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

With the entry into force of the new generation of vertical restraint regulations, the question of the future of the rule of reason has arisen. As the block exemption applies to all vertical agreements, does the rule simply disappear or does it still have some influence alongside exemption of such broad scope? Although logically the rule should apply to all agreements irrespective of the share of  …

With the entry into force of the new generation of vertical restraint regulations, the question of the future of the rule of reason has arisen. As the block exemption applies to all vertical agreements, does the rule simply disappear or does it still have some influence alongside exemption of such broad scope? Although logically the rule should apply to all agreements irrespective of the share of the market controlled by the undertaking involved before looking at the question of exemption, it is likely that it will only come into play in future where the agreement does not benefit from the presumption of lawfulness set out in the Vertical Restraints Regulation.

The Court of Justice in the Metro judgment  laid down for the first time the conditions of lawfulness under Article 101(1) TFEU for selective distribution. It confirmed in that case that this type of distribution is not affected by the prohibition and does not even need to be exempted “provided that resellers are chosen on the basis of objective criteria of a qualitative nature relating to the technical qualifications of the reseller and his staff and the suitability of his trading premises and that such conditions are laid down uniformly for all potential resellers and are not applied in a discriminatory fashion”. The rule of reason only applies in the case of the qualitative selection of resellers . According to the EU courts , a criterion of approval which depends directly or indirectly of the number of authorized resellers on the contrary is caught by Article 101(1) but may benefit from an exemption. In effect, quantitative selective distribution more directly limits the potential number of approved dealers by imposing, for example, a minimum level of sales , limiting the number of resellers according to the number of habitants  or by requiring a professional qualification .

The General Court in subsequent decisions stated that the restrictive nature of the selection criteria must not go beyond what is necessary, that competition must be improved and that the interest of consumers must be taken into consideration . In effect, selection criteria are objective only insofar as they are not disproportionate with regard to what consumers need in terms of assistance and service . The proportionality requirement means that the criteria should be derived directly from the nature of the product and will vary accordingly . As well as high quality  or technically advanced products , all products with distinctive features - such as perfumes and luxury cosmetic products , consumer durables  or computer products  - justify recourse to a specific mode of distribution. More recently, the application of the rule of reason has been extended to selective repair systems for prestige watches, the implementation of which is justified by the complexity of the mechanisms of such watches .

The selection criteria must be applied in a non-discriminatory manner. Selection is only lawful if the criteria are fixed in the same way with respect to all potential resellers and are applied indiscriminately . Thus distribution cannot be only through wholesalers to the exclusion of retailers and supermarkets where the contract product does not have any specific properties justifying such a restriction . It is also not possible to require that the activity subject to selective distribution account for at least 60% of a shop's activities . The number of refusals of approval to resellers who satisfy the qualitative criteria for entry to a network is sufficient proof of discrimination .

Lastly, where the selection of authorized repairers is indeed carried out on the basis of objective criteria laid down uniformly for all potential resellers and not applied in a discriminatory fashion, it is not necessary to verify, in addition, whether the establishment of the network will have the effect of eliminating all competition .

Case 26/76 Metro SB-Grossmarkete GmbH & Co v Commission [1977] ECR 1875, LawLex200400002802JBJ; Case 31/80 L'Oréal v De Nieuwe AMCK [1980] ECR 3775, LawLex200400002967JBJ.

Qualitative selection is inherent in the system. See Commission Decision No 85/616 of 16 December 1985, Villeroy & Boch, LawLex200400002436JBJ; Commission Decision No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; Commission Decision No 92/428 of 24 July 1992, Givenchy, LawLex200500004686JBJ.

The high level of technical advancement of consumer electronic equipment also confers on them a specific nature which justifies the obligation imposed on distributors to have a specialist department - Commission Decision No 83/672 of 21 Dec. 1983, SABA's EEC distribution system, LawLex200500004100JBJ. The specific and highly technically advanced nature of clocks and watches justifies the restricting of their distribution to specialized stores with trained personnel available to sell the goods from premises suitable for their display, stocking and demonstration: Commission Decision No 77/100 of 21 December 1976, Junghans, LawLex200400003544JBJ. See also Commission Decision No 83/610 of 5 December 1983, Murat, LawLex200400002426JBJ, regarding the specific nature of jewellery.

Commission Decision No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; Commission Decision No 92/428 of 24 July 1992, Givenchy, LawLex200200003937JBJ; Case T-19/92 Groupement d'achat des centres distributeurs Édouard Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ; Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

Relative to high quality porcelain tableware, see, Commission Decision No 85/616 of 16 December 1985, Villeroy & Boch, LawLex200400002436JBJ: the nature of the product justifies the obligation placed on distributors to sell these durable consumer goods in a shop easily accessible to the public, specializing in such goods or having a specialist department and technically trained staff, and to provide an after-sales service and provide advice to customers wishing to supplement a service.

Commission Decision No 83/672 of 21 December 1983, SABA's EEC distribution system, LawLex200500004100JBJ; Commission Decision No 84/233 of 18 April 1984, IBM Personal Computer, LawLex200500005320JBJ.

Case T-712/14 Confédération européenne des associations d'horlogers-réparateurs, Judgment of 23 October 2017,  LawLex201700001708JBJ.

Case 126/80 Salonia v Poidomani e Giglio [1981] ECR p.1563, LawLex200400002966JBJ; Case 243/83, Binon v AMP [1985] ECR 2015, LawLex200500004001JBJ; Case T-19/92 Groupement d'achat des centres distributeurs Édouard Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ.

Commission Decision No 85/44 of 10 December 1984, Grohe's distribution system, LawLex200500005321JBJ.

Case T-19/92 Groupement d'achat des centres distributeurs Édouard Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ.

Case 107/82 AEG v Commission [1983] ECR 3151, LawLex200500004025JBJ.

Case 31/80 L'Oréal v De Nieuwe AMCK [1980] ECR 3775, LawLex200400002967JBJ; Case 86/82 Hasselblad v Commission [1984] ECR 883, LawLex200500005391JBJ: a product's brand image can in itself constitute a factor of differentiation of the relevant markets; Commission Decision No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; Commission Decision No 92/428 du 24 July 1992, Givenchy, LawLex200500004686JBJ, the specific nature of luxury cosmetic products justifies the use of selection criteria relative to the presence of specialized sales personnel, the commercial environment and window displays; Case T-19/92 Groupement d'achat des centres distributeurs Édouard Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ; Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

Commission Decision No 76/159 of 15 December 1975, SABA, LawLex200400002389JBJ.

Case 243/83 Binon v AMP [1985] ECR 2015, LawLex200500004001JBJ.

Case T-19/92 Groupement d'achat des centres distributeurs Édouard Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ; Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ, for luxury goods. The specific nature of the product in question must necessitate this particular distribution system: See Commission Notice 2010/C 130/01 of 19 May 2010, at pt 175 et seq. which reasserts the principle.

See Case T-712/14 Confédération européenne des associations d'horlogers-réparateurs v LVMH Moët Hennessy-Louis Vuitton SA, Rolex SA, The Swatch Group SA., Judgment of 23 October 2017, LawLex201700001708JBJ, restating that although preserving a brand image cannot justify a restriction of competition by the establishment of a selective repair system, the objective of preserving the quality of products and ensuring their proper use may, in itself, justify such a restriction.

The product must have a specific nature that justifies the use of this particular method of distribution: see Guidelines on Vertical Restraints 2022/C 248/01 of 28 June 2022, pt 149, which reaffirms this principle.

Commission Decision No 94/29 of 21 December 1993, Grundig's EC distribution system, LawLex200200003894JBJ.

European Distribution Law

75. Rule of reason

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

75. Rule of reason

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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