Spain – The Spanish sentence on the European super league: everyone is happy

26 7 月 2024

  • 西班牙
  • 反垄断

The Commercial Court No. 17 of Madrid has ruled in the SuperLiga case following the guidelines set by the CJEU in its decision of December 21 last year.

The lawsuit was filed by ESCL, an entity formed by Real Madrid and other soccer clubs to promote the SuperLiga, most of which abandoned the project due to pressure from fans and their governments against FIFA and UEFA, with RFEF and La Liga voluntarily joining the defendants.

As usually happens with elections, but not with sentences, everyone, plaintiffs and defendants, has shown their satisfaction with this ruling, which is not yet final, as it can be appealed before the Provincial Court of Madrid.

In brief, the proceedings involved whether the FIFA/UEFA regulations on the organization and authorization of soccer competitions and the management of the rights deriving from such competitions were in accordance with Community competition law, articles 101 and 102 of the TFEU.

The CJEU judgment of last December had already ruled that the regulatory rules of FIFA and UEFA relating to prior authorization and participation, which give these entities the power to prevent any competing company from accessing the market, constitute an abuse of a dominant position and infringe the provisions of Articles 101 and 102 TFEU, mainly because they are not accompanied by certain limits and controls guaranteeing transparency and objectivity in the decision not to authorize such international competitions, which allow the risk of abuse of a dominant position to be excluded.

Likewise, the Court of Justice, using the same arguments and about the exploitation rights deriving from sporting competitions, states that the FIFA and UEFA rules are contrary to the provisions of Articles 101 and 102 TFEU, since they attribute to themselves exclusive responsibility for the marketing of the rights in question.

Following the guidelines set by the CJEU judgment, the judgment of Madrid Commercial Court No. 17 partially upheld the lawsuit filed by ESLC against UEFA and FIFA. It declared that both organizations have abused their dominant position and are preventing free competition in the market by granting themselves the discretionary power to prohibit participation in alternative competitions and impose unjustified and disproportionate restrictions, conduct that infringes Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

The ruling condemns FIFA and UEFA to cease the anticompetitive conduct sanctioned and prohibits them from repeating them in the future. It also condemns them to immediately remove all the effects of the anticompetitive actions that occurred before or during the duration of the lawsuit, which began on April 18, 2021, when ESLC announced the launch of the SupeLiga.

Finally, the judgment states that the content of the declarations issued by FIFA, UEFA and other entities (including the federations and leagues of England, Italy and Spain, some of whose clubs were part of the project) on April 18, 2021 (referred to in the lawsuit as the ‘Declaration’) in relation to the pan-European international competition project, also infringes Articles 101 and 102 TFEU.

It should be noted that the judgment expressly states that “inasmuch as the SuperLiga in the terms initially set forth in the lawsuit, i.e. in accordance with the initial project has been abandoned and discarded by the promoters themselves, the motions in relation thereto must likewise lapse; it is not possible to impose a prohibition or restriction in the abstract, i.e. to impose a prohibition in the future of any other project or modification of the one already presented”.

Based on this argument, the Judgment rejects the requests included in section f) of the lawsuit which, in summary, requested that FIFA and UEFA be ordered to refrain from any conduct, measure, or action or issue any statement that prevents or hinders in any way the preparation of the SuperLiga; and the commercial judge concludes by stating in this regard that the purpose of these proceedings is not “the authorization of any competition, but to lay the foundations to channel a system of free competition for the organization of soccer competitions”.

Thereafter, everyone is happy with the result; La Liga issued a statement stressing that the ruling does not endorse a project which, moreover, according to the same ruling, has been abandoned by its promoters. UEFA says that it is pleased to note that the judge has given a good and valid system of prior authorization for third-party competitions to be approved in accordance with UEFA’s authorization rules and has recognized the undoubted benefits of these rules for the soccer sporting system, concluding that “the judgment does not give third parties the right to develop competitions without authorization and does not refer to any future project or to any modified version of an existing project”.

The plaintiffs, too, are happy and content to proclaim that UEFA’s statutes and the aggressive measures taken to protect its monopoly have stifled innovation for decades. Clubs should not have to fear threats of sanctions simply for having ideas and having conversations. The era of monopoly is definitely over.

Rarely does one find that a judgment leaves all the litigants so happy and content, but that seems to be the case here. Or at least that is what all of them have been interested in communicating, when the harsh reality is, on the one hand, that the SuperLiga project as it was structured when the lawsuit started and FIFA/UEFA reacted furiously, is dead and buried, and on the other hand, that the happy world in which FIFA and UEFA regulated soccer and competitions as a private preserve, considered themselves immune and alien to ordinary justice and shared the money generated without being accountable to the Courts of Justice and threatened to expel or expel the rebellious spirits, has come to an end.

地域封锁是一种歧视性做法，由于客户的国籍或其居住地或营业地，阻止客户（主要是网上客户）从另一欧盟成员国的网站获取和（或）购买产品或服务。

欧盟条例在2018年2月28日颁布的关于解决基于客户国籍、居住地或营业地在国内市场上的不合理的地域封锁和其他形式的歧视的欧盟第2018/302号条例将于2018年12月2日生效。

当前情况

欧盟委员会对欧盟的1万多个电子商务网站进行了“秘密购物”调查。地域封锁指数相当高！63%的网站不允许购物者从另一个欧盟国家购买商品（甚至包括86%的家用电器和79%的电子和计算机硬件）。

另一方面，当电子商务的价值和数量就全球来说，年复一年地大幅增长时，只有50%的欧洲客户从设在另一个欧盟成员国的网上商店购买产品，但这种现象只是在国内范围而非整个欧洲。

2017年6月23日，欧洲理事会要求切实执行数字单一市场战略的所有内容，包括跨界交付、消费者保护和禁止不当地域封锁。

现行法律框架的缺失

欧洲联盟指令（欧盟第2006/123/CE号指令）和TFUE第101条已经解决了基于国籍、地区或住所或营业地的歧视做法。

根据欧盟指令第20(2)条，欧盟成员国必须确保专业人员不因客户的居住地、营业所或国籍而区别对待（客观例外情况除外）。另一方面，关于纵向限制的欧盟竞争法(《欧盟运行条例》第101条和集体豁免条例及其指南)认为，对被动销售的限制是违反欧盟竞争规则的核心限制。然而，这两套规则(欧盟指令和竞争法框架)在实践中似乎并不完全有效。

在这方面，欧盟委员会在最近关于电子商务部门竞争调查的报告中表明，地域封锁尤其在欧洲电子商务部门内得到了大规模使用。

地域封锁条例的目的

地域封锁条例的目的是防止专业人员在处理跨国界电子商务交易时，基于国籍、居住地或客户营业地而实施的直接或间接歧视。

地域封锁条例的范围

新的条例将只适用于企业与最终用户或企业之间的网上销售。

新条例将适用于在欧盟内运作的网站或在欧盟以外运作但向设立在欧盟内的客户提供货物或服务的网站。

电子网站的管理新规是什么？

关于访问网站的问题

根据该条例，企业不得以与互联网用户的国籍、居住地或营业地有关的理由，通过使用技术措施来阻止或限制其进入网络接口。然而，只要客户明确同意，并且仍然可以轻松访问他们原先试图访问的网站版本，企业就有权将客的访问方向改变到他们试图访问的网站之外的另一个网站。

关于网站的销售条款和条件

该规则禁止企业在下列三种情况下，根据客户的国籍、居住地或营业地（特别是他们的IP地址），提供不同的一般条件来取得货物或服务：

提供送货服务的企业将售出的商品送达到另外的欧盟成员国交付（或在企业与客户共同商定的地点收取货物）的；

企业提供的电子化服务，如云、数据存储、主机服务等。（但不提供访问受版权保护的内容的服务，如流媒体或在线游戏服务）；

顾客获得的在各个国家均可运行的商务服务（如汽车租赁和旅馆住宿服务或体育或文化活动的票务服务）。

关于网站上的付款方式

该条例禁止企业以与客户的国籍、居住地或营业地、支付账户所在地或支付服务提供者的设立地有关的理由，对已接受的支付手段适用不同的支付条件（条件是必须符合认证要求，付款交易必须以企业接受的货币进行）。

这项规定对电子零售商有什么影响？

尽管在形式上被排除在该条例范围之外，但供应商与分销商或批发商之间的关系仍将受到该条例的影响，因为根据分销商之间的协议规定，分销商承诺不进行被动销售（例如，阻止或限制进入网站），由于与客户的国籍、居住地或营业地有关的原因“将自动无效”。

因此，地域封锁条例对分销商的影响是双重的：第一，在与客户（最终用户或用户企业）的关系中产生直接影响；第二，在其根据独家分销协议所承担的义务方面产生间接影响。

地域封锁条例必须与现行竞争法框架相协调，特别是与制定适用于网上销售的具体规则的纵向限制指导方针相协调。网上销售被比作被动销售。指导方针中提到4个实践中为了间接保证地方保护主义，在供应商和独家分销商同意的情况下被禁止的例子：

独家经销商应阻止另一地区的客户访问其网站，或自动将其转到供应商或其他经销商的网站，

如果买方的信用卡数据显示买方不是独家经销商的专有区域，独家经销商应终止网上销售。

限制独家分销商通过互联网销售的份额（但合同可规定按绝对值计算的最低线下目标，并规定与离线销售相比，网上销售保持一致）。

独家分销商对在互联网上销售的货物支付的价格，应高于对准备在离线销售的货物支付的价格。

制造商将必须决定是采用一个独一无二的欧洲门户网站报价还是多个地方商业报价，众所周知，每个范畴的客户端是有可能存在价格差异的。

事实上，新规定并没有强制电子零售商协调其价格政策，它们只是必须允许欧盟消费者自由和容易地访问其网站的任何版本。同样，该条例并没有规定电子零售商必须将产品运往欧洲各地，而只是允许欧盟消费者从他们想要的任何网站购买商品，并在必要时自行安排发货。

最后，在更为契约性的层面上，尚不十分清楚新的地域封锁规则如何直接或间接地影响适用于消费者合同的冲突法规则，根据罗马第1号规定(Rome I Regulation)，特别是在允许消费者在本网站所在国的外国网站上购买产品时（这意味着在消费者所在国无特定交货制度已建立。）

因此，B2C网站的一般条款和条件需要在营销和法律两方面进行审查和调整。

The Court of Justice of the European Union (CJEU) ruled, on December 20, 2017, that the service provided by Uber cannot be regarded as a digital service.

The question raised

The request for preliminary ruling was referred by a decision made by the Juzgado de lo mercantil de Barcelona relating to a dispute between the Asociacion Profesional Elite Taxi and Uber where the first considers that the second offers a paid service consisting of connecting non-professional drivers with persons who wish to make urban journeys, without holding any local administrative license nor authorization.

The question at stake was clearly set by the Court. The starting point is the principle of freedom of services (article 56 TFUE) and its implementation by two directives: the 2000/31 Directive on e-commerce and the 2006/123 Directive on services in the internal market. On the other side, in each of these three set of rules (TFUE, 2000 and 2006 Directives), an exception is made for “transport services”. The question at stake was to know whether the service offered by Uber could be qualified as a digital service (subject only to the national law of establishment of the service provider) or as a transport service (which must comply with the 28 national laws on transport).

The decision of the Court

The Court first stated (i) that “an intermediation service consisting of connecting a non-professional driver using his own vehicle with a person wishes to make an urban journey is, in principle, a separate service from a transport service“, and (ii) that a transport service is defined as “the physical act of moving persons or goods from one place to another by means of a vehicle“. With this fine line between the two types of services, the Court then concluded that the hereabove intermediation service “meets, in principle, the criteria for classification as an “information society service” within the meaning of the Directive 2000/31“.

The CJEU ruled however that the very activity conducted by Uber is “more than an intermediation service consisting of connecting, by means of a smart phone application, a non-professional driver using his or her own vehicle with a person who wishes to make an urban journey“. The Court then explained that Uber “simultaneously offers urban transport services, which it renders accessible, in particular, through software tools such as the application (…) and whose general operation it organizes for the benefit of persons who wish to accept that offer in order to make an urban journey“.

The Court grounded its reasoning with the two following features to qualify Uber’s service as a transport service:

  • This intermediation service is “based on the selection of non-professional drivers using their own vehicle, to whom the company provides an application without which (i) those drivers would not be led to provide transport services and (ii) persons who wish to make an urban journey would not use the service provided by those drivers“.
  • “Uber exercises decisive influence over the conditions under which that service is provided by those drivers” (e.g. the maximum fare fixed by Uber, the amount cashed in first by Uber and then repaid to the drivers, the quality control of the vehicles and of the drivers by Uber with possible exclusion as a sanction).

 The impact for startup using intermediation platforms

Although the Court mentions that the service of Uber is “more” than an intermediation service, and that the provider of this intermediation service “simultaneously offer” urban transport services, which imply that this intermediation service does however exist, the Court judged that specific features should invalidate this intermediation service as a digital service.  A more up-to-date approach of what is today the Digital Single Market could have led the Court to choose another solution and stay on the digital side.

The reasoning of the Court does not really constitute a guideline for other intermediation platforms. The shortness of the reasoning might convey a more political decision applying to a US giant like Uber. The briefness of the reasoning may also show the inadequacy of the current EU regulation vis-à-vis the new trends of digital economy, specially the large variety of intermediation platforms business models (the « digital service » to which the Court referred has been defined in the 1998 directive).

It seems that this ruling will not materially impact Uber which is already subject to local transport rules in several EU countries.

This ruling will impact European Uber-like businesses as they will have to take into consideration this decision to build their offer: they will deal with 28 local regulations if they cannot qualify as a digital service. But should they fall into the transport service rules, intermediation platforms will have anyway to control whether national political and judicial authorities implement local transport rules in compliance with the general principles of the TFUE.

As regards service providers dealing with non-transport services, it is difficult to anticipate the real impact of this decision since this ruling is highly focused on the relation between liberalization of services and specific rules applicable to transport.

The author of this post is Christophe Héry.

Understanding the interplay between federal and state statutory and common law in the US legal system is important to understanding the regulation of exclusive distribution agreements in the US.

Under the US Constitution all power not specifically reserved for the federal government remains with the states. Federal law has exclusive jurisdiction only over certain types of cases (e.g., those involving federal laws, controversies between states and cases involving foreign governments), and share jurisdiction with the states courts in certain other areas (e.g., cases involving parties that reside in different states). In the vast majority of cases, however, state law has exclusive jurisdiction. Similarly, the doctrine of freedom of contract under US law also directly affects how distribution agreements are regulated in the US.

Furthermore, because a distributor is typically an unaffiliated third party acting on its own account rather than on behalf of the supplier as principal, distribution agreements are subject to greater regulation under US federal and state antitrust law. Such law, among other things, (i) regulates whether and the degree to which a supplier in a distribution arrangement may seek in a contract or otherwise to dictate the price at which the distributor will resell products supplied; (ii) imposes restrictions on suppliers that engage in “dual distribution” (selling product directly as well as through a distributor); and (iii) may limit the suppliers’ ability to sell product to different distributors at a different price. Antitrust law also regulates exclusivity and selective distribution arrangements, as well as distribution relationships in certain industries (e.g., federally: automobile manufacturers and petroleum; at the state level, heavy equipment, liquor and farm equipment industries). Furthermore, distribution agreements often may resemble franchise arrangements, subjecting those arrangements to extensive federal and state regulation.

Under the law of most states (including New York), exclusive distribution exists when a supplier grants a distributor exclusive rights to promote and sell the contract goods or services within a territory or to a specific group of customers. Exclusive rights in a distribution arrangement are often granted by the supplier for the distribution of high quality or technically complex products that require a relatively high level of expertise by the distributor, including staff that is specially training to sell the goods or specialized after-sales repair and maintenance or other services. Distribution agreements differ from commercial agency agreements in several respects. In contrast to a distributor, a commercial agent does not take title to product, does not hold inventory and typically has no contractual liability to the customer (including risk of customer non-payment). Conversely, a distributor, in line with the greater risk of its activities, typically can expect greater upside economically in terms of margins on resale relative to an agent’s profit through earned commissions.

Sub-distributors

Under the law of most states (including New York), a distributor may appoint sub-distributors absent any restrictions to the contrary in the agency agreement. Commercially, the appointment of a sub-distributor may have an adverse effect on the supplier by reducing the supplier’s control over its distribution channel activities or increasing the supplier’s potential liability exposure given the increased number of distributors whose actions may be attributed to the supplier. A supplier that does not manage properly the appointment of sub-distributors may also lose valuable product knowledge with respect to the distributed goods (particularly if the goods are novel or complex in nature). Advantages to sub-distributor appointments for the supplier may include a more effective overall marketing presence with enhanced local market knowledge, a broader geographic scope, a potentially lower costs as a result of the sub-distributors’ expertise and efficiencies, etc.

 

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Rights and Obligations of the Exclusive Distributor

  • Sales organization: suppliers are not required to establish sales organizations in exclusive distribution agreements.
  • Sales’ target: there are no mandatory rules under federal law or state law (including New York) generally regarding sales targets in exclusive distribution agreements. However, such provisions are common in exclusive distribution agreements.
  • Guaranteed minimum target: minimum sales requirements are common in exclusive distribution agreements. As a commercial matter, a supplier as a requirement to give, or maintain, exclusivity with one distributor, will seek through such requirements to ensure that economically the distributor is performing satisfactorily. Often failure to meet sales targets may entitle a supplier to rescind the exclusivity, terminate the agreement or reduce the portion of the territory to which the exclusivity applies. We note that minimum sales requirements in an exclusive distribution arrangement may, in certain cases, be subject to challenge under antitrust law as having an undue anticompetitive effect by preventing a distributor from purchasing products from a competitive supplier.
  • Minimum stock: there are no mandatory rules in federal law or the law of the majority of states (including New York) regarding minimum stock. A supplier may seek to have the distributor agree, contractually, to maintain adequate levels of stock relative to market demands as well as to store the product properly.
  • After-sales service: the parties to a distribution agreement are generally free to agree as they deem appropriate with respect to after-sale service regarding products.
  • Resale Prices: the Exclusive Distributor is free to fix the resale prices. State law (including New York law) generally does not limit the ability of an exclusive distributor to fix resale prices. […] A supplier’s ability to set resale prices for distributors is subject to limitations under federal and state antitrust law. Many state antitrust laws (including New York’s) closely resemble the federal antitrust laws. However, differences exist such that certain conduct may be found not to violate federal antitrust law but still be found to violate state antitrust law (or vice versa). Because the distributor (contrary to an agent) is acting on its own behalf, an agreement between supplier and distributor to maintain certain prices (or if a distributor is deemed to have been coerced by the supplier to follow certain prices), may be a per se price-fixing violation under federal and state antitrust law. Under federal antitrust law, vertical price-fixing until 2007 had been illegal per se. This per se rule was overturned by the Supreme Court. Horizontal price fixing remains per se illegal under the Sherman Act (see below).

Rights and Obligations of the Supplier

  • Exclusive Distributor undertaking to supply: generally, state statutes do not specifically provide that a supplier in a distribution relationship has a duty to supply specific levels of product to a distributor, with such obligations generally be established by contractual provision. However, a supplier does have an implied covenant of good faith and fair dealing toward the distributor under state law generally, which generally requires that a party to a commercial agreement not do anything which injures the right of the other to receive the benefits of the agreement). Under the foregoing, a supplier may be deemed to have an obligation to supply product to a distributor (or be found to have violated the implied covenant of good faith and fair dealing in the event that the supplier, although able, decided not to provide a distributor with product without any other contractual justification for not doing so). However, even where such a duty were found to exist, the quantity and frequency of product supply and other details often remain unclear. To avoid uncertainty, distributors often seek to have a specific provision included in the distribution agreement, providing at least for the supplier to be required to use some degree of effort (e.g., “best efforts,”, “reasonable best efforts” or “reasonable efforts”) to supply product responsive to distributor’s submitted purchase orders. On a related topic, generally a distributor typically is only required to inform the supplier of lower purchase estimates if the distributor undertakes to do so (or undertakes a more general obligation with respect to the market) in the distribution agreement. However, even if the supplier is not, under an exclusive distribution agreement, required to supply the distributor with product, the supplier may still be subject to a contractual or common law obligation not to sell to third parties in the territory. New York courts held that suppliers that make direct sales to customers in the territory under an exclusive distribution agreement have breached their duties to the exclusive distributor.
  • Retention of title: typically, in sales transactions on credit in the US, title is passed at the moment of initial sale. The buyer typically grants the supplier a security interest in the goods purchased, which if proper perfected under state law, affords the supplier with a priority position relative to other creditors with respect to the products provided (inventory) in the event of non-payment and enforcement.

Construction defects warranty

The law of “products liability” in the US is based on the law of torts. Under New York law, in cases of where an end user is injured by a defective product which was sold by the distributor under a distribution agreement, the end user generally is able to sue the distributor and the supplier of the product under one or more of the following theories: (i) strict liability; (ii) negligence; or (iii) breach of warranty. The usual theory of recovery against a distributor is strict liability. Under a strict liability theory, a supplier or distributor that sells a defective product while engaged in its normal course of business shall be liable for injuries it causes to customers, regardless of privity, foreseeability or the exercise of due care. Product liability cases also are brought under breach of warranty claims. Breach of warranty claims can be based on express warranties (e.g., from advertisement or a product label) and on implied warranties (typically, warranties of merchantability and fitness for a particular purpose under the provisions of the Uniform Commercial Code as adopted by the states). Lastly, negligence claims brought by plaintiffs are based on the improper conduct of the defendant, whether supplier or distributor or other participant in the distribution chain, with respect to the manner of distribution or care of the product sold (examples include improper storage or transport).

Under New York law, exceptions based on misuse, neglect or abuse by the suing party generally apply as defenses against liability under theories of strict liability, negligence or breach of warranty.

The supplier and distributor can allocate third-party liabilities (e.g., potential losses to be paid to plaintiffs in a products liability law suit) and related attorneys fees as between themselves through warranty and other indemnification provisions. Parties to a distribution agreement in the US often seek to put in place such re-allocation provisions not only because of potential liability resulting from a final, unfavorable judgment, but also because of the sizeable legal fees that litigants in the US often incur. In this regard, we note that in the US litigation costs are generally born by all of the litigating parties and not by the losing party as is common in many other countries. Such provisions may include indemnification provisions relating to product liability or trademark infringement claims brought by third parties, limitations on liability provisions (based on monetary caps and exclusions as to the types of damages that may be recovered, such as consequential, punitive, special and indirect damages) and disclaimers in respect of express or implied warranties that may otherwise apply under state law applicable to the distribution agreement.

Exclusivity

Exclusive-dealing provisions – under which the distributor undertakes not to distribute competing products in the territory – are quite common in distribution agreements. However, although it is not easy for a plaintiff to prevail, such a provision may be subject to challenge as an unlawful restriction on competition under federal and state antitrust law, typically under the following federal antitrust laws: (i) section 1 of the Sherman Act, which prohibits contracts “in restraint of trade;”; (ii) section 2 of the Sherman Act, which prohibits “attempt[s] to monopolize” and monopolization; (iii) section 3 of the Clayton Antitrust Act of 1914 […], which prohibits exclusivity arrangements that may “substantially lessen competition” or tend to create a monopoly; and, finally, (iv) section 5 of the Federal Trade Commission Act […], which prohibits “[u]nfair methods of competition.” In deciding these cases, typically courts apply the “rule of reason analysis” under which the exclusive dealing arrangements is analyzed considering a host of factors, including: (a) the defendant’s market power; (b) the degree of foreclosure from the market and barriers to entry; (c) the duration of the contracts; (d) whether exclusivity has the potential to raise competitors’ costs; (e) the presence of actual or likely anticompetitive effects; and (f) legitimate business justifications.

Manufacturers of brand-name products typically aim to ensure the same level of quality of distribution throughout all distribution channels. To achieve this aim, they provide criteria how to resell their products. With the increase of internet sales, the use of such criteria has been increasing as well.

Best example: Asics. Until 2010, the German subsidiary Asics Deutschland GmbH supplied its distributors in Germany without applying special criteria. In 2011, Asics launched a selective distribution system called “Distribution System 1.0“. It provided, inter alia, for a general ban on distributors to use price comparison tools in online sales:

“In addition, the authorized B … distributor is not supposed to … support the functionality of price-comparison tools by providing application-specific interfaces (” API”) for these price comparison tools.” (translated]

The German Federal Antitrust Authority (“Bundeskartellamt”) has determined by decision of 26 August 2015 that the ban of price-comparison tools against distributors based in Germany was void because it infringed Article 101 (1) TFEU, sec. 1 Act on Restraints of Competition (see the 196-page decision here). Reason given was that such ban would primarily aim at controlling and limiting price competition at the expense of consumers. Asics, instead, filed a complaint before the Higher Regional Court of Düsseldorf to annul the Bundeskartellamt’s decision. Asics argued that this ban was a proportionate quality standard within its “Distribution System 1.0“, aiming at a uniform product presentation.

Now the Higher Regional Court of Düsseldorf on 5 April 2017 confirmed the Bundeskartellamt’s decision that within selective distribution systems the general ban to use price comparison tools was anti-competitive and therefore void (ref. no. VI-Kart 13/15 (V); see also the Bundeskartellamt’s press release in English):

  • In particular, the ban of price comparison tools was not exempt from Art. 101 (1) TFEU by way of teleological interpretation (“Tatbestandsreduktion”). According to the court, it was not necessary in order to protect the quality and the product image of the Asics brand (same argumentation as the Higher Regional Court of Frankfurt in its judgment of 22.12.2015, ref. no. 11 U 84/14 regarding Deuter’s functional back-up bags; the Federal Supreme Court will, however, still decide on this, ref. no. KZR 3/16). The court declared that the ban was intended to restrict the buyers, arguing that distributors would be restricted in entering into a price competition with others. The presentation of products in price comparison tools would not damage the quality or brand of Asics products. It would neither give a “flea market impression“, ostensibly also not from the simultaneous presentation of used products. Also, the ban of price comparison tools would not solve the problem of “free-riding“. In any event, the general ban of price comparison tools was not necessary and therefore unlawful.
  • The ban would also not be exempt under the Vertical Block Exemption Regulation. Instead, the court argued, the ban would limit passive sales (over the internet) to end customers, contrary to Art. 4 (c) Vertical Block Exemption Regulation (referring to the CJEU decision in the case of Pierre Fabre, 13 October 2011, ref. no. C-439/09). The “equivalence principle” (i.e. restrictions for offline as well as online sales should not be identical, but functionally equivalent) would not apply as there were no comparable functions to price comparison tools in the stationary trade.
  • Finally, the ban would also not benefit from the individual exemption under art. 101 (3) TFEU (“efficiency defence”).

 Conclusions:

  1. According to the Higher Regional Court of Düsseldorf, manufacturers might not generally prohibit their distributors from using price comparison tools. At the same time, the court also refused to grant leave to appeal against its decision – which, however, can be challenged separately by way of an appeal (sec. 74, 75 Act on Restraints of Competition).The future development of criteria limiting distributors in reselling online remains open, especially as (i) the Coty case is pending at the CJEU (see below) and (ii) the EU Commission in its sector enquiry into e-commerce currently appears to favour manufacturers of brand-name products (see below).
  2. The court has explicitly left open – arguing that they were not relevant for its decision – whether
  • the ban of search engines is anti-competitive (para. 44 et seq. of the decision);
  • the general ban of third-party platforms is anti-competitive (para. 7) – although Asics’ “Distribution System 1.0” also banned third-party platforms such as Amazon or eBay.
  1. Whether and how manufacturers of luxury or brand-name products can continue to ban their distributing via Amazon, eBay and other marketplaces in general in the future will likely be decided by the CJEU in the coming months – in the case of Coty (see our post “eCommerce: restrictions on distributors in Germany”) where a hearing has been just recently been held end of March 2017.
  2. Without prejudice to the Coty case, the EU Commission has however, in its sector enquiry into e-commerce of May 2017, declared that
  • “marketplace bans do not generally amount to a de facto prohibition on selling online or restrict the effective use of the internet as a sales channel irrespective of the markets concerned …,
  • the potential justification and efficiencies reported by manufacturers differ from one product to another …”,
  • (absolute) marketplace bans should not be considered as hardcore restrictions within the meaning of Article 4(b) and Article 4(c) of the VBER…,
  • the Commission or a national competition authority may decide to withdraw the protection of the VBER in particular cases when justified by the market situation”
    (41–43     Final Report on the e-commerce sector inquiry).

Hence, on the basis of the EU Commission’s most recent position, there is room for arguments and creative contract drafting since even general marketplace bans can be compatible with the EU competition rules. However, the courts may see this differently in the single case. Therefore, especially the CJEU with its Coty case (see above) will likely bring more clarity for future online distribution.

Javier Gaspar

业务领域

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    欧盟地域封锁禁令–电子商务网站的新战略

    14 6 月 2018

    • 欧洲
    • 法国
    • 分销协议
    • 反垄断
    • 电子商务

    The Commercial Court No. 17 of Madrid has ruled in the SuperLiga case following the guidelines set by the CJEU in its decision of December 21 last year.

    The lawsuit was filed by ESCL, an entity formed by Real Madrid and other soccer clubs to promote the SuperLiga, most of which abandoned the project due to pressure from fans and their governments against FIFA and UEFA, with RFEF and La Liga voluntarily joining the defendants.

    As usually happens with elections, but not with sentences, everyone, plaintiffs and defendants, has shown their satisfaction with this ruling, which is not yet final, as it can be appealed before the Provincial Court of Madrid.

    In brief, the proceedings involved whether the FIFA/UEFA regulations on the organization and authorization of soccer competitions and the management of the rights deriving from such competitions were in accordance with Community competition law, articles 101 and 102 of the TFEU.

    The CJEU judgment of last December had already ruled that the regulatory rules of FIFA and UEFA relating to prior authorization and participation, which give these entities the power to prevent any competing company from accessing the market, constitute an abuse of a dominant position and infringe the provisions of Articles 101 and 102 TFEU, mainly because they are not accompanied by certain limits and controls guaranteeing transparency and objectivity in the decision not to authorize such international competitions, which allow the risk of abuse of a dominant position to be excluded.

    Likewise, the Court of Justice, using the same arguments and about the exploitation rights deriving from sporting competitions, states that the FIFA and UEFA rules are contrary to the provisions of Articles 101 and 102 TFEU, since they attribute to themselves exclusive responsibility for the marketing of the rights in question.

    Following the guidelines set by the CJEU judgment, the judgment of Madrid Commercial Court No. 17 partially upheld the lawsuit filed by ESLC against UEFA and FIFA. It declared that both organizations have abused their dominant position and are preventing free competition in the market by granting themselves the discretionary power to prohibit participation in alternative competitions and impose unjustified and disproportionate restrictions, conduct that infringes Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

    The ruling condemns FIFA and UEFA to cease the anticompetitive conduct sanctioned and prohibits them from repeating them in the future. It also condemns them to immediately remove all the effects of the anticompetitive actions that occurred before or during the duration of the lawsuit, which began on April 18, 2021, when ESLC announced the launch of the SupeLiga.

    Finally, the judgment states that the content of the declarations issued by FIFA, UEFA and other entities (including the federations and leagues of England, Italy and Spain, some of whose clubs were part of the project) on April 18, 2021 (referred to in the lawsuit as the ‘Declaration’) in relation to the pan-European international competition project, also infringes Articles 101 and 102 TFEU.

    It should be noted that the judgment expressly states that “inasmuch as the SuperLiga in the terms initially set forth in the lawsuit, i.e. in accordance with the initial project has been abandoned and discarded by the promoters themselves, the motions in relation thereto must likewise lapse; it is not possible to impose a prohibition or restriction in the abstract, i.e. to impose a prohibition in the future of any other project or modification of the one already presented”.

    Based on this argument, the Judgment rejects the requests included in section f) of the lawsuit which, in summary, requested that FIFA and UEFA be ordered to refrain from any conduct, measure, or action or issue any statement that prevents or hinders in any way the preparation of the SuperLiga; and the commercial judge concludes by stating in this regard that the purpose of these proceedings is not “the authorization of any competition, but to lay the foundations to channel a system of free competition for the organization of soccer competitions”.

    Thereafter, everyone is happy with the result; La Liga issued a statement stressing that the ruling does not endorse a project which, moreover, according to the same ruling, has been abandoned by its promoters. UEFA says that it is pleased to note that the judge has given a good and valid system of prior authorization for third-party competitions to be approved in accordance with UEFA’s authorization rules and has recognized the undoubted benefits of these rules for the soccer sporting system, concluding that “the judgment does not give third parties the right to develop competitions without authorization and does not refer to any future project or to any modified version of an existing project”.

    The plaintiffs, too, are happy and content to proclaim that UEFA’s statutes and the aggressive measures taken to protect its monopoly have stifled innovation for decades. Clubs should not have to fear threats of sanctions simply for having ideas and having conversations. The era of monopoly is definitely over.

    Rarely does one find that a judgment leaves all the litigants so happy and content, but that seems to be the case here. Or at least that is what all of them have been interested in communicating, when the harsh reality is, on the one hand, that the SuperLiga project as it was structured when the lawsuit started and FIFA/UEFA reacted furiously, is dead and buried, and on the other hand, that the happy world in which FIFA and UEFA regulated soccer and competitions as a private preserve, considered themselves immune and alien to ordinary justice and shared the money generated without being accountable to the Courts of Justice and threatened to expel or expel the rebellious spirits, has come to an end.

    地域封锁是一种歧视性做法，由于客户的国籍或其居住地或营业地，阻止客户（主要是网上客户）从另一欧盟成员国的网站获取和（或）购买产品或服务。

    欧盟条例在2018年2月28日颁布的关于解决基于客户国籍、居住地或营业地在国内市场上的不合理的地域封锁和其他形式的歧视的欧盟第2018/302号条例将于2018年12月2日生效。

    当前情况

    欧盟委员会对欧盟的1万多个电子商务网站进行了“秘密购物”调查。地域封锁指数相当高！63%的网站不允许购物者从另一个欧盟国家购买商品（甚至包括86%的家用电器和79%的电子和计算机硬件）。

    另一方面，当电子商务的价值和数量就全球来说，年复一年地大幅增长时，只有50%的欧洲客户从设在另一个欧盟成员国的网上商店购买产品，但这种现象只是在国内范围而非整个欧洲。

    2017年6月23日，欧洲理事会要求切实执行数字单一市场战略的所有内容，包括跨界交付、消费者保护和禁止不当地域封锁。

    现行法律框架的缺失

    欧洲联盟指令（欧盟第2006/123/CE号指令）和TFUE第101条已经解决了基于国籍、地区或住所或营业地的歧视做法。

    根据欧盟指令第20(2)条，欧盟成员国必须确保专业人员不因客户的居住地、营业所或国籍而区别对待（客观例外情况除外）。另一方面，关于纵向限制的欧盟竞争法(《欧盟运行条例》第101条和集体豁免条例及其指南)认为，对被动销售的限制是违反欧盟竞争规则的核心限制。然而，这两套规则(欧盟指令和竞争法框架)在实践中似乎并不完全有效。

    在这方面，欧盟委员会在最近关于电子商务部门竞争调查的报告中表明，地域封锁尤其在欧洲电子商务部门内得到了大规模使用。

    地域封锁条例的目的

    地域封锁条例的目的是防止专业人员在处理跨国界电子商务交易时，基于国籍、居住地或客户营业地而实施的直接或间接歧视。

    地域封锁条例的范围

    新的条例将只适用于企业与最终用户或企业之间的网上销售。

    新条例将适用于在欧盟内运作的网站或在欧盟以外运作但向设立在欧盟内的客户提供货物或服务的网站。

    电子网站的管理新规是什么？

    关于访问网站的问题

    根据该条例，企业不得以与互联网用户的国籍、居住地或营业地有关的理由，通过使用技术措施来阻止或限制其进入网络接口。然而，只要客户明确同意，并且仍然可以轻松访问他们原先试图访问的网站版本，企业就有权将客的访问方向改变到他们试图访问的网站之外的另一个网站。

    关于网站的销售条款和条件

    该规则禁止企业在下列三种情况下，根据客户的国籍、居住地或营业地（特别是他们的IP地址），提供不同的一般条件来取得货物或服务：

    提供送货服务的企业将售出的商品送达到另外的欧盟成员国交付（或在企业与客户共同商定的地点收取货物）的；

    企业提供的电子化服务，如云、数据存储、主机服务等。（但不提供访问受版权保护的内容的服务，如流媒体或在线游戏服务）；

    顾客获得的在各个国家均可运行的商务服务（如汽车租赁和旅馆住宿服务或体育或文化活动的票务服务）。

    关于网站上的付款方式

    该条例禁止企业以与客户的国籍、居住地或营业地、支付账户所在地或支付服务提供者的设立地有关的理由，对已接受的支付手段适用不同的支付条件（条件是必须符合认证要求，付款交易必须以企业接受的货币进行）。

    这项规定对电子零售商有什么影响？

    尽管在形式上被排除在该条例范围之外，但供应商与分销商或批发商之间的关系仍将受到该条例的影响，因为根据分销商之间的协议规定，分销商承诺不进行被动销售（例如，阻止或限制进入网站），由于与客户的国籍、居住地或营业地有关的原因“将自动无效”。

    因此，地域封锁条例对分销商的影响是双重的：第一，在与客户（最终用户或用户企业）的关系中产生直接影响；第二，在其根据独家分销协议所承担的义务方面产生间接影响。

    地域封锁条例必须与现行竞争法框架相协调，特别是与制定适用于网上销售的具体规则的纵向限制指导方针相协调。网上销售被比作被动销售。指导方针中提到4个实践中为了间接保证地方保护主义，在供应商和独家分销商同意的情况下被禁止的例子：

    独家经销商应阻止另一地区的客户访问其网站，或自动将其转到供应商或其他经销商的网站，

    如果买方的信用卡数据显示买方不是独家经销商的专有区域，独家经销商应终止网上销售。

    限制独家分销商通过互联网销售的份额（但合同可规定按绝对值计算的最低线下目标，并规定与离线销售相比，网上销售保持一致）。

    独家分销商对在互联网上销售的货物支付的价格，应高于对准备在离线销售的货物支付的价格。

    制造商将必须决定是采用一个独一无二的欧洲门户网站报价还是多个地方商业报价，众所周知，每个范畴的客户端是有可能存在价格差异的。

    事实上，新规定并没有强制电子零售商协调其价格政策，它们只是必须允许欧盟消费者自由和容易地访问其网站的任何版本。同样，该条例并没有规定电子零售商必须将产品运往欧洲各地，而只是允许欧盟消费者从他们想要的任何网站购买商品，并在必要时自行安排发货。

    最后，在更为契约性的层面上，尚不十分清楚新的地域封锁规则如何直接或间接地影响适用于消费者合同的冲突法规则，根据罗马第1号规定(Rome I Regulation)，特别是在允许消费者在本网站所在国的外国网站上购买产品时（这意味着在消费者所在国无特定交货制度已建立。）

    因此，B2C网站的一般条款和条件需要在营销和法律两方面进行审查和调整。

    The Court of Justice of the European Union (CJEU) ruled, on December 20, 2017, that the service provided by Uber cannot be regarded as a digital service.

    The question raised

    The request for preliminary ruling was referred by a decision made by the Juzgado de lo mercantil de Barcelona relating to a dispute between the Asociacion Profesional Elite Taxi and Uber where the first considers that the second offers a paid service consisting of connecting non-professional drivers with persons who wish to make urban journeys, without holding any local administrative license nor authorization.

    The question at stake was clearly set by the Court. The starting point is the principle of freedom of services (article 56 TFUE) and its implementation by two directives: the 2000/31 Directive on e-commerce and the 2006/123 Directive on services in the internal market. On the other side, in each of these three set of rules (TFUE, 2000 and 2006 Directives), an exception is made for “transport services”. The question at stake was to know whether the service offered by Uber could be qualified as a digital service (subject only to the national law of establishment of the service provider) or as a transport service (which must comply with the 28 national laws on transport).

    The decision of the Court

    The Court first stated (i) that “an intermediation service consisting of connecting a non-professional driver using his own vehicle with a person wishes to make an urban journey is, in principle, a separate service from a transport service“, and (ii) that a transport service is defined as “the physical act of moving persons or goods from one place to another by means of a vehicle“. With this fine line between the two types of services, the Court then concluded that the hereabove intermediation service “meets, in principle, the criteria for classification as an “information society service” within the meaning of the Directive 2000/31“.

    The CJEU ruled however that the very activity conducted by Uber is “more than an intermediation service consisting of connecting, by means of a smart phone application, a non-professional driver using his or her own vehicle with a person who wishes to make an urban journey“. The Court then explained that Uber “simultaneously offers urban transport services, which it renders accessible, in particular, through software tools such as the application (…) and whose general operation it organizes for the benefit of persons who wish to accept that offer in order to make an urban journey“.

    The Court grounded its reasoning with the two following features to qualify Uber’s service as a transport service:

    • This intermediation service is “based on the selection of non-professional drivers using their own vehicle, to whom the company provides an application without which (i) those drivers would not be led to provide transport services and (ii) persons who wish to make an urban journey would not use the service provided by those drivers“.
    • “Uber exercises decisive influence over the conditions under which that service is provided by those drivers” (e.g. the maximum fare fixed by Uber, the amount cashed in first by Uber and then repaid to the drivers, the quality control of the vehicles and of the drivers by Uber with possible exclusion as a sanction).

     The impact for startup using intermediation platforms

    Although the Court mentions that the service of Uber is “more” than an intermediation service, and that the provider of this intermediation service “simultaneously offer” urban transport services, which imply that this intermediation service does however exist, the Court judged that specific features should invalidate this intermediation service as a digital service.  A more up-to-date approach of what is today the Digital Single Market could have led the Court to choose another solution and stay on the digital side.

    The reasoning of the Court does not really constitute a guideline for other intermediation platforms. The shortness of the reasoning might convey a more political decision applying to a US giant like Uber. The briefness of the reasoning may also show the inadequacy of the current EU regulation vis-à-vis the new trends of digital economy, specially the large variety of intermediation platforms business models (the « digital service » to which the Court referred has been defined in the 1998 directive).

    It seems that this ruling will not materially impact Uber which is already subject to local transport rules in several EU countries.

    This ruling will impact European Uber-like businesses as they will have to take into consideration this decision to build their offer: they will deal with 28 local regulations if they cannot qualify as a digital service. But should they fall into the transport service rules, intermediation platforms will have anyway to control whether national political and judicial authorities implement local transport rules in compliance with the general principles of the TFUE.

    As regards service providers dealing with non-transport services, it is difficult to anticipate the real impact of this decision since this ruling is highly focused on the relation between liberalization of services and specific rules applicable to transport.

    The author of this post is Christophe Héry.

    Understanding the interplay between federal and state statutory and common law in the US legal system is important to understanding the regulation of exclusive distribution agreements in the US.

    Under the US Constitution all power not specifically reserved for the federal government remains with the states. Federal law has exclusive jurisdiction only over certain types of cases (e.g., those involving federal laws, controversies between states and cases involving foreign governments), and share jurisdiction with the states courts in certain other areas (e.g., cases involving parties that reside in different states). In the vast majority of cases, however, state law has exclusive jurisdiction. Similarly, the doctrine of freedom of contract under US law also directly affects how distribution agreements are regulated in the US.

    Furthermore, because a distributor is typically an unaffiliated third party acting on its own account rather than on behalf of the supplier as principal, distribution agreements are subject to greater regulation under US federal and state antitrust law. Such law, among other things, (i) regulates whether and the degree to which a supplier in a distribution arrangement may seek in a contract or otherwise to dictate the price at which the distributor will resell products supplied; (ii) imposes restrictions on suppliers that engage in “dual distribution” (selling product directly as well as through a distributor); and (iii) may limit the suppliers’ ability to sell product to different distributors at a different price. Antitrust law also regulates exclusivity and selective distribution arrangements, as well as distribution relationships in certain industries (e.g., federally: automobile manufacturers and petroleum; at the state level, heavy equipment, liquor and farm equipment industries). Furthermore, distribution agreements often may resemble franchise arrangements, subjecting those arrangements to extensive federal and state regulation.

    Under the law of most states (including New York), exclusive distribution exists when a supplier grants a distributor exclusive rights to promote and sell the contract goods or services within a territory or to a specific group of customers. Exclusive rights in a distribution arrangement are often granted by the supplier for the distribution of high quality or technically complex products that require a relatively high level of expertise by the distributor, including staff that is specially training to sell the goods or specialized after-sales repair and maintenance or other services. Distribution agreements differ from commercial agency agreements in several respects. In contrast to a distributor, a commercial agent does not take title to product, does not hold inventory and typically has no contractual liability to the customer (including risk of customer non-payment). Conversely, a distributor, in line with the greater risk of its activities, typically can expect greater upside economically in terms of margins on resale relative to an agent’s profit through earned commissions.

    Sub-distributors

    Under the law of most states (including New York), a distributor may appoint sub-distributors absent any restrictions to the contrary in the agency agreement. Commercially, the appointment of a sub-distributor may have an adverse effect on the supplier by reducing the supplier’s control over its distribution channel activities or increasing the supplier’s potential liability exposure given the increased number of distributors whose actions may be attributed to the supplier. A supplier that does not manage properly the appointment of sub-distributors may also lose valuable product knowledge with respect to the distributed goods (particularly if the goods are novel or complex in nature). Advantages to sub-distributor appointments for the supplier may include a more effective overall marketing presence with enhanced local market knowledge, a broader geographic scope, a potentially lower costs as a result of the sub-distributors’ expertise and efficiencies, etc.

     

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    Rights and Obligations of the Exclusive Distributor

    • Sales organization: suppliers are not required to establish sales organizations in exclusive distribution agreements.
    • Sales’ target: there are no mandatory rules under federal law or state law (including New York) generally regarding sales targets in exclusive distribution agreements. However, such provisions are common in exclusive distribution agreements.
    • Guaranteed minimum target: minimum sales requirements are common in exclusive distribution agreements. As a commercial matter, a supplier as a requirement to give, or maintain, exclusivity with one distributor, will seek through such requirements to ensure that economically the distributor is performing satisfactorily. Often failure to meet sales targets may entitle a supplier to rescind the exclusivity, terminate the agreement or reduce the portion of the territory to which the exclusivity applies. We note that minimum sales requirements in an exclusive distribution arrangement may, in certain cases, be subject to challenge under antitrust law as having an undue anticompetitive effect by preventing a distributor from purchasing products from a competitive supplier.
    • Minimum stock: there are no mandatory rules in federal law or the law of the majority of states (including New York) regarding minimum stock. A supplier may seek to have the distributor agree, contractually, to maintain adequate levels of stock relative to market demands as well as to store the product properly.
    • After-sales service: the parties to a distribution agreement are generally free to agree as they deem appropriate with respect to after-sale service regarding products.
    • Resale Prices: the Exclusive Distributor is free to fix the resale prices. State law (including New York law) generally does not limit the ability of an exclusive distributor to fix resale prices. […] A supplier’s ability to set resale prices for distributors is subject to limitations under federal and state antitrust law. Many state antitrust laws (including New York’s) closely resemble the federal antitrust laws. However, differences exist such that certain conduct may be found not to violate federal antitrust law but still be found to violate state antitrust law (or vice versa). Because the distributor (contrary to an agent) is acting on its own behalf, an agreement between supplier and distributor to maintain certain prices (or if a distributor is deemed to have been coerced by the supplier to follow certain prices), may be a per se price-fixing violation under federal and state antitrust law. Under federal antitrust law, vertical price-fixing until 2007 had been illegal per se. This per se rule was overturned by the Supreme Court. Horizontal price fixing remains per se illegal under the Sherman Act (see below).

    Rights and Obligations of the Supplier

    • Exclusive Distributor undertaking to supply: generally, state statutes do not specifically provide that a supplier in a distribution relationship has a duty to supply specific levels of product to a distributor, with such obligations generally be established by contractual provision. However, a supplier does have an implied covenant of good faith and fair dealing toward the distributor under state law generally, which generally requires that a party to a commercial agreement not do anything which injures the right of the other to receive the benefits of the agreement). Under the foregoing, a supplier may be deemed to have an obligation to supply product to a distributor (or be found to have violated the implied covenant of good faith and fair dealing in the event that the supplier, although able, decided not to provide a distributor with product without any other contractual justification for not doing so). However, even where such a duty were found to exist, the quantity and frequency of product supply and other details often remain unclear. To avoid uncertainty, distributors often seek to have a specific provision included in the distribution agreement, providing at least for the supplier to be required to use some degree of effort (e.g., “best efforts,”, “reasonable best efforts” or “reasonable efforts”) to supply product responsive to distributor’s submitted purchase orders. On a related topic, generally a distributor typically is only required to inform the supplier of lower purchase estimates if the distributor undertakes to do so (or undertakes a more general obligation with respect to the market) in the distribution agreement. However, even if the supplier is not, under an exclusive distribution agreement, required to supply the distributor with product, the supplier may still be subject to a contractual or common law obligation not to sell to third parties in the territory. New York courts held that suppliers that make direct sales to customers in the territory under an exclusive distribution agreement have breached their duties to the exclusive distributor.
    • Retention of title: typically, in sales transactions on credit in the US, title is passed at the moment of initial sale. The buyer typically grants the supplier a security interest in the goods purchased, which if proper perfected under state law, affords the supplier with a priority position relative to other creditors with respect to the products provided (inventory) in the event of non-payment and enforcement.

    Construction defects warranty

    The law of “products liability” in the US is based on the law of torts. Under New York law, in cases of where an end user is injured by a defective product which was sold by the distributor under a distribution agreement, the end user generally is able to sue the distributor and the supplier of the product under one or more of the following theories: (i) strict liability; (ii) negligence; or (iii) breach of warranty. The usual theory of recovery against a distributor is strict liability. Under a strict liability theory, a supplier or distributor that sells a defective product while engaged in its normal course of business shall be liable for injuries it causes to customers, regardless of privity, foreseeability or the exercise of due care. Product liability cases also are brought under breach of warranty claims. Breach of warranty claims can be based on express warranties (e.g., from advertisement or a product label) and on implied warranties (typically, warranties of merchantability and fitness for a particular purpose under the provisions of the Uniform Commercial Code as adopted by the states). Lastly, negligence claims brought by plaintiffs are based on the improper conduct of the defendant, whether supplier or distributor or other participant in the distribution chain, with respect to the manner of distribution or care of the product sold (examples include improper storage or transport).

    Under New York law, exceptions based on misuse, neglect or abuse by the suing party generally apply as defenses against liability under theories of strict liability, negligence or breach of warranty.

    The supplier and distributor can allocate third-party liabilities (e.g., potential losses to be paid to plaintiffs in a products liability law suit) and related attorneys fees as between themselves through warranty and other indemnification provisions. Parties to a distribution agreement in the US often seek to put in place such re-allocation provisions not only because of potential liability resulting from a final, unfavorable judgment, but also because of the sizeable legal fees that litigants in the US often incur. In this regard, we note that in the US litigation costs are generally born by all of the litigating parties and not by the losing party as is common in many other countries. Such provisions may include indemnification provisions relating to product liability or trademark infringement claims brought by third parties, limitations on liability provisions (based on monetary caps and exclusions as to the types of damages that may be recovered, such as consequential, punitive, special and indirect damages) and disclaimers in respect of express or implied warranties that may otherwise apply under state law applicable to the distribution agreement.

    Exclusivity

    Exclusive-dealing provisions – under which the distributor undertakes not to distribute competing products in the territory – are quite common in distribution agreements. However, although it is not easy for a plaintiff to prevail, such a provision may be subject to challenge as an unlawful restriction on competition under federal and state antitrust law, typically under the following federal antitrust laws: (i) section 1 of the Sherman Act, which prohibits contracts “in restraint of trade;”; (ii) section 2 of the Sherman Act, which prohibits “attempt[s] to monopolize” and monopolization; (iii) section 3 of the Clayton Antitrust Act of 1914 […], which prohibits exclusivity arrangements that may “substantially lessen competition” or tend to create a monopoly; and, finally, (iv) section 5 of the Federal Trade Commission Act […], which prohibits “[u]nfair methods of competition.” In deciding these cases, typically courts apply the “rule of reason analysis” under which the exclusive dealing arrangements is analyzed considering a host of factors, including: (a) the defendant’s market power; (b) the degree of foreclosure from the market and barriers to entry; (c) the duration of the contracts; (d) whether exclusivity has the potential to raise competitors’ costs; (e) the presence of actual or likely anticompetitive effects; and (f) legitimate business justifications.

    Manufacturers of brand-name products typically aim to ensure the same level of quality of distribution throughout all distribution channels. To achieve this aim, they provide criteria how to resell their products. With the increase of internet sales, the use of such criteria has been increasing as well.

    Best example: Asics. Until 2010, the German subsidiary Asics Deutschland GmbH supplied its distributors in Germany without applying special criteria. In 2011, Asics launched a selective distribution system called “Distribution System 1.0“. It provided, inter alia, for a general ban on distributors to use price comparison tools in online sales:

    “In addition, the authorized B … distributor is not supposed to … support the functionality of price-comparison tools by providing application-specific interfaces (” API”) for these price comparison tools.” (translated]

    The German Federal Antitrust Authority (“Bundeskartellamt”) has determined by decision of 26 August 2015 that the ban of price-comparison tools against distributors based in Germany was void because it infringed Article 101 (1) TFEU, sec. 1 Act on Restraints of Competition (see the 196-page decision here). Reason given was that such ban would primarily aim at controlling and limiting price competition at the expense of consumers. Asics, instead, filed a complaint before the Higher Regional Court of Düsseldorf to annul the Bundeskartellamt’s decision. Asics argued that this ban was a proportionate quality standard within its “Distribution System 1.0“, aiming at a uniform product presentation.

    Now the Higher Regional Court of Düsseldorf on 5 April 2017 confirmed the Bundeskartellamt’s decision that within selective distribution systems the general ban to use price comparison tools was anti-competitive and therefore void (ref. no. VI-Kart 13/15 (V); see also the Bundeskartellamt’s press release in English):

    • In particular, the ban of price comparison tools was not exempt from Art. 101 (1) TFEU by way of teleological interpretation (“Tatbestandsreduktion”). According to the court, it was not necessary in order to protect the quality and the product image of the Asics brand (same argumentation as the Higher Regional Court of Frankfurt in its judgment of 22.12.2015, ref. no. 11 U 84/14 regarding Deuter’s functional back-up bags; the Federal Supreme Court will, however, still decide on this, ref. no. KZR 3/16). The court declared that the ban was intended to restrict the buyers, arguing that distributors would be restricted in entering into a price competition with others. The presentation of products in price comparison tools would not damage the quality or brand of Asics products. It would neither give a “flea market impression“, ostensibly also not from the simultaneous presentation of used products. Also, the ban of price comparison tools would not solve the problem of “free-riding“. In any event, the general ban of price comparison tools was not necessary and therefore unlawful.
    • The ban would also not be exempt under the Vertical Block Exemption Regulation. Instead, the court argued, the ban would limit passive sales (over the internet) to end customers, contrary to Art. 4 (c) Vertical Block Exemption Regulation (referring to the CJEU decision in the case of Pierre Fabre, 13 October 2011, ref. no. C-439/09). The “equivalence principle” (i.e. restrictions for offline as well as online sales should not be identical, but functionally equivalent) would not apply as there were no comparable functions to price comparison tools in the stationary trade.
    • Finally, the ban would also not benefit from the individual exemption under art. 101 (3) TFEU (“efficiency defence”).

     Conclusions:

    1. According to the Higher Regional Court of Düsseldorf, manufacturers might not generally prohibit their distributors from using price comparison tools. At the same time, the court also refused to grant leave to appeal against its decision – which, however, can be challenged separately by way of an appeal (sec. 74, 75 Act on Restraints of Competition).The future development of criteria limiting distributors in reselling online remains open, especially as (i) the Coty case is pending at the CJEU (see below) and (ii) the EU Commission in its sector enquiry into e-commerce currently appears to favour manufacturers of brand-name products (see below).
    2. The court has explicitly left open – arguing that they were not relevant for its decision – whether
    • the ban of search engines is anti-competitive (para. 44 et seq. of the decision);
    • the general ban of third-party platforms is anti-competitive (para. 7) – although Asics’ “Distribution System 1.0” also banned third-party platforms such as Amazon or eBay.
    1. Whether and how manufacturers of luxury or brand-name products can continue to ban their distributing via Amazon, eBay and other marketplaces in general in the future will likely be decided by the CJEU in the coming months – in the case of Coty (see our post “eCommerce: restrictions on distributors in Germany”) where a hearing has been just recently been held end of March 2017.
    2. Without prejudice to the Coty case, the EU Commission has however, in its sector enquiry into e-commerce of May 2017, declared that
    • “marketplace bans do not generally amount to a de facto prohibition on selling online or restrict the effective use of the internet as a sales channel irrespective of the markets concerned …,
    • the potential justification and efficiencies reported by manufacturers differ from one product to another …”,
    • (absolute) marketplace bans should not be considered as hardcore restrictions within the meaning of Article 4(b) and Article 4(c) of the VBER…,
    • the Commission or a national competition authority may decide to withdraw the protection of the VBER in particular cases when justified by the market situation”
      (41–43       Final Report on the e-commerce sector inquiry).

    Hence, on the basis of the EU Commission’s most recent position, there is room for arguments and creative contract drafting since even general marketplace bans can be compatible with the EU competition rules. However, the courts may see this differently in the single case. Therefore, especially the CJEU with its Coty case (see above) will likely bring more clarity for future online distribution.

    Christophe Hery

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