Distribution update the competition law perspective Peter Meyer Koen Platteau Genevieve Borremans Claudia Mercer Filippo Fioretti 3 June 2015
Overview EU legal framework National reports from France UK Italy Germany The risks of information exchange (hub and spoke) 1 / L_LIVE_EMEA1:26660109v1
The EU Framework Article 4 Vertical Block Exemption (VBER) and Vertical Guidelines Enforcement primarily at national level but potential for divergence 2014 European Commission becomes active again Study of the retail food sector published (traditional channels, not online) Launch of investigations into: Online video games Licensing conditions Hollywood majors (pay TV) Consumer electronic products Efforts to coordinate cases handled at national level Hotel bookings 2 / L_LIVE_EMEA1:26660109v1
2015: EU e-commerce sector inquiry Background Timeline Focus Vertical restrictions Pricing restrictions Targeted sectors Targeted types of undertakings Goals Understanding the market Fact-finding Consideration of other guidance necessary/legislative action 3 / L_LIVE_EMEA1:26660109v1
France - overview Enforcement of distribution rules Distribution is highly regulated under French law. Two sets of rules Competition law Commercial code Two enforcement agencies French Competition Authority highly active in distribution cases Direction générale de la concurrence, de la consommation et de la répression des fraudes (DGCCFR) wide powers to detect infringements, settle small cases and refer cases if necessary to FCA 4 / L_LIVE_EMEA1:26660109v1
France the issues Supplier-distributor relationships Non-price restrictions Prohibitions of online sales by selective distributors eg Pierre Fabre case Sector inquiries Sector inquiry into e-commerce Sector-specific inquiries (for instance distribution of medicinal products) Pricing restrictions Price parity clauses Booking.com commitment decision Recommended resale prices 5 / L_LIVE_EMEA1:26660109v1
UK - overview Online markets: a major Competition and Markets Authority (CMA) priority Main concerns identified Restrictions in the online distribution of goods The role of gatekeepers in internet ecosystems Markets tipping to online platforms with market power Potential areas of scrutiny Barriers to new challenger companies in established markets / newer markets Licensing of standard-essential patents / other IP Contracts between intermediaries and consumers Growth in cloud computing / internet of things 6 / L_LIVE_EMEA1:26660109v1
UK hotel online booking case OFT investigation into vertical agreements that restricted the ability of online travel agents to discount the price of hotel rooms Commitments offered triggered objections by price comparison website (Skyscanner). OFT did not address the objections and accepted the commitments Decision quashed on appeal Two further points of interest: The OFT s approach differed from that adopted by regulators in other jurisdictions Reaching a settlement agreement with a regulator is not necessarily the end of the story 7 / L_LIVE_EMEA1:26660109v1
Italy overview Distribution sector: an Italian Competition Authority (ICA) priority Long-term interest of the ICA in traditional sales channels Recent focus on online sales Main concerns: resale price maintenance (RPM) 8 / L_LIVE_EMEA1:26660109v1
Italy - cases decided Case law (traditional sales channel) Italian Booksellers Association (1995): minimum resale price Oil companies (2000): recommended prices imposed on distributors Football League (2006): clubs unable to set different ticket prices to those fixed by the League Case law (online sales) Enervit (2013): minimum resale prices and customer restrictions imposed on online distributors Booking.com/Expedia (2014): excessively restrictive most favoured nation clause (best price guarantee/price parity clause) 9 / L_LIVE_EMEA1:26660109v1
Germany - overview and issues Strict approach of German Federal Cartel Office may differ from that of other National Competition Authorities Main issues Price differentiation between products sold online and in stores Platform prohibitions sales via third party websites Best price guarantees - HRS and booking.com cases Manufacturers must not limit or restrict online sales without a good reason Andreas Mundt, Bundeskartellamt 10 / L_LIVE_EMEA1:26660109v1
Germany cases decided Hardcore restrictions under the VBER: Price differentiation (double pricing systems) between online sales and shop sales Attempts to prohibit sales on third party websites such as amazon (also in the context of selective distribution systems) Düsseldorf Appeal court confirmation: best price obligations in agreements with hotel booking systems violate antitrust law. 11 / L_LIVE_EMEA1:26660109v1
Information exchange Hub and spoke arrangements in the e-commerce sector? Traditional hub and spoke: commercially sensitive information flows from A to B to C, usually vertically through common customer or supplier (eg) Supplier A to Retailer B, who passes to Supplier C where state of mind & use of information tests met, each could be liable for concerted practice infringing Article 101 (B as facilitator ) UK examples: Replica Kit, Hasbro, Dairy 2012 EU e-books case? Focuses on concerted practices between publishers, with the help of Apple. Ended in commitments 2013 Apple v US - US precedent Possible scope for hub and spoke issues in online distribution in the future 12 / L_LIVE_EMEA1:26660109v1
Looking forward Significant changes underway on EU and national level Will the Commission try to impose a tougher policy or leave scope for national authorities? For the time being, differences in national approaches require careful review of distribution policy on a country-by-country basis Fines for antitrust law violations in vertical agreements will increasingly become a significant issue for undertakings Any questions? 13 / L_LIVE_EMEA1:26660109v1
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