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

Although internet sales may appear difficult to reconcile with selective distribution which requires qualified staff and an adapted environment, this is not the view of the EU authorities. In the Guidelines on Vertical Restraints of 2010, the Commission stated that “in principle, every distributor must be allowed to use the internet to sell products”. The internet was regarded as “a powerful tool  …

Internet sales

Although internet sales may appear difficult to reconcile with selective distribution which requires qualified staff and an adapted environment, this is not the view of the EU authorities. In the Guidelines on Vertical Restraints of 2010, the Commission stated that “in principle, every distributor must be allowed to use the internet to sell products”. The internet was regarded as “a powerful tool to reach a greater number and variety of customers than by more traditional sales methods, which explains why certain restrictions on the use of the internet are dealt with as (re)sales restrictions.”  The Commission advocated strict compliance with a principle of equivalence of the conditions applied to resellers, regardless of whether the contractual products were marketed online or offline, in order to protect online sales, which, according to the Commission, contributed to decompartmentalizing the markets. The rigor of the principle was reinforced by a strict prohibition of dual pricing .

The consultations prior to the revision of Regulation No 330/2010 showed that due to the considerable development of e-commerce in recent years, it was no longer necessary to favor online sales over physical sales. While the new Regulation No 2022/720 and its guidelines make the prohibition of online sales a hardcore restriction in its own right, the permissible restrictions on the use of the internet are now more numerous. The importance of online intermediation platforms has also forced their inclusion in the exemption mechanism and the introduction of some form of regulation.

The prohibition of online sales, whether direct or indirect, is now expressly classified as a hardcore restriction by Article 4(e) of Regulation No 2022/720, whereas such sales were previously only considered as a variant of passive sales by the guidelines of 2010 . The regulation thus codifies the solutions of the Pierre Fabre  judgment - according to which the stipulation in the selective distribution contract requiring the sale of cosmetic and personal hygiene products in a physical space in the presence of a qualified pharmacist excludes the use of the internet - and the Guess  decision - according to which the requirement of prior authorization from the network head before any online sale constitutes a restriction by object, when it is not justified by any precise qualitative criterion and aims to give preference to its own website. The guidelines outline the various forms that the prohibition of online sales can take: clauses which, directly or indirectly, have the object of preventing the effective use of the internet by the buyer or its customers; restrictions on online sales or online advertising which de facto prohibit the buyer from using the internet to sell the contractual goods or services; clauses that significantly reduce the aggregate volume of online sales of the contract goods or services or the ability of end-users to purchase the contract goods or services online; clauses that entirely prevent the use of one or more online advertising channels by the buyer, such as search engines or price comparison tools, or the opening or prohibition of the buyer to create its own online store . More specifically, hardcore restrictions include requiring the buyer to: (i) prevent customers located in another territory from viewing its website or online store or automatically re-rout its customers to the manufacturer's or other distributors' websites; (ii) terminate consumers' transactions over the internet once their credit card data reveal an address that is not within the distributor's territory; (iii) sell contract goods or services only in a physical space or in the physical presence of dedicated personnel; (iv) seek permission from the vendor before conducting individual online sales transactions; or prohibit the vendor: (v) use the supplier's trademarks or trade names on its website or in its online store; (vi) create or operate one or more online stores, whether hosted on its own server or on a third-party server; (vii) make full use of an online advertising channel, such as search engines or price comparison services, or the supplier's trademarks or trade names for submissions that will be referenced in search engines .

On the other hand, some requirements regarding the way in which contract goods or services must be sold online are tolerated. In general, the Commission allows restrictions that do not interfere with the reseller's freedom to operate its own online store and to advertise online . More specifically, the Guidelines of 2022  enshrine the solution of the Coty  judgment, according to which the prohibition on members of a selective distribution network from marketing the contract products on a third party platform or marketplace does not infringe either Article 101(1) TFEU, nor the prohibition of restrictions on passive sales provided for in Article 4 of the regulation, provided that the agreement does not have, directly or indirectly, the object of preventing the effective use of the internet by the buyer to sell the contract goods or services in specific territories or to a specific customer base . Other requirements, which break with the principle of strict equivalence of conditions for online/offline sales, are now exempted. This is the case for the obligation to guarantee the quality or a particular aspect of the reseller's online store or relating to the presentation of the contractual goods or services in the online shop  ; or, for the reseller, the obligation to operate one or more physical sales outlets or display areas, or to sell an absolute minimum amount of the contractual goods or services  offline in order to ensure the proper functioning of its physical sales outlet .

Finally, while the previous guidelines characterized  dual pricing as a hardcore restriction, the new text now sees it as a means of encouraging or rewarding an appropriate level of investment in online or offline sales channels . Dual pricing is now exempted provided that it is not intended to restrict sales to specific territories or specific customers. The new text also provides that dual pricing is a means of encouraging or rewarding an appropriate level of investment in online or offline channels. Dual pricing is now exempted provided that it is not intended to restrict sales to specific territories or to a specific customer base . Similarly, dual pricing must not be intended to restrict sales to a specific customer base. Similarly, they must not be set at a level that would make online sales unprofitable or financially unviable or be used to limit the quantity of products available to the buyer for online sales. Conversely, dual pricing may qualify for the exemption where the difference in wholesale price between online and offline sales is reasonably related to the differences in investment and costs incurred by the reseller of sales in each channel. The guidelines allow the parties to agree on an appropriate method for implementing the dual pricing system, including through ex post rebalancing of accounts based on actual sales.

Guidelines on Vertical Restraints of 2010, pt 52.

With the inclusion of restrictions on the use of online marketplaces in the scope of the exemption, the debates on the scope of the Coty judgment are no longer relevant. The prohibition can now apply to luxury goods as well as to high-quality or high-tech products.

Such as the minimum number of items displayed, the way trademarks or supplier trade names are displayed...

In value or volume, but not as a proportion of its total sales.

This requirement may apply to all resellers or it may be set at a different level for each reseller based on objective criteria, such as the size of a reseller relative to others or its geographic location.

Guidelines on Vertical Restraints of 2010, pt 64. 

Guidelines on Vertical Restraints of 2022, pt 209.

Case C-439/09 Pierre Fabre Dermo-Cosmétique SAS, Judgment of 13 October 2011, LawLex201200000028JBJ, considering that such a clause constitutes a restriction by object because it is not objectively justified by the properties of the products in question.

Commission Decision No 40428 of 17 December 2018, Guess, LawLex201900000160JBJ. In this decision, the Commission also emphasized that the head of a selective distribution network cannot prohibit its members from using its trademark for advertising related to online searches, as long as there is no risk of confusion as to the origin of the products and it thus reserves for itself a competitive advantage vis-à-vis the latter with whom it competes for sales on the internet.

Guidelines on Vertical Restraints No 2022/C 248/01 of 28 June 2022, pt 203.

Guidelines on Vertical Restraints of 2022, pt 206.

Guidelines on Vertical Restraints of 2022, pt 208.

Case C-230/16 Coty Germany GmbH, Judgment of 6 December 2017, LawLex201800000317JBJ.

European Distribution Law

73. Internet sales

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

73. Internet sales

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