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

Traditionally, exclusive distribution was defined as an agreement in which, “the supplier agreed to sell its products to only one distributor for resale in a particular territory” . With new Vertical Restraints Regulation No 2022/720, “the supplier may allocate a territory or group of customers exclusively to itself or to a maximum number of five buyers and restricts all its other buyers from acti …

Definition

Traditionally, exclusive distribution was defined as an agreement in which, “the supplier agreed to sell its products to only one distributor for resale in a particular territory” . With new Vertical Restraints Regulation No 2022/720, “the supplier may allocate a territory or group of customers exclusively to itself or to a maximum number of five buyers and restricts all its other buyers from actively selling into the exclusive territory or to the exclusive customer group” .

The exclusivity the supplier must provide is essential in differentiating between exclusive distribution and selective distribution. The exclusive distributor, unlike the authorized reseller, benefits from a veritable monopoly to sell the products on the contract territory . The supplier agrees not to supply any other distributors or customers on the territory, apart from those customers specifically reserved. Selective distributors are on the other hand subject to unrestricted competition from other network members . However, the exclusivity enjoyed by the exclusive distributor is not absolute. Although immune from the active sales of other distributors in the network on its territory, as well as those of their direct buyers since the new regulation, the exclusive distributor is exposed to their passive sales, i.e. those who meet the demand of consumers in their own territory, that have not been solicited by competing resellers . Finally, since the new vertical restraints regulation, like the selective distributor, the exclusive distributor may be prohibited from active or passive sales to unauthorized distributors located in a territory in which the supplier operates a selective distribution system for the contract goods or services .

The existence of an agreement is established according to the rules of contract. Evidence must be brought of an offer from the supplier and an acceptance by the distributor. Initially established by the General Court , the rule is also included in the Guidelines on Vertical Restraints .

Where an international distribution agreement is the subject of litigation, the question of which court has jurisdiction is governed by Regulation No 1215/2012, Article 7(1)(b) of which - where there is no jurisdiction clause  - designates the courts of place of performance of the obligation which characterizes the contract: this may be the place of performance in which the non-performed obligation imposed by the contract is invoked or the place where the services were or should have been provided . 

Guidelines on Vertical Restraints of 2010, pt 151.

Reg. No 2022/720 of 10 May 2022 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJEU L 134 of 11 May 2022, Art. 1(1)(h).

Case C-9/12 Corman-Collins SA, Judgment of 19 December 2013, LawLex201300001876JBJ; Case C-64/17 Saey Home & Garden NV/SA, Judgment of 8 March 2018, LawLex201800000386JBJ, finding that the court with jurisdiction to hear a claim for compensation relating to the termination of an exclusive commercial concession agreement concluded between two companies established and operating in two different Member States for the distribution of goods on the domestic market of a third Member State in which neither of those companies has a branch or establishment, is that of the Member State in which the place of the main supply of services or the actual performance of that contract, and where it cannot be determined on that basis, the place where the agent is domiciled.

For an agreement conferring absolute territorial protection, see Commission Decision No 2001/135 of 5 July 2000, LawLex200400003581JBJ.

On passive sales: Case T-175/95 BASF Coatings (AG), Judgment of 19 May 1999, LawLex200400003599JBJ.

Case T-208/01 VAG, Judgment of 3 December 2003, LawLex200500004803JBJ; Case C-74/04 P VAG, Judgment of 13 July 2006, LawLex200600002433JBJ: the mere conclusion of a car dealership contract that complies with competition law cannot be considered as a tacit acceptance by the dealer of the manufacturer's future policy that does not comply with the law. See also Cases C-2/01 P, C-3/01 P Bayer, Judgment of 6 January 2004, LawLex200500004498JBJ: the mere fact that the unilateral quota policy implemented by a manufacturer of pharmaceutical products, combined with the national requirements of complete assortments incumbent on wholesalers, produces the same effect as a ban on exports does not mean that the manufacturer has imposed such a ban, nor does it mean that there is an agreement forbidden by Article 101(1), TFEU Case T-450/05 Automobiles Peugeot, Judgment of 9 July 2009, LawLex201000001159JBJ, retaining the proof of the distributors' acquiescence.

Guidelines on Vertical Restraints No 2022/C 248/01 of 28 June 2022, pt 54.

Case C-64/17 Saey Home & Garden NV/SA v Lusavouga-Máquinas e Acessórios Industriais SA, Judgment of 8 March 2018, LawLex201800000386JBJ, holding that a jurisdiction clause contained, in the absence of a written contract between the parties, only in the general terms and conditions of sale mentioned on the back of the supplier's invoices, does not comply with Article 25 of Regulation No 1215/2012 and is therefore not enforceable against the distributor.

Case 14/76 De Bloos, Judgment of 6 October 1976, LawLex200900001547JBJ.

Exclusive agreements are formally more anticompetitive than non-exclusive agreements by reason of the monopoly they establish and the resulting market foreclosure . An increase in inter-brand competition is obtained after a reduction of intra-brand competition . The economic analysis has however shown that the negative effects of exclusivity could be compensated by its beneficial effects. Exclusive distribution therefore restricts competition while contributing to its development. In this respect, it may escape the prohibition of the law on restrictive agreements, either under the rule of reason , or on the basis of collective or individual exemption. The Guidelines on Vertical Restraints draw up a non-exhaustive list of inefficiencies which may be solved by exclusive distribution. Exclusive distribution may ensure the release of a new product, in particular experience goods or complex goods or favor the entering or opening up of new markets , compensate for the renunciation to relationship-specific investments to be made by the distributor , favor the retailer's sales efforts to struggle against the double marginalization problem , have scale economies at the distribution level and enable the manufacturer to lower the retail price of the product and improve the quality of the service . 

Vertical Restraints Guidelines of 2022, pt 119: “In a distribution system where the supplier allocates a territory or group of customers exclusively to one or more buyers, the main possible risks for competition are market partitioning, which could facilitate price discrimination, and the weakening of intra-brand competition. When most or all of the strongest suppliers active in a market operate an exclusive distribution system, this may also weaken inter-brand competition and/or facilitate collusion, both at the supplier and distributor level. Finally, exclusive distribution may lead to foreclosure of the market to other distributors and thereby reduce both inter-brand and intra-brand competition at the distributor level”.

Guidelines on Vertical Restraints, at pt 21.

See Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 337, LawLex200400002665JBJ: an exclusive distribution agreement which confers no absolute territorial protection and includes no export ban, does not necessarily fall within Article 101(1) TFEU [former Article 81 EC], in particular where exclusivity is necessary for the penetration of a new market.

Guidelines on Vertical Restraints, at pt 16(c).

Guidelines on Vertical Restraints, at pt 16(e).

Guidelines on Vertical Restraints, at pt 16(a).

Guidelines on Vertical Restraints, at pt 16 (g) and 17.

European Distribution Law

57. Definition

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Les décisions de justice citées dans ce paragraphe :

Sous parties

Les notions juridiques connexes

57. Definition

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Les décisions de justice citées dans ce paragraphe :

Sous parties

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise