EU Commission Regulation 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty to categories of vertical agreements goal is to create a single market and promote competition between the companies without the interference of national borders.
According to the Regulation 330/2010, agreements between companies which may affect trade between the EU’s member states and which have the objective or effect of restricting competition are generally prohibited unless the economic benefits of the agreement outweigh its anti-competitive effects.
In this legal framework, the EU authorities consider online sales a way to stimulate competition and therefore any contractual limitation on online sales in a selective distribution system are viewed with suspicion and disfavor.
The Commission and the EU Courts have historically considered obligations which discourage distributors from using internet to sell the contractual products to customers as hardcore restrictions of competition; to restrict the Distributor not to use the online channel has been considered as bad as to forbid the passive sales, such as sales in response to unsolicited requests from individual customers, including delivery of goods or services to such customers.
This interpretation does not seem to be uniformly applied. There are some specific exceptions that the EU authorities consider legally acceptable, even though in this case, we should start asking ourselves: What is the real objective of the European antitrust rules? Are these rules protecting final customers or competition between companies? If these rules do indeed protect the competition between companies, why is it considered acceptable to apply them to certain companies and not to others?
Actually the last verdicts on the vexata quaestio: “Are contractual clauses that inhibit the distributor to sell online lawful?” have been answered in an apparently ambiguous way.
The decisions are always very clear in highlighting that “online” sales are a typical way to reach customers and that even in a selective distribution system Contract provisions cannot prohibit the use of Distributor’s internet site for online selling even though the Distributor can be required to adhere to specific qualitative website requirements.
In the last case law, the European Court of Justice has pointed out that for luxury products the Distribution contract can prevent the Distributor from using third-party platforms. This exception is allowed due to the fact that it is intended to preserve the image of the goods and because, in this case, it is impossible to check if third part online sales platform in which the products are sold corresponds with the qualitative conditions imposed to the Distributor by the Seller.
One important clarification: European Court of Justice decision does not support an absolute prohibition to sell the contract goods online, but only applies to the internet sale of the contract goods via third-party platforms which operate in a discernible manner towards consumers.
As an Italian comedian used to say: one question arises spontaneously? What is a luxury product? What kind of characteristics must a product have to be considered a luxury product? Is this an objective characteristic or, as the Roman saying goes, “De gustibus non disputandum est” meaning that it depends on the eyes (the taste) of the person who is watching?
Is a product without a well-known brand a luxury product because of the price? Or because of the design? If a Manufacturer starts to produce new products with specific design features, are they considered luxury products? Can the Manufacturer prevent the Distributor to sell online on third-party platforms? Who decides? Clearly there are many questions to be answered, but we are running out of time…. The Big Shop OnLine that we all use is knocking on doors of the Manufacturer and Distributor!
Avv. Alberto Andreello