Short Reads

Franchise argument in laundry cartel does not wash with Dutch court

Franchise argument in laundry cartel does not wash with Dutch court

Franchise argument in laundry cartel does not wash with Dutch court

01.11.2018 NL law

Companies participating in a franchise agreement are advised to carefully assess possible competition law concerns, particularly if the franchisees are (potential) competitors. The Dutch Trade and Industry Appeal Tribunal (CBb) recently confirmed that a franchise agreement cannot be used to cover up anti-competitive horizontal agreements.

Market-sharing arrangements among competitors generally qualify as agreements with the object to restrict competition, even when part of a franchise agreement. However, the CBb found that the Dutch Authority for Consumers and Markets should have taken the cooperation's genuine franchise-related aspects, such as the joint development of knowhow, into account when setting the gravity factor for calculating the fine. It therefore reduced the gravity factor from 1 to 0.5.

On 23 October 2018, the CBb upheld the Rotterdam District Court's ruling that a 'franchise' agreement among four laundry service providers constituted anti-competitive market allocation.

The four laundry companies had jointly established a subsidiary Rentex Nederland (Rentex) in the 1970s which concluded "franchise agreements" with its shareholders. In 2011, the Dutch Authority for Consumers and Markets (ACM) had fined the companies for their participation in this agreement arguing that it in fact served as a means to allocate the market. This decision was upheld on appeal before the District Court, although the District Court annulled the decision vis-à-vis one of the companies (see our earlier newsletter).

Before the CBb, the companies reiterated their primary argument that the agreements under scrutiny were part of a legitimate vertical franchise agreement which was pro-competitive and did not infringe the cartel prohibition. Despite the vertical element, the CBb ruled that the 'franchise' agreement was predominantly horizontal in nature. The franchisees were the only shareholders of Rentex and were, as shareholders, actively involved in Rentex's strategic decisions (including those relating to the agreements under scrutiny). Also, the decisions taken in the shareholders' meetings affected the relationship among the laundry service providers themselves and thus had a horizontal effect.

The CBb ruled that the District Court erred in law in finding that one of the companies did not participate in the market allocation agreement as from August 2003. The CBb thus upheld the fine for this company as imposed by the ACM.

The CBb also concluded that the gravity factor used by the ACM for calculating the fine had to be reduced, considering that (i) the agreements had pro-competitive effects, such as development of knowhow, comparable to a franchise organisation, (ii) after receiving legal advice to assess the agreement the companies had ceased the passive sales restriction, (iii) the agreements were not clandestine and (iv) the actual detrimental effects on competition were limited. The reduction of the gravity factor led to a fine reduction for one of the companies.

 

 

This article was published in the Competition Law Newsletter of November 2018. Other articles in this newsletter:

  1. A problem shared is a problem halved: fine reduction and fine liability are correlated
  2. Rotterdam District Court rules on follow-on damages claim in relation to Dutch bitumen cartel
  3. ACM bound by its own rules during dawn raids
  4. European Court of Justice clarifies the application of choice of forum clauses in competition damages claims

Team

Related news

02.04.2020 NL law
ACM played high stakes and lost: no more fixed network access regulation

Short Reads - The ACM’s failure to meet the requisite standard of proof has led to the fixed networks of Dutch telecom providers KPN and VodafoneZiggo being free from access regulation. The Dutch Trade and Industry Appeals Tribunal ruled that the ACM had failed to demonstrate the existence of collective dominance, and that KPN and VodafoneZiggo would tacitly coordinate their behaviour absent regulation.

Read more

26.03.2020 BE law
​I am suffering significant financial losses as a result of the spread of the corona virus. Is there a possibility of State aid?

Short Reads - COVID-19 brings certain questions to centre stage regarding State aid. In this short read, Peter Wytinck, Sophie Van Besien and Michèle de Clerck discuss the possibility of State aid in case of significant financial losses as a result of the spread of the corona virus.

Read more

02.04.2020 NL law
Claims assigned to a litigation vehicle: who needs to prove what?

Short Reads - Two recent decisions from the Amsterdam Court of Appeal have confirmed that litigation vehicles cannot come empty-handed to the court, and should provide documentation regarding the assignments of claims they submit. The Dutch legal system allows companies and individuals to assign their claims to a “litigation vehicle” or “claims vehicle” that bundles those claims into a single action. In its decisions of 10 March 2020, the Court of Appeal ruled that it is up to litigation vehicles to prove that the assignments can be invoked against the debtor. 

Read more

10.03.2020 NL law
De AVG staat niet in de weg aan de verwerking van persoonsgegevens door een toezichthouder tijdens een bedrijfsbezoek

Short Reads - Bedrijven die met toezicht worden geconfronteerd, zijn gehouden op verzoek van een toezichthouder in beginsel alle informatie te verstrekken. Met de komst van de Algemene verordening gegevensbescherming (AVG) is in de praktijk de vraag opgekomen of een toezichthouder bevoegd is om persoonsgegevens die onderdeel uitmaken van de gevraagde informatie te verwerken.

Read more

02.04.2020 NL law
EU competition policy agenda: full to the brim

Short Reads - The European Commission’s competition policy agenda stretches to 2024 and contains plans for many new or revised rules and guidelines. Recent publications, such as the New Industrial Strategy for Europe, shed more light on the Commission’s initiatives and their possible impact on parties from both inside and outside the European Union (EU). These new initiatives include temporary state aid rules to address the effects of the Corona crisis, consultations on the Block Exemption Regulations, and new measures in respect of (primarily) third-country companies.

Read more

05.03.2020 NL law
CBb confirms: no cartel fine, still interest to appeal cartel decision

Short Reads - Companies can challenge a decision establishing that they committed a competition law violation, even if no fine was imposed on them. The CBb – the highest court for public enforcement of cartel cases – recently confirmed that the absence of a fine does not affect a company’s interest to appeal. Consequently, parent companies held liable for a subsidiary’s cartel infringement can still challenge a cartel decision, irrespective of whether fines were imposed on them separately.

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring