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

When the system in question is not within the scope of the rule of reason and exceeds the 30% threshold set down in the block exemption regulation, it may be able to benefit from an individual exemption. A number of restrictive clauses that may be exempted have been identified by the case law. The guidelines also contain directions for the assessment of the competitive situation above the 30% mark …

Individual exemption

When the system in question is not within the scope of the rule of reason and exceeds the 30% threshold set down in the block exemption regulation, it may be able to benefit from an individual exemption. A number of restrictive clauses that may be exempted have been identified by the case law. The guidelines also contain directions for the assessment of the competitive situation above the 30% market share threshold .

The lawfulness of contracts forming a system of selective distribution has been recognized by the Commission, because they lead to the creation of “an uninterrupted and improved supply […] to customers” and that the restrictions “ensure that […] products are distributed only to dealers who meet certain professional standards and make a special effort to promote the sales of this particular manufacturer” .

The obligation to keep a minimum stock , to make a minimum amount of purchases from the supplier , to achieve a minimum turnover , clauses relating to the range which obligate the authorized distributor to stock as comprehensive an assortment of the supplier's products as possible , clauses pertaining to competing brands imposing the presence of other luxury brands in order to reflect the image and reputation of the products , obligations relating to cooperation in advertising and promotional activities enabling the planning of coordinated advertising campaigns  or the prohibition on active sales of new products  have all been exempted as they contributed to the improvement of production and distribution. The existence of an improvement in distribution is assessed objectively. The Commission has thus found that a selective distribution system brought advantages, “in the form of efficient after-sales service and the availability of a wider range and faster delivery from wholesalers and retailers” which were “of immediate benefit to consumers” . The Court of Justice in the Metro I case went as far as to say that, “In the circumstances of the present case regular supplies represent a sufficient advantage to consumers for them to be considered to constitute a fair share of the benefit resulting from the improvement brought about by the restriction on competition [...]” .

The obligation for authorized resellers to maintain certain price levels can be lawful or at least fulfil the conditions for exemption of Article 101(3) TFEU, where it corresponds to the desire to preserve, in the consumer's interests, the possibility of the continued existence of this channel of distribution in conjunction with new methods of distribution based on a different type of competition policy  or to support the financial burden resulting from the taking back of unsold products . The Vertical Restraints Guidelines now accept that resale price maintenance (RPM) can lead to efficiencies, which will be assessed under Article 101(3) . In the specific case of selective distribution, the complexity of products can justify the imposing of a maximum resale price, as the extra margin provided by RPM may allow retailers to provide pre-sales services. RPM may also prevent free-riding from retailers who do not provide such services and hence do not incur these costs but take advantage of the reputation of the product . Maximum or recommended price agreements can also be exempted where they lead to avoiding “double marginalization ” or help to ensure that the brand in question competes more forcefully with other brands .

Banning cross-supplies  or active or passive selling , which is in principle prohibited, may exceptionally be exempted. 

Selective distribution mainly runs the risk of weakening intra-brand competition. Such a weakening has no impact on competition where there are no restrictions on inter-brand competition  . The market position of the supplier and his competitors is crucial in assessing any harmful effects on competition. The supplier's strong position will be offset by the presence of numerous competitors  . The number of selective distribution networks present on the same market is also of utmost significance. If there is only one supplier operating selectively, the agreement cannot produce negative effects. On the other hand, the existence of several selective distribution systems can lead to a weakening of intra-brand competition, the possible elimination of certain types of distributor and the risk of collusion between suppliers  . The cumulative effect of parallel selective distribution networks will prevent exemption  . On the other hand, distributors are not likely to be eliminated if their competitors do not apply selective distribution and are in a strong position on the market. Quantitative selective distribution can also create barriers to entry. In effect, selective distribution is used by manufacturers of branded goods and requires heavy investments in terms of time and money for such goods to become established on the market  . Excluded retailers will therefore have little chance of launching their own brands or obtaining competitive supplies elsewhere. The purchasing power of authorized dealers may also lead to the elimination of particular distributors by allowing network members to impose selection criteria on the supplier aimed at limiting distribution to their advantage . Lastly, the combination of selective distribution and a non-compete obligation may pose a risk of foreclosure to other suppliers . Where the market share of the five largest suppliers on the market is equal to or above 50%, an obligation, either direct or indirect, not to sell the brands of particular competing suppliers is unlikely to qualify for exemption .

See Guidelines on Vertical Restraints, at pts 153 et seq.

Commission Decisions No 83/672 of 21 December 1983, SABA's EEC distribution system, LawLex200500004100JBJ; No 84/233 of 18 April 1984, LawLex200500005320JBJ; No 92/33 of 16 December 1991, LawLex200500005352JBJ; Case 75/84, Metro v Commission [1986] ECR 3021, LawLex200500004031JBJ; Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ and Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

See especially Case 26/76 Metro SB-Grossmarkete GmbH & Co v Commission [1977] ECR 1875, LawLex200400002802JBJ.

Case 26/76 Metro SB-Grossmarkete GmbH & Co v Commission [1977] ECR 1875, LawLex200400002802JBJ.

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

Guidelines on Vertical Restraints of 2022, pt 197. At point 137, the Commission states that, “In general, the case is strongest for new products, complex products, products whose qualities are difficult to judge before consumption (so-called experience products) or whose qualities are difficult to judge even after consumption (so-called credence products)”.

Guidelines on Vertical Restraints, pt 197, d).

Guidelines on Vertical Restraints, pt 16 (a).

Guidelines on Vertical Restraints, pt 201.

Commission Decision No 90/38 of 13 December 1989, Bayo-n-ox, LawLex200500005346JBJ.

Banning the active sale of new products for a fixed period of time is a restriction of competition and can only be justified under Article101(3) TFEU: Commission Decision No 92/428 of 24 July 1992, Givenchy, LawLex200500004686JBJ.

Guidelines on Vertical Restraints, pt 153.

Commission Decision No 76/159 of 15 December 1975, SABA, LawLex200400002389JBJ; Case 26/76 Metro SB-Grossmarkete GmbH & Co v Commission [1977] ECR 1875, LawLex200400002802JBJ; Commission Decisions No 83/672 of 21 December 1983, SABA's EEC distribution system, LawLex200500004100JBJ; No 85/559 of 27 November 1985, Ivoclar, LawLex200400002433JBJ; No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; No 92/428 of 24 July 1992, Givenchy, LawLex200500004686JBJ; No 94/29 of 21 December 1993, Grundig's EC distribution system, LawLex200200003894JBJ.

Guidelines on Vertical Restraints, pt 155: such a cumulative effect is unlikely if the market share of the selective distribution is below 50% or where the market share exceeds 50% but the combined share held by the five largest suppliers is below this threshold. If the market share of the selective distribution and the market share of the five largest suppliers exceeds 50%, the assessment depends on whether or not they have a selective distribution system. If they have also set up a selective distribution network, the harm to competition will be particularly appreciable in the case of quantitative selection. Individual exemption is not possible if the limitation of the number of authorized resellers prevents distributors who can adequately sell the contract products from entering the market. Where quantitative selection is more indirect and imposes minimum purchase quantities, exemption is still possible if the level of purchases imposed does not represent a significant proportion of the total turnover achieved by the authorized reseller on this type of product. It must also be limited to what is necessary for the supplier to recoup the amount of investment specific to this contractual relationship and/or to achieve economies of scale in distribution. 

Guidelines on Vertical Restraints, pt 1571.

Guidelines on Vertical Restraints, pt 158.

Guidelines on Vertical Restraints, pt 160.

Guidelines on Vertical Restraints, pt 159.

Commission Decision No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ.

Commission Decision No 76/159 of 15 December 1975, SABA, LawLex200400002389JBJ; Case 26/76 Metro SB-Grossmarkete GmbH & Co v Commission [1977] ECR 1875, LawLex200400002802JBJ; Commission Decision No 83/672 of 21 December 1983, SABA's EEC distribution system, LawLex200500004100JBJ.

Commission Decisions No 83/672 of 21 December 1983, SABA's EEC distribution system, LawLex200500004100JBJ; No 94/29 of 21 Dec. 1993, Grundig's EC distribution system, LawLex200200003894JBJ. 

Commission Decisions No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; No 92/428 of 24 July 1992, Givenchy, LawLex200500004686JBJ.

Commission Decisions No 85/616 of 16 Dec. 1985, Villeroy & Boch, LawLex200400002436JBJ; No 92/33 of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; No 92/428 of 24 July 1992, Givenchy, LawLex200500004686JBJ.

Commission Decision No 83/672 of 21 December 1983, SABA's EEC distribution system, LawLex200500004100JBJ.

European Distribution Law

77. Individual exemption

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

77. Individual exemption

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