Short Reads

Guess what, online branding restrictions are on the Commission's radar

Guess what, online branding restrictions are on the Commission's radar

Guess what, online branding restrictions are on the Commission's radar

04.01.2019 NL law

Companies are probably aware of the Commission's eagerness to clamp down on online resale price maintenance and geo-blocking restrictions. The recent fine for vertical restraints by clothing company Guess marks a new dot on the Commission's radar. Restrictions on retailers using a supplier's brand names for online search advertising purposes are just as much a no-go.

The ACM seems to be catching up with the vertical restraints crusade too. It is therefore essential for companies to check their distribution contracts. Companies wishing to have a guided tour through the maze of vertical competition issues are very welcome to join us at the Stibbe Annual Competition Law Update on 17 January 2019.

According to a recent press release, the European Commission imposed a fine of EUR 40 million on Guess for placing a number of restrictions on retailers within its selective distribution network. In addition to the more 'traditional' restrictions such as restrictions on online resale prices, geo-blocking, cross-selling between authorised retailers and online sales limitations, Guess had also restricted retailers from using its brand names and trademarks for the purposes of online search advertising.

This is the first time the Commission has established this type of infringement. This does not mean that these restrictions have gone unnoticed until now. The Commission had already flagged online advertising restrictions in its 2017 E-commerce sector inquiry. In the accompanying Staff Working Document, the Commission expressed concerns that these kind of restrictions aim to prevent retailers' websites from appearing in a prominent position when using specific keywords, to safeguard top listings for the supplier's own retail activities or to keep bidding prices down. In 2015, the Bundeskartellamt examined a prohibition by ASICS on its retailers' use of brand names as a key word in paid search engine advertising [see our February 2016 Newsletter] and the U.S. Federal Trade Commission recently condemned bidding agreements between 1-800 Contacts, a large online retailer of contact lenses, and a number of its competitors with regard to auctions to place online advertisements. Meanwhile, the ACM seems to be catching up with the European Commission's vertical restraints crusade. It recently conducted dawn raids at various companies to investigate possible vertical price-fixing of consumer goods by manufactures and (web)shops. These investigations may mark the end of the ACM's more liberal approach towards vertical restraints.

It may therefore just be a matter of time before more vertical competition issues, including online search advertising restrictions, come under fire. If and when they do, it makes sense for companies to consider which approach to follow during the antitrust investigation procedure. Guess was granted a 50% fine reduction in return for (i) coming clean about the online search advertising restriction, (ii) providing additional evidence and (iii) expressly acknowledging the facts and infringements before the issuing of a statement of objections. The Guess case is the third non-cartel case, following the ARA and Consumer Electronics cases, in which the Commission granted fine reductions for cooperation. The Commission recently published a fact sheet codifying this practice of rewarding cooperation outside cartel cases, where settlement and leniency procedures do not apply. Similarly, the ACM recently published guidelines enabling it to conclude its fining cases more swiftly. According to the ACM guidelines, companies can obtain a 10% fine reduction for acknowledging the infringement and accepting the fine to be imposed.

It remains to be seen whether more national authorities will follow a similar approach in future cases. Who knows, it could even be a first step towards more competition authorities introducing leniency possibilities in vertical competition cases. This is why it is essential for companies to double-check whether their distribution contracts are competition law-proof.

 

 

This article was published in the Competition Law Newsletter of January 2019. Other articles in this newsletter:

Team

Related news

12.05.2020 NL law
Kroniek van het mededingingsrecht

Articles - Wat de gevolgen van de coronacrisis zullen zijn voor de samenleving, de economie en – laat staan – het mededingingsbeleid laat zich op het moment van de totstandkoming van deze kroniek niet voorspellen. Wel stond al vast dat het mededingingsrecht zal worden herijkt op basis van de fundamentele uitdagingen die voortvloeien uit zich ontwikkelende ideeën over het belang van industriepolitiek, klimaatverandering en de positie van tech-ondernemingen en de platforms die zij exploiteren.

Read more

07.05.2020 NL law
Spreading fast: Dutch and Belgian COVID-19 State-aid approved

Short Reads - Many Member States are taking measures to support the economy during the COVID-19 crisis. The European Commission’s Temporary Framework enables the rapid approval of certain types of State aid. So far, three Dutch State aid schemes and six Belgian schemes were approved, providing the beneficiaries with legal certainty that the aid received is in line with EU State aid law and cannot be challenged at a later stage.

Read more

07.05.2020 NL law
ECJ confirms: no shortcut for ‘by object’ antitrust infringements

Short Reads - The European Court of Justice has found there is no shortcut for determining whether particular conduct can be held to have the object to restrict competition. A competition authority will always need to assess carefully whether the conduct reveals "a sufficient degree of harm to competition” before labelling it a ‘by object’ infringement. This is the case where there is sufficiently solid and reliable experience showing that this type of conduct is commonly regarded as being inherently anticompetitive.

Read more

28.04.2020 EU law
Origin of the primary ingredient - Implementing Regulation 2018/775

Short Reads - Since the beginning of this month, the origin of the primary ingredient of a food must be clearly indicated on the product when it differs from the origin given for the product as a whole. This is the result of the implementation of Article 26 (3) of the European Regulation 1169/2011 on the provision of food information to consumers.  

Read more

07.05.2020 NL law
COVID-19: fast-forwarding competition law

Short Reads - Competition authorities are temporarily ‘green-lighting’ certain collaboration initiatives to safeguard the supply of essential products in light of the COVID-19 outbreak. At the same time, authorities warn against using the current exceptional circumstances to engage in anti-competitive practices, such as price-fixing, excessive pricing, refusals to deal or opportunistic takeovers. 

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