Brussels

Vertical Restraints in Online Commerce

Law & Economics workshop organised by Concurrences Review, in partnership with Baker McKenzie and Compass Lexecon.

Fiona Carlin

It is amazing to me that the topic of vertical restraints never seems to die. The law has been quite clear on this topic since the last Vertical Restraints Block Exemption Regulation and Guidelines were published almost a decade ago. Although in my view they are too strict and there is too much micromanagement of commercial terms and conditions, it is nonetheless safe to say that the Block Exemption is a compromise that businesses have learnt to work with. By and large, the current rules are not doing much damage and they provide legal certainty on the basis of which businesses have been able to strategize and grow. In this regard, the recent e-commerce sector inquiry was an interesting fact-finding mission: it revealed that the Block Exemption is generally fit for purpose.

Also, the Coty judgment reaffirms the position taken in the Guidelines on online sales and third party platforms. Selective distribution is not something that should be restricted to luxury goods, and third party platform bans are legitimate. Yet, surprisingly, a few hours after Coty was rendered, the German Bundeskartellamt registered its objections and so the debate continues. The Bundeskartellamt still seems to have some open questions. In particular, it asks whether the Coty findings can be transferred to branded products other than cosmetics. Why this is an open question is a mystery to me, not least since DG COMP subsequently explained the ramifications of Coty in a very clear policy brief. That brief makes a distinction between the Metro case (which holds that selective distribution in relation to luxury products where there are no quantitative restraints falls outside the scope of Article 101(1) TFEU altogether, so far as the scheme is proportionate and necessary to preserve the aura of the brand) and the principles in Coty which relate to the exemption criteria in Article 101(3).

Photos © Emilie Gomez

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Speakers

  • Compass Lexecon (Brussels)
  • Baker McKenzie (Brussels)
  • European Commission competition - Directorate General