted ; therefore a supplier adopts anticompetitive behavior when he imposes retail prices or discounts at a fixed level . 

Traditionally, retail price maintenance is subject to unfavorable consideration from the competition authorities since it: (i) enhances price transparency, which generates a risk of collusion between suppliers; (ii) facilitate the risk of collusion between buyers at the distribution level, especially when the practice is led by them, (iii) mitigate competition between manufacturers and/or between retailers, in particular when they use the same distributors; (iv) reduce the pressure on the manufacturer's profit margin, (v) prevent distributors from lowering their prices, which is detrimental to the interests of the end consumer, (vi) allow the manufacturer to foreclose competitors who have little market power, (vii) eliminate intra-brand price competition . 

However, a per se condemnation of retail price maintenance no longer corresponds to the current status of the economic analysis or to the rules currently in force in other states with highly advanced competition laws like the United States. In effect, economic science emphasizes that retail price maintenance may be legitimate in certain circumstances, in particular in the context of the introduction of a new product where consumers should be informed of its price positioning . Following that more modern analysis, the Supreme Court of the United States has reversed its case law by substituting the per se condemnation of retail price maintenance between manufacturers and distributors for a case-by-case assessment on the basis of the rule of reason. The maintenance of a minimum retail price has been regarded as capable of stimulating inter-brand competition, therefore offsetting a reduction of intra-brand competition .

Although a retail price maintenance constitutes a hardcore restriction excluding any block exemption (Article 4(a) of Commission Regulation (EU) No 2022/720), the Guidelines on Vertical Restraints seem to partly take account of the evolution when they assert, “RPM may also lead to efficiencies” . The Commission seems to show its willingness to take more the real economic impact of vertical restraints into consideration. However, the flexibility is only apparent. The Commission lists a limited number of cases in which a retail price maintenance may be necessary, such as the marketing of complex goods, the promotion of a new brand or a new entrant, or the setting-up of a short term low price campaign (two to six weeks). 

In all events, unlawfulness only concerns the imposition of a minimum price. A maximum limit may be fixed by the supplier . Likewise, communicating a recommended price is not per se contrary to Article 101 TFEU . The guidelines indicate that maximum or recommended resale prices are covered by the Block Exemption Regulation provided that the market share of each of the parties to the agreement does not exceed the 30% threshold and that the prices do not amount to a minimum or fixed sale price as a result of pressure from, or incentives offered by, any of the parties. However, a maximum resale price or a recommended resale price followed by most of the distributors might soften competition and facilitate collusion between suppliers , unless it avoids double marginalization .

Commission Decision No 97/123 of 4 December 1996, Novalliance/Systemform, LawLex200500004768JBJ.

Commission Decisions No 75/358 of 3 July 1975, Stoves and Heaters, LawLex200500005282JBJ, system of collective resale price maintenance; No 2001/135 of 5 July 2000, Nathan-Bricolux, LawLex200400003581JBJ; No 2002/190 of 21 December 2000, JCB, LawLex200500004731JBJ, on resale price maintenance and the harmonizing of prices and discounts among territories; No 2001/711 of 29 June 2001, Volkswagen, LawLex200400002643JBJ, on an obligation to comply with intra-brand price level in circulars and formal notices sent to dealers.

Guidelines on Vertical Restraints of 2022, pt 196.

Guidelines on Vertical Restraints, pt 225.

Supreme Court of the United States, 28 June 2007, Leegin Creative Leather Products, Inc v PSKS, Inc, 75USLW 4643 (US June 28 2007), No 06-480, 2007 WL 2335892.

Guidelines on Vertical Restraints, at pts 197 et seq.

Reg. No 2022/720, Art. 4: “The exemption provided for in Article 2 shall not apply to vertical agreements which, directly or indirectly, in isolation or in combination with other factors over which the parties have control, have as their object: (a) to restrict the ability of the buyer to determine its sale price, without prejudice to the possibility for the supplier to impose a maximum sale price or to recommend a sale price, provided that the latter does not amount to a fixed or minimum sale price as a result of pressure from or incentives offered by one of the parties.” - See also Guidelines on Vertical Restraints, pt 188.

Case T-67-01 JCB Service Judgment of 13 January 2004, LawLex2004000070JBJ .

In such case, the market position of the parties will be decisive in the assessment of possible anticompetitive effects: Guidelines on Vertical Restraints, pts 199 and 200.

Guidelines on Vertical Restraints, pt 201.

European Distribution Law

60. Resale price maintenance

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

60. Resale price maintenance

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