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

Block Exemption Regulation No 2022/270 lays down a presumption of legality for agreements where the supplier and the distributor's market share on their respective relevant market  does not exceed 30%, provided that they contain no red or black clauses. Below this threshold, the qualitative or quantitative nature of selection, the nature of the product concerned and the criteria for selection are  …

Block Exemption Regulation No 2022/270 lays down a presumption of legality for agreements where the supplier and the distributor's market share on their respective relevant market  does not exceed 30%, provided that they contain no red or black clauses. Below this threshold, the qualitative or quantitative nature of selection, the nature of the product concerned and the criteria for selection are irrelevant insofar as selective distribution or application of the required criteria - such as the requirement for distributors to have one or more brick and mortar shops or to provide specific services  - are necessary due to the characteristics of the product. The presumption of legality only comes into play if authorized distributors can actively sell to each other and to final consumers. A restriction on active However, the new regulation does allow for a limitation of active sales, both to authorized distributors and to their direct customers, in a territory or to a group of customers that the supplier has reserved for itself or that it has allocated on an exclusive basis to a maximum of five exclusive distributors . The prohibition on selling on the internet is also made a hardcore restriction in the regulation itself, not just in the guidelines . As in the past, cross-supplies between distributors in the network must be allowed . Finally, the regulation excludes from the classification of hardcore restrictions those relating to the place of establishment of the members of the selective distribution system .

According to the guidelines of 2022, the supplier is not required to publish its selection criteria . This clarification is inspired by the solution adopted by the Auto 24/Jaguar judgment, in which the European Court of Justice clarified the nature of the criteria required for a quantitative selection system to benefit from the block exemption . In this judgment, the Court of Justice ruled that the criteria defined within the meaning of the Motor Vehicle Regulation No 1400/2002 must only be “criteria the precise content of which can be verified”, without it being “necessary for such a system to be based on criteria which are objectively justified and applied in a uniform and non-differentiated manner to all applicants for approval”. This decision, in line with competition law and economic efficiency, has put an end to the divergence in case law and secured selective distribution systems in all sectors of the economy. Indeed, Regulation No 2022/720, like Regulation No 330/2010 before it, refers to a selection system “on the basis of defined criteria” with a prohibition of resale outside the network. Like the regulation, the Court makes no distinction between qualitative and quantitative selective distribution. However, the vertical restraints guidelines do make a distinction between these two types of selection, where the Commission does not require quantitative criteria to be objectively justified and applied in a uniform and non-differentiated manner, with those conditions only applying to qualitative selection . The European authority also adds that the block exemption regulation exempts selective distribution “regardless of the nature of the product concerned and regardless of the nature of the selection criteria ”. Two consequences result from this. Quantitative selective distribution is fully exempted irrespective of the product as long as the market share is under 30% with no requirement to justify the economic objectivity of the quantitative criterion . Qualitative selective distribution also benefits from block exemption up to 30% market share regardless of the product at issue and the selection criteria used, which, whether quantitative or even qualitative also do not require justification. Justification is required only where there are appreciable anticompetitive effects giving rise to a withdrawal of the exemption and this rarely happens. 

According to the Commission, although a withdrawal of the exemption would be likely in respect of the cumulative effects of selective distribution networks , with some selecting solely qualitatively and others exclusively quantitatively, withdrawal would only apply to quantitative restrictions that directly limit the number of authorized distributors . In effect, more indirect types of quantitative selection that, for example, combine qualitative criteria and minimum purchase obligations, are less likely to harm competition in the case of cumulative effects. The level of purchases required should not, however, represent a significant part of the reseller's turnover nor should it exceed what is necessary for the supplier to offset investments and achieve economies of scale.

The relevant market for the buyer is the market on which he purchases the contract goods and services, i.e., the supply market, which will generally not be a local market (Reg. No 2022/720, Art. 3(1). It is therefore not a question of taking into account its market share as a reseller on the downstream market, but as a buyer on the upstream market. In the case of multiparty agreements, whereby a buyer purchases the contract goods or services from one undertaking party to the agreement and sells the contract goods or services to another undertaking that is also party to the agreement, the benefit of the exemption will only be granted if the buyer's market share does not exceed 30% as a buyer on the upstream market and as a reseller on the downstream market (Article 3(2)).

See Guidelines on Vertical Restraints, at pt 151.

Motor vehicle distribution has been subject to the general regime since 1 June 2013.

See Guidelines on Vertical Restraints, pt 155.

See Guidelines on Vertical Restraints, pt 154 et seq.

Reg. No 2022/720 of 10 May 2022, Art. 4(c)(i)(1); Case C-306/96 Javico v Yves Saint Laurent Parfums (SA), Judgment of 28 April 1998, LawLex200400003612JBJ.

See Reg. No 2022/720, Art. 4(e), which enshrines C-439/09 Pierre Fabre Dermo-Cosmétique SAS, Judgment of 13 October 2011, LawLex201200000028JBJ.

Guidelines on Vertical Restraints, pt 151.

Case C-158/11 Auto 24 SARL, Judgment of 14 June 2012, LawLex201200000961JBJ.

See Guidelines on Vertical Restraints, pt 149.

See Guidelines on Vertical Restraints, pt 151.

European Distribution Law

76. Block exemption

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

76. Block 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