Hopes that the Coty decision of the Court of Justice of the European Union (CJEU) would create a more harmonized approach to vertical restraints in the EU may be short lived.
On 6 December 2017, the CJEU ruled in the Coty case that prohibitions on distributors in selective distribution systems to sell via third-party online platforms do not amount to hardcore restrictions under the EU block exemption regulation on vertical restraints No. 330/2010 ("VBER").
But only one week later, Germany's high court, the Bundesgerichtshof (BGH), found that prohibitions on distributors in selective distribution systems to participate in online price comparison tools do beyond any doubt amount to a hardcore restriction under Art. 4 c) VBER (12 December 2017, case KVZ 41/17).
Although third-party platforms and price comparison tools are not the same, the BGH's reasoning appears difficult to reconcile with the Coty judgment. In any event, some scholars expressed concerns that the BGH did not consider it necessary to refer the question to the CJEU for a preliminary ruling.
What were the facts?
Sports clothing and shoes manufacturer ASICS introduced selective distribution contracts, which contained inter alia the following restrictions on its dealers:
- Absolute prohibition to participate in price comparison tools
- Absolute prohibition to sell via third-party online platforms
- De facto absolute prohibition to advertise on third-party websites using ASICS brands
The German Federal Cartel Office decided that clauses 1 and 3 were hardcore restrictions under Art. 4 c) VBER.
The first instance court confirmed the decision. It held not only that clause 1 amounts to a hardcore restriction (clause 3 could be left open), but that this fact was so evident ASICS was refused leave to appeal to the BGH.
ASICS appealed against this refusal (not the decision on the merits). The BGH rejected the appeal, concluding that it was beyond any doubt that absolute price comparison tool bans amount to hardcore restrictions under Art. 4 c) VBER.
BGH in line with Coty and Pierre Fabre?
Considering CJEU case law in Coty and previously in Pierre Fabre (C-439/09), the BGH decision has surprised many legal analysts, who ask: Is it really beyond any doubt that absolute price comparison tool bans in selective distribution systems are hardcore restrictions?
According to Pierre Fabre (C-439/09), de facto prohibitions to sell online are hardcore restrictions under Art. 4 c) VBER. In Coty, the CJEU appears to have refined the notion of “de facto prohibition.” It held that in a selective distribution contract a clause restricting a “specific kind of online sale” is not a hardcore restriction if it does not prohibit the use of the internet as a means of marketing, and is part of a selective distribution contract where customers remain able to find the online offer of authorised distributors (paragraphs 65-68). While Coty concerned third-party platforms, the line of argumentation does not appear to be limited to those platforms.
Applying the above criteria, the BGH might have been right in concluding that the combined restrictions in the distribution contract made selling online so difficult for authorized dealers that together they amounted to a de facto prohibition of online sales: hence, a hardcore restriction.
But given that the BGH explicitly noted that an absolute price comparison tool ban in a selective distribution system, while not a de facto prohibition of online sales, constitutes on its own a hardcore restriction under Art. 4 c) VBER, its ruling appears doubtful to some analysts, and difficult to reconcile with the case law of the CJEU.
Is harmonisation still a long way away?
Regarding vertical restraints, the BGH decision demonstrates that creating a level playing field throughout the EU remains a distant hope.
This case represents more divergence. Throughout the German ASICS case, the enforcer and courts uniformly stated that ASICS products are not luxury goods, which barred ASICS from justifying restrictive clauses with the requirement to preserve a “luxury image”. In the Netherlands, however, the District Court of Amsterdam found that NIKE products are luxury goods, and restrictions preserving the brand image of those goods are not caught by the prohibition laid down in Art. 101(1) TFEU (4 October 2017, case C/13/615474 / HA ZA 16-959.).
For the present, harmonisation remains elusive.