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Too big for its Boots: Asics’ distribution policy in Germany found to be unlawful

  • United Kingdom
  • Germany

    15-09-2015

    Introduction

    On 27 August 2015, the German competition authority, the Bundeskartellamt (BKartA), concluded its investigation into the distribution policies of the sports shoe manufacturer Asics and ruled that the company unlawfully restricted the sales of its products by its online traders.[1] This decision highlights the willingness of the BKartA to pursue charges in cases where it believes restrictions of online sales have occurred.

    The investigation

    The BKartA opened its investigation into the distribution system operated by Asics in 2011. Following its investigation, the BKartA warned the company in April 2014 that its policy violated both German and EU competition law (read our briefing here).

    In its recent decision, the BKartA reached the conclusion that certain provisions included by Asics in its distribution policies prevented price competition between its dealers by restricting resellers from using various price comparison websites and prohibiting the use of the Asics trademarks on third party websites.

    The BKartA investigation revealed that the restrictions made it more difficult for small and medium-sized dealers to promote their online stores to consumers and that as a result online purchases were primarily made through either the manufacturers own web-sites or through some big well-known dealers or internet marketplaces.

    The BKartA also found that Asics had completely restricted dealers from using online marketplaces like Amazon or eBay. However, since it found the other restrictions on online trading in violation of competition law, it did not reach a focus on these restrictions in any detail.

    In contrast to the recent BKartA case against Adidas (see our briefing here), Asics has not agreed a settlement with the BKartA. Whilst Asics has ceased the practices criticised by the BKartA, the BKartA has still issued a formal decision, in which it states that Asics’ conduct is unlawful. This opens the way for Asics to challenge the decision of the BKartA by way of a complaint to the Düsseldorf Court of Appeal. Asics has already stated that it considers its conduct to have been lawful and that the point of view of the BKartA is too restrictive. Therefore, it remains to be seen whether Asics will challenge the decision of the BKartA.

    E-Commerce Sector Inquiry

    The BKartA has stated publically that it hopes that its decision will kick-start an EU-wide discussion on the competition law assessment of the restrictions imposed by the brand manufacturers on online sales and the use of online marketplaces.

    Interestingly, the decision comes on the back of the e-commerce sector inquiry, launched by the European Commission on 6 May 2015, in which the European Commission (the “Commission”) is looking into the selling arrangements of companies operating on the online marketplace. The Commission’s aim is that the inquiry will enable it to understand the nature and effects of the market barriers that exist in the online marketplace in the EU (see our briefing here).

    Comment

    This decision against Asics follows-on from the BKartA’s recent investigation against, and settlement with, Adidas and affirms its commitment to clamping down on restrictions in online marketplaces (see our briefing here). There are also several other cases concerning online sales and parallel restrictions pending in German courts. Of these, there are two appeals pending in the Frankfurt Court of Appeals (“Oberlandesgericht Frankfurt”)[2]; in both cases, the Frankfurt District Court (“Landgericht Frankfurt am Main”) held that an overall ban on dealers using online marketplaces and portals for the resale of branded products was anticompetitive. It also expressly rejected the application of the “logo” clause under paragraph 54 of the Guidelines of the European Commission on Vertical Restraints.[3]

    The activity in Germany also reflects the renewed focus by national competition authorities across Europe on vertical restraints - as evidenced by the Competition and Markets Authority’s investigation into the clothing, footwear and fashion sector in the UK and the announcement by the Dutch Authority for Consumers and Markets that it intends to review and prioritise vertical agreements which impact on consumer welfare (see our briefing here).

    It is clear that focus on vertical restraints and online restrictions will take centre stage across Europe in the coming months. It is therefore crucial that businesses with online operations, as well as bricks and mortar stores, assess their trading and distribution practices in light of these developments to ensure that they do not fall foul of either national or EU competition law as investigations by competition authorities and litigation with retailers and associations for consumer protection are lengthy, costly and disruptive. Further, once a restrictive point of view, like that of the BKartA, has been confirmed by the courts, or even the European Court of Justice, there is a very real risk of large fines and follow-on actions.


    [1] Case B 2 – 98/11.

    [2] Cases 11 U 96/14 and 11 U 84/14.

    [3] LG Frankfurt am Main, Judgemnts of 31 July and 18 June 2014, Cases 2-03 O 128/13 – Coty fragrances – and 2-03 O 158/13 – Deuter rucksacks.

    Disclaimer

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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