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

Franchises are covered by Regulation No 2022/720. Whereas before they were subject to a very detailed specific regulation , they are barely mentioned in the new regulation and then only indirectly within a definition of know-how  and the rules covering post contractual non-compete clauses which are indispensable to protect know-how transferred by the supplier to the buyer . 
The guidelines only br …

Franchises are covered by Regulation No 2022/720. Whereas before they were subject to a very detailed specific regulation , they are barely mentioned in the new regulation and then only indirectly within a definition of know-how  and the rules covering post contractual non-compete clauses which are indispensable to protect know-how transferred by the supplier to the buyer . 

The guidelines only briefly touch on developments relating to franchises . They are defined as the granting of a commercial method, consisting of, “licenses of intellectual property rights relating in particular to trademarks or signs and know-how for the use and distribution of goods or services” together with, “commercial or technical assistance during the period of application of the agreement ”. According to the regulation , most obligations found in franchise agreements can be considered as necessary for the protection of intellectual property rights  or to maintain the common identity and reputation of the franchised network and therefore fall outside the scope of Article 101(1) TFEU. Such agreements also, “usually contain a combination of different vertical restraints concerning the products being distributed, such as selective distribution and/or non-compete obligations” .

Regulation No 2022/720 presumes that agreements are lawful where they contain no hardcore restrictions as long as the supplier's or the reseller's market share does not exceed 30% of the relevant market . Beyond that level of market share, the agreement can only be exempted under a rule of reason or through an individual exemption.

According to the guidelines, vertical restraints in franchise agreements must be assessed under the principles applicable to the distribution system that best fits the franchise agreement at stake. Thus, a franchise agreement that results in a “closed” network, i.e. that prohibits franchisees from selling to non-franchisees, must be assessed under the principles applicable to selective distribution. On the other hand, a franchise agreement that does not create a closed network but grants territorial exclusivity and protection against active sales by other franchisees must be assessed under the principles applicable to exclusive distribution .

Clauses purporting to impose resale prices , prohibit parallel sales  or prohibit passive sales  are hardcore restrictions - known as black clauses - and lead to the whole of the agreement being excluded from the benefit of block exemption. Post contractual non-compete obligations, or for the duration of the agreement  are classified as red clauses in the regulation : their validity is subject to certain conditions, which, unless they are fulfilled, exclude the clause in question from the benefit of the exemption . 

Regulation No 4087/88 of 30 November 1988, OJEC L 359 of 28 December 1988.

Reg. No 2022/720 of 10 May 2022, Art. 1(1)(j).

Reg. No 2022/720, Art. 4(a). See also Case 161/84 Pronuptia de Paris (GmbH) v Schillgalis, Judgment of 28 January 1986, LawLex200500004110JBJ.

Reg. No 2022/720, Art. 4(c)(i). See also Commission decision No 89/94 Charles Jourdan, Judgment of 2 December 1988, LawLex200500004474JBJ.

The non-compete obligation concluded for the duration of the contract takes, relative to franchise agreements, the form of an exclusive supply obligation.

Non-compete obligations included in an agreement must be of fixed duration and cannot exceed five years; for franchises, the guidelines stipulate that the duration of the non-compete obligation is also irrelevant as long as it does not exceed the duration of the franchise agreement itself (Guidelines on Vertical Restraints pts 166); the post-contractual non-compete obligation should be limited to one year after the expiry, but its duration may be indefinite if it concerns a restriction on the use and disclosure of know-how that has not fallen into the public domain.

Reg. No 2022/720 of 10 May 2022, Art. 5(1)(b).

Guidelines on Vertical Restraints of 2022, pts 85 et seq. on know-how; pts 165 et seq. on the treatment of franchising; pt 174 on the assessment of market share in the case of franchising; pt 16(h) on the positive effects of franchising; pt 318 on the relationship between know-how and the non-compete obligation.

Guidelines on Vertical Restraints of 2022, pt 165.

Guidelines on Vertical Restraints of 2022, pts 87 and 166.

Article 1(1)(j) of Reg. No 2022/720 includes know-how among intellectual property rights.

Guidelines on Vertical Restraints, pt 165.

Guidelines on Vertical Restraints, pt 167.

European Distribution Law

100. Block exemption

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

100. Block exemption

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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