Selective Distribution Competition law issues which must be addressed in a selective distribution agreement

Transcription

1 Selective Distribution Competition law issues which must be addressed in a selective distribution agreement Fabio Bortolotti BBMPartners - BUFFA, BORTOLOTTI & MATHIS Gerhard Fussenegger bpv Hügel Rechtsanwälte OG BBMPartners 1

2 Selective distribution & competition law Why is Selective Distribution a competition law topic? Selective distribution agreements fall outside scope of competition law if Nature of products necessitates selective distribution Objective selective criteria for an unlimited number of dealers Criteria must not go beyond what is nescessary Can selective fashion distribution agreements fall outside scope of competition law? l 2

3 Selective distribution & competition law First: Fashion goods products, which necessitate a selective distribution system? Cf. Commission s guidelines: necessity depends on nature of the product concerned, to preserve its quality and ensure its proper use. The aim of maintaining a prestigious image is not a legitimate aim for restricting competition and cannot therefore justify a finding that a contractual clause pursuing such an aim does not fall within Article 101(1) TFEU. l 3

4 Selective distribution & competition law Second: unlimited number of dealers fashion industry s interest to establish distributionnetwork based on a dealership with selected partners (and restricted) number of dealers l 4

5 Selective distribution & competition law Third: Criteria must not go beyond what is nescessary Difficulties to define necessity; e.g., necessity of sales staff uniform? l 5

6 Section I Pros and cons of selective distribution Assume that the supplier sells (directly or through his agents/distributors) to retailers, granting them some exclusive rights Why should he choose selective distribution contracts? 6

7 The direct contractual relationship with the retailers The supplier can request that goods are sold in a certain way He can exclude that the goods are sold by non-authorized retailers He has more space for recommending appropriate sales strategies as to pricing, advertising, etc. 7

8 sold in a certain way Contractual Restrictions on selected dealers Allowed* Combination of selective distribution with a location clause, protecting an appointed dealer against other appointed dealers opening up a shop in its vicinity Allowed* Prohibition of pure internet-sales *In general accepted, provided that the vber 330/2010 can be applied l 8

9 sold in a certain way Contractual Restrictions on selected dealers Allowed* contractual obligations with regard to, e.g., training of sales personnel, the service provided at the point of sale, a certain range of the products being sold, design of retail shop, etc quantitative selective distribution: Allowed* criteria applied in order to select the distributors must not be objectively justified, do not have to be published and applied in a uniform and non-differentiated way Allowed * limitation of number of dealers; direct / indirect: requirement to achieve a minimum amount of purchases, requirement to guarantee certain amount of squaremeters, etc *In general accepted, provided that the vber 330/2010 can be applied l 9

10 The need to respect the EU Antitrust requirements The supplier must permit cross-sales within the network The members of the network are free to sell actively to endusers (from their place of establishment and through Internet) The members of the network are free to sell to unauthorized retailers outside the territory covered by the selective distribution network 10

11 Section II Overcoming the problems arising out of the EU antitrust rules A Territories not covered by the selective distribution network The supplier can reserve such territories for him. Article 4(b)(iii), V-BER authorizes... the restriction of sales by the members of a selective distribution system to unauthorized distributors, within the territory reserved by the supplier to operate such system 55 of the Guidelines 11

12 B Internet sales Impossible to prohibit internet sales by members of the network (Pierre Fabre). Possible limitations Conditions regarding presentation and respect of same conditions as in retail shops Limitations to use of the trademark. Creation of an Internet system managed by the supplier, including the members of the network 12

13 Retail Prices - Retail Price Maintenance? C Prices (i) Fashion industry s success very much depends on brand image; important criteria price level of products offered May fashion brands agree with their dealers on retail prices? l 13

14 RPM in selective distribution? C Prices (ii) Resale Price Maintenance ( RPM ) hard core cartel restriction How to apply RPM in accordance with competition law? introduction of new product short term low price campaign (franchise) Prevention of free riding problem Disclaimer RPM very sensitive competition law issue; differences in application per jurisdiction national specialized counsel required! l 14

15 Alternative: Price recommendation C Prices (iii) Non binding, no (indirect) pressure (no threatening, no agreement on bonuses, no penalties, suspension of deliveries) Maximum Prices Clarification towards retailers of marketing strategy l 15

16 Section III Distributor acting as commission agent selling from a consignment stock Can the distributor be considered as a genuine agent? Is it admissible to oblige him to respect a resale price, or should he be free to grant discounts? Is it materially possible to grant discounts on products bearing a bar code? 16

17 Thank you Fabio Bortolotti BBMPartners - BUFFA, BORTOLOTTI & MATHIS 17

18 THANK YOU Gerhard Fussenegger, Brussels / Vienna gerhard.fussenegger@bpv-huegel.com l 18