Franchising

Anticompetitive practices

Parasitism: The Court of Cassation rules that only first instance Courts may assess the fault and the damages (Mill’Vi/ALS)
Université Littoral-Cote d’Opale (Dunkerque)
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Université Littoral-Cote d’Opale (Dunkerque)
L’appréciation des éléments constitutifs de la faute, ainsi que celle de l’existence et du montant du préjudice, relèvent du pouvoir souverain des juges du fond Cass. com., 25 janvier 2005, Société Mill’Vi c/ Sociétés ALS service, Bennes Rhône-Alpes et Bennes Manjot, n° 03-11.770 L’arrêt du 25 janvier (...)

The Hungarian Competition Authority initiates a competition supervision proceeding following its unannounced inspection held at the seats of two realtors (Duna House / Otthon Centrum Franchising)
Hungarian Competition Authority (Budapest)
The GVH commenced proceeding because of suspected cartel* On 3 July 2014 the Gazdasági Versenyhivatal (GVH – Hungarian Competition Authority) launched a competition supervision procedure against DUNA HOUSE FRANCHISE Kft. (Real Estate Agency) and Otthon Centrum Franchising Tanácsadó Kft. (Real (...)

A US District Court receives a complaint on an allegation of anticompetitive agreements to exclude the plaintiff from the market for ownership of professional basketball franchises (Donald Sterling / NBA)
Orrick, Herrington & Sutcliffe (San Francisco)
Basketball, Surreptitious Recordings, and Antitrust* Donald Sterling — yes, that Donald Sterling — filed an antitrust lawsuit a few days ago against the National Basketball Association. You can download a copy here: Sterling Antitrust Complaint. It’s not clear if the complaint has now been (...)

The Portuguese Supreme Court declares a non-compete clause in a franchise agreement invalid due to absence of transference of confidential information justifying protection of know-how (Montijo)
Eduardo Paz Ferreira & Associados
In a dispute concerning an infringement of a franchising agreement in the food services industry, including an alleged violation of a non-compete clause, the Portuguese Supreme Court reversed a ruling of the Lisbon Appeal Court, providing clarifications on its view on the validity of such (...)

The Polish Competition Authority imposes fines on a franchisor for practising fixed and minimum prices of goods on its trading partners (Sfinks Polska)
Wiercinski Kwiecinski Baehr (Poznan)
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WKB Wierciński Kwieciński Baehr (Warsaw)
Franchise networks under siege from the Polish competition authority over alleged RPM arrangements* In its decision of 25 June 2013, the Polish competition authority has fined Sfinks Polska the amount of PLN 464,228.92 (approximately €107,000) for imposing fixed resale prices on its (...)

The Polish Competition Authority reminds franchisors that resale price maintenance is a hardcore violation of competition law (Sfinks Polska)
Freshfields Bruckhaus Deringer (Brussels)
In its unprecedented decision of 25 June 2013 in Sfinks Polska, the President of the Polish competition authority (Prezes Urzędu Ochrony Konkurencji i Konsumentów, the UOKiK), established a list of competition law “don’ts” in franchise agreements. While the UOKiK’s jurisprudence in relation to (...)

The EU Court of Justice hands down preliminary ruling on post-term non-compete obligation in franchise agreement (La Retoucherie)
Van Bael & Bellis
On 7 February 2013, the Court of Justice of the European Union (“ECJ”) handed down its ruling in response to a preliminary reference from a Spanish court that had questioned the meaning of the phrase “premises and land from which the buyer has operated during the contract period” in Article (...)

The French Competition Authority makes binding commitments proposed by leading retailer concerning its franchise agreement (Carrefour / Carrefour market)
Van Bael & Bellis
On 16 December 2011, the French Competition Authority made binding the commitments proposed by Carrefour concerning its Carrefour Market franchise agreement. In August 2010, Marcadet (a Carrefour franchisee) complained to the French Competition Authority concerning certain commercial (...)

The Czech Competition Authority hands out penalties to five participants in a bid rigging cartel in the construction industry (Inzet)
BPV Braun Partners
Penalty for first Czech Bid Rigging Case Confirmed by Court* Bid rigging has for a long time been a merely theoretical example of criminal liability in Czech Antitrust law without any actual cases decided. Until 2010 with the introduction of criminal liability for hard-core horizontal cartels, (...)

The Croatian Competition Authority grants an individual exemption in relation to non-compete obligation contained in a settlement agreement (Intereuropa sajam međunarodno otpremništvo / UPS Worldwide Forwarding)
University of Technology (Tallinn)
On 16 December 2010 the Croatian Competition Authority (AZTN) granted an individual exemption in relation to a non-compete obligation contained in a settlement agreement between international courier services providers Intereuropa sajam međunarodno otpremništvo d.o.o.(Intereuropa) and UPS (...)

The Greek Competition Authority imposes fine of € 12.5 M for resale price maintenance in the supermarket sector (Carrefour)
Van Bael & Bellis
According to a press release of 15 July 2010, the Greek Competition Authority has imposed a fine of € 12.5 million on Carrefour Marinopoulos (“Carrefour”) for engaging, inter alia, in resale price maintenance with its supermarket franchisees in breach of Greek and EU competition law. In (...)

The Hellenic Competition Commission fines a retailer for resale price maintenance and other infringements within its franchise network (Carrefour Marinopoulos)
Lambadarios Law Firm
On 6th April 2010, the Hellenic Competition Commission (“Epitropi Antagonismou”, hereinafter: “HCC”) issued a decision on the merits by which it imposed a fine on the retailer Carrefour Marinopoulos S.A. (hereinafter: “Carrefour”) for infringements detected within its franchise network, namely resale (...)

The Danish Competition Council adopts commitment decision lifting ban on reporting of sales price and contribution margins (Bestseller)
Danish Competition and Consumer Authority (Copenhagen)
On 24 March 2010, the Danish Competition Council adopted a commitment decision, cf. section 16 a of the Danish Competition Act, allowing Bestseller A/S to regain access to price information from its franchise partners - irrespective of a previous injunction issued by the Competition Council in (...)

The French Competition Authority seizes itself on its own motion in order to issue an opinion on several questions involving mass retail distribution which may hinder the functioning of competition in this sector
Norton Rose Fulbright (Paris)
On 25 February and 19 March 2010, the French Competition Authority decided on its own initiative, to make a reference to issue two opinions in the mass retail distribution sector, in order to ensure that the functioning of competition in this sector is not hindered. The French NCA’s power to (...)

The Dutch Supreme Court annuls a judgment of the Court of Appeal for error in market definition and lack of analysis of the franchise agreement’s restrictive object in the light of its context (Prisma Vastgoed, Prisma Food Retail / Verweerders)
European Commission - DG HR
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European Court of Justice (Luxembourg)
In 1989, Prisma rented out a supermarket to the defendant. The rental agreement provided for an option to purchase the supermarket in favour of the defendant, which could be exercised on 30 April 2001. This agreement further provided that in case the defendant purchased the supermarket, it (...)

The Turkish competition board investigates price fixing and non-compete provisions in franchising agreements (DiaSA/Complaining Franchisees)
Erdem & Erdem
Two complaints were lodged against DiaSA by its franchisees alleging that the provisions and application of DiaSA’s franchise agreements are in violation of the Act on Protection of Competition Numbered 4054 (“Competition Act”). The Competition Board (“CB”) examined the price and non-compete (...)

The Dutch Court of First Instance of Arnhem holds, in interlocutory proceedings, that a non-compete clause concluded in a franchise agreement, which was not exempted under the vertical agreements and concerted practices Regulation was enforceable (Bruna)
European Commission - DG HR
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European Court of Justice (Luxembourg)
In March 1999, a franchise agreement was concluded for a period of five years between Bruna, the franchisor, and the defendant in this case, the franchisee. After renewal in 2004, this agreement was prolonged until 1 August 2009. The defendant was given the right to use the Bruna system for the (...)

The Paris Court of Appeal upholds the NCA decision to impose € 580,000 fine on a national scale agreement aimed at hindering the free setting of prices by product distributors (Master Cycle, Bouticycles)
LeMore Avocats
Description of the impugned case The 22 companies implemented a series of anticompetitive agreements and introduced into the terms of sale and other distribution contracts anticompetitive clauses, aimed at hindering the free setting of prices by the product distributors. Small retailers (...)

The Higher Regional Court of Düsseldorf holds that exclusive purchase obligations contained in franchise agreements are not necessarily prohibited as unfair hindrances, even though they cover the whole assortment of goods (Baumarkt)
Gleiss Lutz (Munich)
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Milbank, Tweed, Hadley & McCloy (Munich)
On 16 January 2008 the Higher Regional Court of Düsseldorf issued a decision on questions concerning the German prohibition of unfair hindrance, Sec. 20(1) of the German Act against Restraints on Competition (ARC). The questions arose in administrative proceedings by the German Federal Cartel (...)

A Dutch Court rules on the anticompetitive effects of an obligation to offer for sale a supermarket in case of termination of a franchise agreement in the large retail distribution sector (Prisma)
European Commission - DG HR
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European Court of Justice (Luxembourg)
The present case was concerned with the restrictive effects, under competition law, of contractual conditions surrounding the ending of a franchise agreement in the supermarket sector. The facts of the case were the following. In 1989, Prisma, the legal successor of Flevozoom Vastgoed B.V., (...)

The Spanish National Competition Commission rules that neither inter- nor intra-brand competition is affected by restrictive practices in the postal sector (Logimail / Unipost)
Chilean Competition Tribunal (Santiago)
On April 29th, 2005, Logimail filed a complaint against Unipost. Logimail is a postal operator that performs pickup services, sorting and even distribution. To complete the distribution, however, it outsources the service to other postal operators. Unipost is one of the main postal-services (...)

A German Court finds an exclusive purchase obligation in breach of Art. 81 EC and replaces a void non-compete obligation in a franchise agreement (The Body Shop)
Blomstein
Background The cosmetics chain The Body Shop (TBS) employs two different types of distribution channels in Germany: On the one hand, it holds a number of proprietary retail outlets and, on the other hand, it distributes its products through a franchise system. Under the franchise system the (...)

A Dutch Court decides, in an interlocutory proceeding, that the nullity of a price-fixing clause brings along the nullity of the franchise agreement as a whole, including its non-compete clause (Make It Easy)
European Commission - DG HR
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European Court of Justice (Luxembourg)
Several franchise agreements were concluded between Make It Easy B.V. and Make It Easy Reality B.V. (hereafter the franchisers) on the one hand, and Make it Easy Gelderland V.O.F as well as other undertakings (hereafter the franchisees), on the other. According to these franchise agreements, (...)

The French Competition Authority fines a chocolate manufacturer for having imposed on its franchisees retail prices to certain of its corporate customers (Jeff de Bruges)
UGGC Avocats (Paris)
Description of the impugned case Jeff de Bruges SAS limited the contractual freedom of its franchisees by imposing retail prices for certain corporate customers (comité d’entreprise). These sales with specific range of products were promoted through “books CE”, containing notably CE prices, (...)

The French Competition Council fines a chain store chocolate franchisor for a price fixing practices in sales to work councils (Jeff de Bruges)
White & Case (Paris)
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French Competition Authority (Paris)
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European Commission - DG COMP (Brussels)
French Competition Council (Conseil de la Concurrence), 24 January 2007, Decision n° 07-D-04, rregarding practices implemented by the Jeff de Bruges franchise network (“relative à des pratiques mises en œuvre par le réseau de franchise Jeff de Bruges”) In a decision dated 24 January 2007, the (...)

The French Competition Council fines a Belgian chocolate manufacturer for having imposed resale price maintenance for sales to works committees (Jeff de Bruges)
AptarGroup
By a decision dated January 27, 2007, the French Competition Council fined the Belgian chocolate manufacturer Jeff de Bruges for fixing retail prices concerning chocolate sales to works committees. The Belgian company Jeff de Bruges specializes in the distribution of chocolates and other (...)

A Danish Court confirms that reporting of sales prices and contribution margins may amount to resale price fixing (Bestseller)
Danish Competition and Consumer Authority (Copenhagen)
On 27 November 2006, the High Court of Western Denmark upheld a decision by the Danish Competition Appeal Tribunal finding that an IT-system through which the supplier was informed on a daily basis of independent retailer’s sales prices and contribution margins on individual items effectively (...)

The Dutch District Court of Maastricht assesses compatibility of a franchise agreement with EC competition law (BBQ Franchise)
The AES Corporation
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Clifford Chance (Amsterdam)
In January 2006 summary proceedings were brought before the District Court of Maastricht by a franchisee (hereafter: the claimant) against its franchisor BBQ Franchise B.V. (hereafter: BBQ). The District Court applied EC competition law to set out the limits of what can and cannot be arranged (...)

The US Supreme Court overturns a lower court decision for the plaintiff but reiterates the traditional method of proving secondary line price injuries under the Robinson-Patman Act (Volvo Trucks / Reeder-Simco)
Seattle University
The Robinson-Patman Act and Consumer Welfare: Has Volvo Reconciled them?* The Robinson-Patman Act is the black sheep of antitrust. Unlike the other antitrust laws, its fundamental goal is not to preserve competition in order to benefit consumers, but to limit competitive rivalry in order to (...)

The US Supreme Court reverses a lower court’s decision clarifying competitive injury and secondary price line discrimination under the Robinson-Patman Act (Volvo Trucks / Reeder-Simco)
Mayer Brown (New York)
Competitive Injury and Price Discrimination in the United States* In Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., the Supreme Court provided guidance on whether, under the Robinson-Patman Act, a manufacturer may offer one dealer better prices than another dealer when those (...)

A Dutch Court of Appeal declares a franchise agreement compatible with national competition law on the basis of the ECJ Pronuptia Case (Multicopy)
European Commission - DG HR
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Dutch Ministry of Security and Justice
In 1989, Multicopy (the franchisor) and the applicant (the franchisee) concluded a franchise agreement for the exploitation of a Multicopy print service establishment. This agreement was concluded for a duration of 10 years and was due to expire in October 1999. Under this agreement, the (...)

The Paris Court of Appeal holds that Art. 81 EC does not apply to a hairdressing franchise national network and that the provided “clause d’agrément” does not amount to a hardcore restriction (Socovi/Jean-Louis David)
Kramer Levin Naftalis & Frankel (Paris)
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Eversheds Sutherland (Paris)
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Eversheds Sutherland (Paris)
Background SARL SOCOVI, the franchisee, had entered into a franchising agreement with Jean Louis David SA, the franchisor, whereby the latter granted the former the right to run a franchise for the purposes of marketing hairdressing products and services. It included inter alia the right to (...)

A Dutch Court declares a franchise agreement void because of a clause allowing the franchisor to impose a maximum price for promotional purposes (Market Food Group - “Bakkerijt Stoepje")
European Commission - DG HR
Market Food Group B.V. (hereafter “MFG”) is active in bakery products. It has developed a franchising network under the brand “Bakkerij ‘t Stoepje” for open air markets stands in The Netherlands. The franchise agreement contains inter alia the following clauses: The franchisee shall exclusively (...)

The French Competition Council authorizes a franchisor to recommend a maximum resale price on its franchisees (Plus International)
Terre Azur (Pomona Group)
Description of the impugned case In a case of a franchising agreement, the franchisor recommended to franchisees to respect a maximum price during promotional and non-promotional period. The French competition Council considers that the pricing policy implemented by the franchisor was not (...)

The Hungarian Competition Authority objects to RPM and exclusive purchasing in petrol station franchising agreements (MOL)
Oppenheim
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Oppenheim - Budapest
Description of the impugned case The agreements at stake were part of a franchising network by MOL (the largest oil and gas company in Hungary) relating to operators of petrol stations and contained straightforward RPM clauses. The agreements also contained exclusive purchasing obligations. (...)

A Luxembourg Commercial Court rules that a de minimis exclusive distribution agreement is not prohibited under Article 85 EC (La Pastourelle/Rolling)
FratiniVergano
1. Facts On 1 April 1982, "la Pastourelle" (hereafter "the plaintiff"), limited company under Belgian law, and "Maison Rolling" (hereafter "the defendant"), shop located in Luxembourg, concluded an exclusive sale agreement for a duration of 5 years. This agreement was extended for the same (...)

A Luxembourg Commercial Court rules that a de minimis exclusive distribution agreement is not prohibited under Article 85 EC (La Pastourelle/Rolling)
FratiniVergano
1. Facts On 1 April 1982, "la Pastourelle" (hereafter "the plaintiff"), limited company under Belgian law, and "Maison Rolling" (hereafter "the defendant"), shop located in Luxembourg, concluded an exclusive sale agreement for a duration of 5 years. This agreement was extended for the same (...)

The German Federal Court of Justice holds that the prohibition to fix prices regarding contracts with third parties is applicable to the relationship between franchisor and franchisee at least in the event that the franchisee himself bears the economic risk of his franchising business (Preisbindung durch Franchisenehmer)
Linklaters (Dusseldorf)
Description of the impugned case The case deals with indirect RPM in the framework of a franchising system in which the franchisor who operates several own branches, advertises for certain prices without however limiting the indications of prices to his own branches or pointing out their (...)

The French supreme Court confirms the NCA decision having ruled that the publication of a catalogue including prices combined with recommendations pursuant to which retailers are only allowed to apply a lower price when there is a fierce competition amounts to resale price maintenance (ITM)
PPG Industries (Rueil-Malmaison)
Description of the impugned case ITM manages a supermarkets’ network, mostly with franchisees. ITM has published in France during 1990 and 1991 a few millions of catalogues called “L’argus de la distribution” including the prices of washing powders. It also results from the investigations that (...)

The Paris Court of appeal considers that the use and implementation by franchisees of the franchisor’s contractual documents has an equal effect to a resale price maintenance practice (CEJIBE)
Terre Azur (Pomona Group)
Description of the impugned case In a franchising network, franchisor sent to each franchisee pre-printed and standardized documents including amount of rebates and fixe fees. The appeal Court has considered that diffusion of standards documents was a huge incitation to apply rebates and (...)

The Luxembourg Commercial Court found non-compete, price fixing and exclusivity clauses in a franchising agreement severable from the rest of the agreement (Wintergarten Feddersen / Soluver)
Arendt & Medernach (Luxembourg)
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NautaDutilh (Luxembourg)
The undertakings Wintergarten Feddersen and Soluver concluded in 1985 a franchising agreement for the distribution of verandas. In 1987 Wintergarten Feddersen, the franchisor, brought proceedings against Soluver, the franchisee, before the Tribunal de commerce (“Commercial Court”) of Luxembourg (...)

Dominance

The Italian Competition Authority challenges anticompetitive measures in the Italian slots allocation tender process (Rotte Italia / Israele)
Macchi di Cellere Gangemi (Rome)
Following the Opinion S2138 of January, 30, 2015 (not yet published), the ICA is going to challenge in Court the Italian Civil Aviation Agency (ENAC) method of allocating air traffic rights from Italy to Israel due to hamper of competition and favor of the dominant player . The outcome may (...)

A US District Court dismisses a federal antitrust claim brought against automobile manufacturer by a franchise car dealer for failing to prove facts concerning an alleged tying between the rental agreement and the volume of cars sold (Matthew Enterprise / Chrysler Group)
Orrick, Herrington & Sutcliffe (San Francisco)
Northern District of California Addresses Functional Discounts, Price Discrimination Claims* In Mathew Enterprise, Inc. v. Chrysler Group, LLC, 2014 U.S. Dist. LEXIS 95522 (N.D. Cal. July 11, 2014) (Freeman, J.), the court dismissed certain Robinson-Patman Act price discrimination claims and (...)

The French Competition Authority dismisses an abuse of dominance case concerning a pre-emptive right provided in an affiliation agreement (Altimat, Sapec, Weldom)
Baker Botts (Brussels)
By a decision (hereinafter the ‘Decision’) dated 29 October 2013, the French Competition Authority (hereinafter the ‘FCA’) rejected a complaint submitted in January 2011 by the company Altimat (hereinafter the ‘Complainant’) alleging abusive exercise of a pre-emptive right by the companies Sapec and (...)

The Cypriot Commission for the Protection of Competition concludes that the termination of a franchise agreement in a reasonable delay does not constitute an abuse of economic dependence (Bacenco / Orchestra-Premaman)
Neocleous (Nicosia)
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Neocleous
The case arises out of a complaint filed by Bacenco Ltd against Orchestra-Premaman for the alleged infringement of the Protection of Competition Law 13(I)/2008 (“Law”); concerning the termination of the sub-franchise agreement between Bacenco Ltd and Orchestra-Premaman. Bacenco was an (...)

A US Court of Appeals affirms the decision of the lower court allowing a summary judgment on all claims including the exclusion of competition from the market for gasoline (Partner / ExxonMobil Oil)
Sheppard Mullin (Los Angeles)
PMPA Franchise Agreement Disavowing Plaintiff’s Claim to an Exclusive Market and Geographic Territory Trumps Alleged Oral Commitment* Partner v. ExxonMobil Oil Corp., 08-1590 (6th Cir. May 4, 2009) In 2000, plaintiff Partner & Partner, Inc. entered into a lease/franchise agreement with (...)

Mergers

The French Competition Authority clears, subject to remedies, a merger in the fast food market (Quick / Burger King)
French Competition Authority (Paris)
The Autorité de la concurrence clears the acquisition of Quick by Burger King, subject to commitments.* On 4 November 2015, Burger King France notified to the Autorité de la concurrence the acquisition of sole control of the Quick group. Burger King France operates a network of thirty (...)

The Australian Government proposes reform of the national competition regime including an extension of the unfair terms protection to small business and a review of the formal merger assessment process
King & Wood Mallesons (Sydney)
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Westpac
This article was originally published on In Competition by King & Wood Mallesons (click here). Coalition to uproot competition laws?* With the votes counted and Tony Abbott safely claiming a Coalition victory on 7 September 2013, it’s not only the government that is getting a makeover. As (...)

The French competition authority specifies under which conditions a merger is likely to affect competition in local markets and validates behavioural remedies due to the economic crisis (Caisse d’Epargne and Banque Populaire)
Freshfields Bruckhaus Deringer (Paris)
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Freshfields Bruckhaus Deringer (Paris)
Since it was granted jurisdiction over mergers, the Competition Authority (hereafter “the Authority”) gave its first decision of approval with commitments on June 22, 2009. Even though it was a Phase I decision, the Authority performed a very thorough analysis of the operation’s impact, especially (...)

The UK Office of Fair Trading clears the acquisition of a rail passenger services franchise by an existing operator of rail and bus services subject to behavioral remedies (Arriva/ Wales and Borders rail franchise)
Added Value Capital Partners (AVCP)
The operation Arriva plc (“Arriva”) operates an extensive range of public transport services across the UK, including buses, trains and commuter coaches. Arriva Passenger Services Limited (“APS”) is the holding company for a number of bus subsidiaries, including companies which operate in Wales (...)

The UK Competition Commission cleared subject to behavioural remedies an acquisition of a rail franchise by the leading supplier of bus travel (FirstGroup/ScotRail)
Serle Court
The operation FirstGroup was the leading supplier of bus travel in the UK with four bus subsidiaries in Scotland. As at April 2004, it was also the operator of five passenger train operating companies. The Scottish rail franchise operated by ScotRail accounted for 95 per cent of railway (...)

The French Minister of Economy cleared a merger in the DIY products sector subject to termination of a franchise agreement (Mr Bricolage/Tabur)
French Competition Authority (Paris)
The operation Mr Bricolage acquired sole control of Tabur. Both parties were active in the distribution of DIY products, notably through integrated networks and franchises. The market concerned The market involved is the retail of DIY products through specialized superstores. Remedy: (...)

The French Minister of Economics clears a merger in the retail sector following EU Commission’s referral subject to 34 stores divestment (Carrefour / Promodes)
French Competition Authority (Paris)
The operation Following the notification of the merger between Carrefour and Promodès, on 5 October 1999, the European Commission concluded, with regard to the supply market, that the operation was compatible with the Common Market, subject to the commitments given by Carrefour. At the French (...)

Procedures

Regulations

The French Competition Authority issues the results of a sector inquiry into networks of retail distributors and makes policy recommendations
European Commission (Brussels)
France: The Autorité de la concurrence issues the Results of a Sector Inquiry into Networks of Retail Distributors and makes Policy Recommendations On 7 December 2010, the Autorité de la concurrence adopted the final report of its sector inquiry into networks of retail distributors. On 25 (...)

The US Federal Energy Regulatory Commission supplements existing cross-subsidization restrictions and sets pricing standards for certain affiliate transactions
George Washington University - School of Law
On February 21, 2008, FERC issued a Final Rule through Order No. 707 in which it supplements existing affiliate transaction rules and codifies restrictions on and pricing of affiliate transactions between franchised public utilities that have captive customers or own or provide transmission (...)

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