A leading running shoe manufacturer has been given until 10 June 2014 to respond to German Federal Cartel Office (“FCO”) concerns that its ban of online marketplace sales within its selective distribution system may be anti-competitive.
The FCO has taken exception with the manufacturer’s apparent complete ban on authorised dealers using online market places such as Amazon and Ebay as well as from supporting price comparison sites. The FCO believe such a ban goes beyond the legitimate remit of a selective distribution in protecting brand quality and customer service and may instead be an attempt to control price competition.
This case is a departure from common practice in many distribution systems which ban the use of online marketplaces and may signal a regulatory shift against the use of such clauses. The FCO seems to have taken exception at this particular manufacturer due to their strong market position and because the FCO believes other major running shoe manufacturers may be doing the same and wants to set an example.
This case throws into confusion the widely held view that paragraph 54 of the 2010 Commission Guidelines on Vertical Restraints permits suppliers to exclude such third party platforms.
It remains to be seen whether this move by the FCO will create a new precedent in EU competition law regarding such bans. The individual facts of the case including the strong market position of the manufacturer, the similar presumed behaviour of their rivals, the ban on price comparison sites and the complex nature of the particular distribution system in question, may confine this case to its facts. The FCO is also a regulator, not a Court and if commitments are reached between the manufacturer and the FCO, no binding precedent will be created.
Suppliers will be watching the case with interest to see whether a ban on online marketplace sales will need to be reviewed in the context of their own distribution systems.