In context

Shopping around for ban on sales via internet platforms makes EU approach welcome

July 13, 2016
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In context

Lately, the answer to whether competition rules apply to the banning of selling products via third-party online market places seems to depend on who you ask. For instance, a Dutch district court recently ruled that there was nothing wrong with a supplier terminating a selective distribution agreement for violating the contractual ban on selling via third-party internet platforms. The German competition authority earlier criticised these sales bans, although some German courts seem to adopt a more liberal approach. The European Commission also seems less strict in its guidelines on vertical restraints, and the same goes for the Dutch Authority for Consumers and Markets. These differences in treatment force companies wanting to implement a uniform distribution policy in various countries to go for the safest option. The time may have come for an EU-wide approach.

The Gelderland District Court recently had to rule in preliminary relief proceedings whether Shure, a manufacturer of high-quality professional audio products, had rightfully terminated its selective distribution agreement with the claimant. Shure had presented three reasons for terminating the claimant’s agreement:

  1. Violation of the contractual obligation not to sell Shure products through third-party platforms such as Amazon and Hitmeister. According to the court, Shure’s reason for this ban (to ensure a high service-level by requiring its distributors to also have a brick and mortar shop) was plausible. The decisions in Asics and Adidas, criticising third-party platform bans, were set aside by the court because they were issued by the German competition authority.
  2. Constant sending of e-mails requesting Shure, amongst others, to deal with other selective distributors charging prices below Shure’s recommended resale price. Despite Shure’s repeated answer that it was legally prohibited from fixing resale prices, the claimant continually sent e-mails on this subject. The court considered it understandable that Shure found this troublesome.
  • Selling Shure products to unauthorised resellers. Given the lack of additional information, the court considered that the seriousness of this contractual violation could not be established.

 

The court concluded that Shure’s reasons for terminating the agreement were understandable. Also, the court found that Shure could terminate the contract on the basis of the freedom of contract principle.

 

This ruling shows that there is no clear message yet on how third-party platform sales bans will be treated under the competition rules. As stated earlier, the German competition authority is critical of third-party platform sales bans, although some German courts seem to adopt a more liberal approach: see, for instance, the ruling by the Higher Regional Court of Frankfurt allowing a ban against distributing through a specific online third-party platform. The European Commission’s guidelines on vertical restraints also seem less strict by providing that if a distributor’s website is hosted by a third-party platform, a supplier can require that customers not visit the distributor’s website through a site carrying the name or logo of the third-party platform. And the Dutch Authority for Consumers and Markets has indicated that it will stick to its more liberal approach to vertical restraints (see for more our In Context of January 2015 and May 2016).

 

All in all, the time has come for an EU-wide approach: see our Best Friends newsletter for more information on E-commerce and vertical restraints.

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