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

The Commission’s overall approach to the automotive sector remains that of 2010. It considers it necessary to distinguish, in terms of competitive intensity, between distribution—which it deems highly competitive—and after-sales services, regarding which it is more cautious. This results in two major consequences. Since after-sales services are generally brand-specific, according to the Commission …

General conditions for exemption

The Commission’s overall approach to the automotive sector remains that of 2010. It considers it necessary to distinguish, in terms of competitive intensity, between distribution—which it deems highly competitive—and after-sales services, regarding which it is more cautious. This results in two major consequences. Since after-sales services are generally brand-specific, according to the Commission , each brand necessarily holds more than 30% market share and therefore cannot benefit from the block exemption. As a result, brands are led to use qualitative selective distribution.

This market analysis leads the Commission to further consider that the rules set out in the general vertical block exemption regulation are insufficient, and that, in the context of after-sales services, stricter additional requirements must apply to certain types of hardcore restrictions of competition likely to limit the supply and use of spare parts in the automotive after-sales market. Thus, pursuant to Article 4 of Regulation No 461/2010, Article 101 TFEU does not apply to agreements relating to the sale or resale of spare parts or the provision of repair and maintenance services, which fulfill the requirements for an exemption under Regulation No 330/2010 and do not contain any of the hardcore restrictions listed in Article 5. 

Agreements, either directly or indirectly, in isolation or in combination, must not restrict the sales of spare parts by members of a selective distribution system to independent repairers which use those parts for the repair and maintenance of a motor vehicle , restrict the supplier's ability to sell spare parts, repair tools or diagnostic or other equipment to authorized or independent operators (distributors or repairers) or end users , or to place its trade mark or logo effectively and in an easily visible manner on the components supplied or on the spare parts (Article 5) . 

Those assumptions, which date back to 2010, continue to be upheld by the Commission in 2023, as evidenced by the absence of any changes in the automotive guidelines regarding the assessment of competitive intensity in after-sales services and the brand-specific segmentation of after-sales markets. This position of the Commission has previously influenced certain national competition authorities . However, whether it still holds true today is questionable for several reasons.

Firstly, several national competition authorities highlighted during the consultation phase on the assessment of the application of Regulation No 461/2010, which led to the Commission’s evaluation report, that automotive markets could be viewed as system markets encompassing motor vehicles and spare parts. As the Commission explains in its evaluation report, such a market, combining vehicles and their parts, may be defined taking into account, inter alia, the vehicle’s lifespan as well as users’ preferences and habits. In this case, the relevant market shares would concern the entire system (multi-brand), rather than just repair and maintenance, and the supply of spare parts .

Nevertheless, in its evaluation report, the Commission considers that there likely exist, at least for passenger cars, brand-specific after-sales markets, notably because:
i) the majority of buyers are individuals or small and medium-sized enterprises who purchase motor vehicles and after-sales services separately; ii) although the evidence gathered shows that consumers increasingly use the internet for research before purchasing a passenger car, it does not demonstrate that they swiftly and systematically adjust their purchasing behavior in response to variations in the after-sales market; and iii) there is a well-developed framework for entities offering only after-sales products and services. The Commission acknowledges, however, that this would not apply to other categories of motor vehicles characterized by a stronger presence of professional users who may exhibit different purchasing behaviors. By the Commission’s own admission, a single market for sales and after-sales services may therefore exist for trucks, where buyers assess the total cost of ownership (TCO) globally before making their purchase or leasing decision. With the rise of leasing arrangements that include maintenance, independent repairers or those approved by other brands can freely procure parts of any brand through each brand’s network, with additional substantial purchasing opportunities from spare parts wholesalers or equipment manufacturers. The technical information of each brand necessary for repair and maintenance is also available and access to it cannot be denied. Accordingly, repair and maintenance services should be regarded as multi-brand, since the market share of most brands’ repair and maintenance networks is well below 30% in this increasingly competitive market. While caution may still favor the use of qualitative selective distribution for the supply of repair and maintenance services to avoid legal risk, it now appears essential that the Commission re-evaluate its market definitions, as they no longer reflect reality.

In addition to the three additional hardcore restrictions, compared to those in the general regulation, the Commission highlights in its guidelines three specific competition concerns in the area of after-sales services: access by independent operators to essential inputs, warranties, and access to repair networks:

1) Access by independent operators to essential inputs

The Commission traditionally considers that the ability of independent repairers to compete with members of official networks is effective only if they can obtain the technical information necessary to carry out maintenance and repair operations for all brands. Following a series of decisions accepting commitments from manufacturers regarding independent operators’ access to technical information , the Commission stated in its 2010 Automotive Guidelines that it would pay particular attention to ensuring strict compliance by manufacturers with their obligation to provide technical information to independent operators. In practice, this opening of access to technical information could give rise to abuses, especially where publishers seek to benefit from it by paying the same rate charged to independent repairers, while using the information on a very large scale to market it to a much broader user base.

The main innovation introduced by the Commission’s Communication of 17 April 2023 amending the 2010 Motor Vehicle Guidelines concerns the replacement of “Access by independent operators to technical information”  with “Access by independent operators to essential inputs,” which broadens the scope of access for independent operators. Vehicle-generated data may now constitute an essential input for repair and maintenance services, to which independent operators’ access is extended. This development aligns with changes observed in EU regulations governing type-approval of motor vehicles, which also impose an obligation on manufacturers to provide vehicle onboard diagnostics (OBD) information to independent operators . This integration of vehicle-generated data into the right of access for independent operators raises at least two unresolved practical issues: the interaction of this principle with data protection law , and the practical application of access rights in terms of defining and assessing a potential abuse of a dominant position. What market definition should be used? What test should apply to evaluate the abuse?

These questions will need to be clarified through case practice. In any event, manufacturers who refuse to grant access to such information expose themselves to two categories of sanctions: those provided under competition law, and those set out, where applicable, in national rules, since the EU vehicle type-approval regulations provide that Member States may impose fines for violations of the obligation to supply information .

The Commission’s second concern relates to practices whereby manufacturers tie the validity of a warranty, whether a statutory or extended warranty, to the condition that the end user has all repair and maintenance work not covered by the warranty carried out exclusively by authorized repair networks. This concern has been echoed by certain national competition authorities .

More broadly, the terms of warranty and extended warranty frequently give rise to disputes initiated by independent repairers or their trade associations. For instance, a federation of independent automotive artisans challenged the decision of a brand to no longer apply the manufacturer’s warranty to new vehicles sold to a final customer by an independent or unauthorized reseller - even where the vehicles were originally acquired from an authorized distributor or dealer. Consistent with the Cartier ruling , which upheld the limitation of a warranty to products sold to consumers by members of a selective distribution network, the Commission dismissed the complaint .

More recently, a manufacturer was prosecuted by a national competition authority for entering into agreements with members of its network that required or encouraged vehicle owners to have their cars repaired and serviced solely by authorized representatives, and to use original spare parts for routine maintenance, in order to benefit from the vehicle warranty. The authority characterized these agreements as restrictions of competition by effect. However, the national Court of Cassation referred to the Court of Justice the question of whether the authority must demonstrate the existence of concrete and actual restrictive effects, or merely potential effects.

Without ruling on the nature of the restriction at issue, the Court of Justice, in line with its established case law, held that demonstrating potential effects was sufficient, provided they are sufficiently significant .

The Commission’s third additional competition concern relates to access to authorized repair networks. According to the Commission, access to such networks should be open to all undertakings that meet the defined quality criteria , and should not be linked to the sale of new vehicles .

Such requirements may result in a number of repair points within a brand’s network that far exceeds actual customer needs and is incompatible with the profitability of the repair network, particularly in the context of a highly competitive after-sales market. The Commission’s most questionable position in this respect lies in its continued, unqualified support for the view that the Commission considers it important that access to authorized repair networks remains generally open to all companies that meet the defined quality criteria. This categorical stance disregards a widespread abusive practice in which a former authorized repairer whose contract has been lawfully terminated reapplies for approval at the end of the notice period, arguing that it must be reinstated in the network.

More importantly, this position is inconsistent with the case law of several Member States of the European Union. First of all, the German courts have held long that applications by repairers to join a network should be assessed not on the downstream vehicle maintenance market directed at end customers, but on the upstream market for the supply and demand of repair contracts, which is a multi-brand market where manufacturers do not necessarily hold significant market shares .

The Commission’s position is also inconsistent with French case law. Under French law, the key issue is whether a refusal to grant approval constitutes an agreement or a unilateral act. In many cases the courts have held that the decision to refuse approval qualifies as a unilateral act. Even when such a refusal is coordinated with a network member or is considered—rightly or wrongly—to amount to an explicit or implicit agreement with the network, in almost all cases, the refusal to approve former authorized repairers reapplying to remain part of the network is deemed consistent with contract law and competition law .

Therefore, a practice of refusing to grant approval to a former network member claiming continued compliance with the approval criteria cannot be regarded as anticompetitive per se, contrary to what is implied by the previous supplementary guidelines, which remained unchanged in 2023, unless an anticompetitive object or effect is clearly established.

Paragraphs 15 and 57 of the 2010 Guidelines, unchanged in 2023.

According to point 22 of the Motor Vehicle Guidelines, this restriction concerns a particular type of spare part - captive parts - which can only be obtained from the car manufacturer or members of its authorized networks.

Regulation No 2018/858 of 30 May 2018, Art. 65(2).

French Competition Authority, Opinion No 12-A-21 of 8 October 2012, LawLex201200002525JBJ.

Case C-376/92 Metro SB-Großmärkte GmbH & Co. KG v Cartier,  Judgment of 13 January 1994, LawLex200500005061JBJ.

European Commission, Letter of 4 December 2017 to the Fédération nationale de l'artisanat automobile,  4.12.2017 C(2017) 8319 final (Hyundai case).

Case C-606/23, Tallinna Kaubamaja Grupp AS v Konkurences padome, Judgment of   5 December 2024, LawLex202500000898JBJ.

 Supplementary Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and the distribution of motor vehicle spare parts, OJ C 138, 28 May 2010, para. 70, unchanged by the 2023 Communication.

Supplementary Guidelines 2010, para. 71, also unchanged by the 2023 notice

German Federal Court of Justice (BGH), 30 March 2011, KZR 6/09; 26 January 2016, KZR 41/14: BGH’s position has evolved - from a broad market covering all car and truck repairers to a more segmented view, recognizing distinctions among certain categories of repairers (e.g., high-end vehicles).

See most recently Cass. com., 16 February 2022, LawLex202200001050JBJ, LawLex202200001051JBJ, and LawLex202200001052JBJ.

This provision covers in particular so-called “tooling arrangement” between component suppliers and motor vehicle manufacturers, which are sub-contracting agreements in principle excluded from the scope of Article 101 TFEU, unless the component supplier must transfer its ownership of such a tool, intellectual property rights, or know-how, bears only an insignificant part of the product development costs, or does not contribute any necessary tools, intellectual property rights, or know-how. Guidelines, pt 23.

This provision should facilitate the identification of compatible replacement parts which can be obtained from original equipment suppliers (OESs). Guidelines, pt 24.

In its opinion No 12-A-21 of 8 October 2012, LawLex201200002525JBJ, concerning the competitive functioning of the vehicle repair and maintenance sectors and the manufacture and distribution of spare parts, the French Competition Authority considered that manufacturers’ after-sales networks controlled, on average, 50% of the after-sales market and therefore could not benefit from the block exemption.

Commission Evaluation Report on the operation of the Motor Vehicle Block  Exemption Regulation (EU) No 461/2010 of 28 May 2021.

Commission decisions No 2007-788 of 13 September 2007, LawLex200800000055JBJ; No 2007-831 of 13 September 2007, LawLex200800000054JBJ; No 2007-836 of 13 September 2007, LawLex200800000053JBJ; No 2007-841 of 13 September 2007, LawLex200800000056JBJ.

Motor Vehicle Guidelines, previously paras. 62-68.

See in particular Regulation 2018/858 of 30 May 2018 on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles. See, for recent applications, Case C-296/22 A.T.U. Auto-Teile-Unger GmbH & Co. KG and Carglass GmbH, Judgment of 5 October 2023, LawLex202300012327JBJ; Case C-319/22 Gesamtverband Autoteile-Handel eV, Judgment of 9 November 2023, LawLex202300013344JBJ. 

See also GDPR of 27 April 2016; Regulation on the free flow of non-personal data of 14 November 2018; Data Governance Act of 30 May 2022; draft Data Act; and the potential regulation on vehicle-generated data requested by independent operators but opposed by manufacturers.

European Distribution Law

91. General conditions for exemption

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

91. General conditions for exemption

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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