Online Sales Distribution Agreement
In this context, the European Commission opened RPM investigations against consumer electronics manufacturers Asus, Denon & Marantz, Philips and Pioneer in 2017. According to the European Commission`s preliminary opinion in the opening decision, these may have limited the ability of online retailers to set their own prices. The Commission found that the effects of these alleged price restrictions could be exacerbated by the use of pricing software by many online retailers that automatically adjusts retail prices to the prices of major competitors. As a result, a retailer`s use of RPM can spread high prices among other retailers who may not be involved in a similar RPM and affect overall online prices for particular consumer electronics.3 Of course, the above list of main cases hardly scratches the surface. There are many other restrictions online on which we have at least some advice from the authorities and courts. Examples: prohibition of price comparison sites, pre-approval of third-party platforms, obligation to translate a website into certain languages, restriction of permitted referencing methods, restriction of the use of trademarks in the website URL, double pricing (use of different wholesale prices depending on whether the products are sold online or offline) that require a certain proportion of online and offline sales, limitation of online and offline sales, limitation of the number of goods that can be sold to a customer, obligation for merchants to have one or more physical stores, etc. Businesses are usually free to set up the distribution system that best serves them, whether online or offline. However, surveys launched in 2017 show that the Commission is increasingly focusing on the implementation and completion of the Digital Single Market and that it is to be expected that other sectors related to online distribution agreements will be examined. Particular attention should therefore be paid to the introduction of restrictions limiting the means and places where the retailer may distribute the goods and services concerned. The vertical opinion of the Swiss Competition Commission (“COMCO”) of 28 June 2010, even if it is only indicative, leaves no doubt that COMCO also applies the rules applicable to vertical agreements in the online environment. The vertical notice was published shortly after the publication of the Vertical Agreements Regulation1 by the EU in order to align Swiss rules with those in force in the EU.
On the other hand, the legality of some of these restrictions is still under discussion. There is no doubt that there are also many restrictions for which we have no guidelines, simply because they have not yet arrived on the radar of the competition authorities. A hot topic of discussion, of course, is the extent to which online sales restrictions on non-luxury products can be defended (especially since courts and national authorities clearly cannot reach a consensus on this). Last but not least, the question remains how to evaluate cases in which the supplier uses several forms of online sales restrictions in parallel. Beyond Metro and to create more legal certainty, we can rely on the Vertical Agreement Block Exemption Regulation (VBER). VBER creates a safe haven for selective distribution agreements, provided that neither the market share of the supplier nor the distributor exceeds 30 % and that the agreement does not contain so-called hardcore restrictions and fulfils certain other conditions. As such, this is a second line of defense for restrictions imposed on merchants in a selective distribution system – which can be relied upon if Metro`s criteria are not met or if their application leads to uncertain results. A guarantee of a high degree of legal certainty for the above limitations can be found by choosing an agency model (“real” agency) instead of a distribution model by a manufacturer. However, this means that the manufacturer must bear almost all the risks and costs of the agent`s activity related to the sale of its products. Dr.
Antoni Bolecki, Competition Law Firm, Wardyński & Partners In addition, in November 2017, the European Parliament, the Council and the European Commission reached a political agreement on a proposal for a regulation to end unjustified geo-blocking for consumers wishing to buy products or services online in the EU.9 The proposed Regulation, which will enter into force at the end of 2018, is expected to boost e-commerce for the benefit of consumers and businesses that benefit from the growth of the European online market. The principle of equivalence is not unreasonable. However, it effectively deprives online sales of the main advantage of the VBER: legal certainty. Indeed, this is often not possible without the explicit directives of the courts or authorities. There are two reasons for this. First of all, it can be very difficult to say what is “equivalent” and what is not, because online and offline sales are two very different worlds (is a two-day delivery in an online store synonymous with instant delivery to a physical point of sale)? Second, some online sales criteria have no equivalent in the offline environment, making comparisons difficult (for example. B, requirements for physical retail or permitted methods of search engine optimization). Finally, according to Guess (Commission Decision of 17 December 2018, AT.40428), we know that it is prohibited to prevent distributors from using the supplier`s trade mark for online advertising on search engines. This is a fairly popular tactic that aims to reduce the provider`s spending on online ads by reducing competition between the provider and the distributor when both bid on the same keywords. The same decision tells us that a supplier cannot introduce an approval procedure for online sales without specifying precise quality criteria for deciding whether or not to grant approval.
For these (and other) infringements, the Commission fined Guess almost €40 million. Under Swiss law, vertical agreements that harm competition are only prohibited if (a) they significantly affect competition and cannot be justified by gains in economic efficiency or (b) they completely eliminate competition. Distribution agreements with online retailers raise a number of specific issues for manufacturers, such as how to deal with parasitism, maintain or establish a particular brand image. B or to guarantee a high level of sales quality. E-commerce and the establishment of online distribution networks facilitate the tracking of resale prices (RPM), but also the introduction of online restrictions for resellers (prohibitions on online marketplaces) and most-favoured-nation (MFN) clauses/price parity clauses. However, due to the nature of selective distribution, a manufacturer may impose various requirements on the quality of the online store, which must be met by a retailer. The specific extent of the restrictions allowed depends on the respective products. Typically, the following sales restrictions could be competitive: The development of sales platforms such as Amazon has triggered the use of most-favored-nation clauses that guarantee the platform that the supplier does not sell its products on better terms through another platform.
However, these practices can facilitate collusion and reduce incentives for online retailers to develop innovative services or alternative business models, reduce their commission rates, etc. The growth of e-commerce and the resulting increase in price transparency and price competition are having a significant impact on companies` sales strategies and consumer behavior. While the advent of e-commerce has the potential to drive down prices, reduce barriers to entry, and increase consumer choice and transparency, the E-Commerce Sector Inquiry (IS)1 found that manufacturers are increasingly concerned about price consistency and brand consistency on the Internet. It is important to note that, in Pierre Fabre, cited above, the Court confirmed the principle that luxury goods, by reason of their characteristics and nature, may require the introduction of a selective distribution system in order to maintain their quality.11 However, it is not only the prohibition of internet sales that is considered an unlawful restriction on passive sales. The same applies to other contractual measures having a similar effect. Therefore, the following restrictions related to online sales are likely to be considered “characterized” restrictions illegal by comCO: In most cases, a vertical agreement containing a clause restricting a merchant`s right to unfettered online sales is treated as follows: most-favoured-nation treatment is not necessarily problematic in distribution agreements. The assessment of the impact of such clauses on competition depends on the market position of the parties, the characteristics of the market and the way in which the most-favoured-nation clause is implemented. NCAs have also been active with regard to most-favoured-nation clauses and have adopted different approaches. For example, in the case of price parity clauses used by online travel agencies in their contracts with hotels, the German Bundeskartellamt issued a ban decision, while the French, Italian and Swedish NCAs adopted a commitment approach.5 In September 2017, the CMA opened an investigation into the use of most-favoured-nation clauses on price comparison websites in with regard to household insurance products.6 The vertical The notice exempts vertical agreements from the application of rules prohibiting the prohibition of preferential clauses. anti-competitive agreements where the parties` market shares do not exceed 30 % and the agreement does not contain `hardcore restrictions` (such as.
B maintenance of prices for resale). In a selective distribution system, a supplier undertakes to deliver only to distributors who meet certain requirements, such as . B an appropriate sales environment, pre-sales advice and customer service. However, EU competition law contains certain restrictions on the requirements that the supplier can and cannot impose on its distributors in a selective distribution system. Along with the huge growth of e-commerce after COVID-19, online sales are also becoming more and more relevant. .