Short Reads

General Court rules that luxury watchmakers can limit supply of parts to approved repairers

General Court rules that luxury watchmakers can limit supply of parts

General Court rules that luxury watchmakers can limit supply of parts to approved repairers

01.11.2017 NL law

On 23 October 2017, the General Court (GC) dismissed an appeal of the Confédération européenne des associations d’horlogers-réparateurs (CEAHR) against the European Commission's decision to reject its complaint.

CEAHR had complained to the Commission that LVMH Moët Hennessy-Louis Vuitton, Rolex and the Swatch Group (the "luxury brand watchmakers") had engaged in anticompetitive conduct and abused their market power by setting up selective distribution systems for repair services and refusing to supply spare parts to watch repairers that were not part of their authorised repair and maintenance network.

The GC reiterated that selective distribution systems are not considered anticompetitive when they are objectively justified, non-discriminatory and proportionate. Contrary to the appellant's claim, when these conditions are met, there is no need to examine whether selective distribution systems have the effect of "eliminating all competition". In determining whether the selective distribution systems are objectively justified, the Court held, contrary to the view expressed by AG Wahl in the Coty case, that the protection of the brand image alone cannot be a valid justification for the restriction of competition. However, the objective of preserving the quality of the products and ensuring their proper use may justify such a restriction, in which case selective distribution systems are allowed. The Court concluded that the selective distribution systems in place met all the necessary conditions.

The GC also rejected a claim by CEARH that the refusal to supply amounted to an abuse of dominance because the selective distribution systems lacked any objective justification. In order to establish an abuse under Article 102 TFEU, the refusal to supply by a dominant undertaking must (i) not be objectively justified, (ii) be related to goods and services that are indispensable for the requesting person's activity, and (iii) be likely to eliminate all competition. Consequently, the lack of an objective justification is not in itself sufficient ground for finding an abuse under Article 102 TFEU. The GC confirmed the Commission's finding that there was a very low probability of all effective competition being eliminated.

Finally, CEARH claimed that the Commission did not properly appreciate the market power of the luxury watchmakers. The GC dismissed that claim and ruled that since the Commission had held that the watchmaker's conduct did not qualify as an abuse, the degree of market power of the watchmakers was irrelevant.

This article was published in the Competition Law Newsletter of November 2017. Other articles in this newsletter:

  1. General Court annuls UPC/Ziggo merger decision
  2. General Court upholds fine for 'gun jumping' EU merger control procedure
  3. European Commission orders the recovery of State aid of around EUR 250 million from Amazon
  4. Nike can restrict sales via online platforms within its selective distribution system
  5. Dutch Trade and Industry Appeals Tribunal rules on cover pricing
  6. KLM and Amsterdam Schiphol airport offer commitments to reduce competition concerns

Team

Related news

07.11.2019 NL law
Safeguarding legal privilege: better safe than sorry?

Short Reads - The European Court of Justice recently ruled that the European Commission does not have to take additional precautionary measures to respect the right of legal professional privilege when conducting a new dawn raid at the same company. Companies are well-advised to mark clearly all communications covered by legal privilege as 'privileged and confidential' and to keep all privileged communication separate from other communication.

Read more

12.11.2019 EU law
Third country bids in EU procurement: always excluded?

Articles - The European Commission recently issued guidance on the participation of third country bidders in public procurement. It clarified bids may be excluded, but remains silent on whether they may be accepted and under which conditions. The Commission is of the opinion that contracting authorities or entities can exclude bids if no access is secured. However, it does not discuss if and under which conditions contracting authorities or entities can allow foreign bids if no access is secured.

Read more

07.11.2019 NL law
Tackling Big Tech up-front? Time to stop thinking and start acting

Short Reads - Benelux competition authorities have published a joint memorandum on how best to keep up with challenges in fast-moving digital markets. As well as calling on the European Commission to issue an economic study on digital mergers, the memorandum calls for an ex ante intervention tool to fill the gap between interim measures and ex post enforcement. This tool would pre-emptively impose behavioural remedies on digital gatekeepers without first having to establish an actual competition law infringement.

Read more

08.11.2019 BE law
Interview with Wouter Ghijsels on Next Gen lawyers

Articles - Stibbe’s managing partner Wouter Ghijsels shares his insights on the next generation of lawyers and the future of the legal profession at the occasion of the Leaders Meeting Paris where Belgian business leaders, politicians and inspiring people from the cultural and academic world will discuss this year's central theme "The Next Gen".

Read more

07.11.2019 NL law
Rotterdam District Court rules that claims in elevator cartel damages proceedings need further substantiation

Short Reads - The Rotterdam District Court has ordered claimant SECC (a litigation vehicle) to substantiate its claims in proceedings against Kone and ThyssenKrupp regarding the elevator cartel. The Court also ruled that some claims have become time-barred, unless SECC can show that these were timely assigned to SECC and notified to Kone and ThyssenKrupp. The Court rejected several defences of Kone and Thyssenkrupp, including a jurisdictional challenge based on arbitration clauses between the defendants and assignors of claims to SECC.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring