EU Antitrust Issues In Consumer Goods—Export Bans, Online Sales, And Pricing Restrictions

Several European competition authorities are showing a renewed focus on restrictions in distribution arrangements, particularly in the UK and Germany. Some of this originates in the rise of online platforms and e-commerce disruptors but its effects extend beyond the online world. We look at some recent trends and key issues that companies should keep in mind to avoid falling foul of these rules.

The EU vs. US Approach

EU antitrust agencies take a more critical view than their US counterparts of vertical restrictions, i.e. restrictions that a seller seeks to impose on its distributor.

While the basic principle remains that vertical agreements are less likely to give rise to competition issues than restrictions between competitors, the basic approach of EU antitrust rules is that a supplier cannot restrict a distributor's onward sales (subject to some clearly defined exceptions). There are many instances where such restrictions are prohibited, irrespective of their effect (so-called hardcore restrictions).

To guide companies when entering into vertical agreements, the European Commission has published two important documents: the Vertical Block Exemption 1 and the Vertical Guidelines.2 The Block Exemption creates a safe harbour for agreements that fulfil certain criteria. The Guidelines set out how to analyse vertical agreements that fall outside the safe harbour.

The difference between US and EU rules stems, in part, from the fact that EU institutions have used competition rules as a tool to integrate various national markets in the EU and this means that in certain circumstances unilateral actions that restrict trade amongst member states can also present antitrust issues where the company potentially holds market power.

Export Bans and Restricting Parallel Trade

EU competition rules take a very strict approach against agreements that seek to restrict onward exports of products. Whilst companies can generally set up a network of exclusive sales territories, they are generally allowed only to restrict active but not passive sales from one to another sales territory.

Active sales means actively approaching individual customers, for example through direct mail or visits. Passive sales are where the customer approaches the distributor on its own. Selling products over the internet through its own dedicated website or via an online platform is viewed as a passive, not an active sale (see more below).

The European Commission has not been shy in imposing fines for agreements that restrict sales between member states. For example, it imposed a102 million fine on Volkswagen in 1998,3 a42 million fine on Opel in...

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