Competition Update | October 2017
Published on 16th Oct 2017
As we move into autumn, we look back on a summer of interesting developments in competition law jurisprudence. Across the EU, courts have been handing down judgments and providing commentary on areas of law which have been mired in uncertainty, serving to both clarify and challenge our existing interpretations of the law.
In August, selective distribution and online sales came under the spotlight. While we await a definitive ruling from the CJEU in the case of Coty as to whether it is permissible to prohibit sales via third-party platforms such as Amazon and eBay, the Advocate General’s opinion gave a preview of the outcome and indicated that the CJEU will find such a prohibition legitimate. In France, this comes at a time when recent decisions by the French Court of Cassation appear to demonstrate a trend in case law favouring legal protection of selective distribution networks.
The announcement at the end of the month, however, that Ping had been fined £1.45 million for preventing resellers from selling Ping golf clubs over the internet served as a pertinent reminder that we should not expect a softening of approach by authorities on absolute prohibitions of online sales; while Ping’s legitimate commercial reasons proved a mitigating factor when it came to the amount of the fine, it was not enough to prevent the CMA demanding that Ping end the online sales ban.
In Germany, the issue of mitigation itself was at the forefront; a recent tax evasion case may serve to push the German Courts toward adopting an approach more consistent with other member states by taking compliance systems into account as a mitigating factor when it comes to calculating fines imposed on companies in breach.
Discussions surrounding the issue of price parity continue in Italy, when a new law came into force on 29 August 2017, banning price parity clauses and seemingly ushering in a less tolerant approach to narrow “Most Favoured Nation clauses” than the approach previously taken by the Italian Antitrust Authority.
Further uncertainty arose in Spain as the Spanish High Court prompted confusion rather than clarity on the interpretation of the Single Economic Doctrine, giving a judgment which appeared to contradict CJEU interpretation of the doctrine.
Finally, in the UK, our eyes are on “the Repeal Bill” as it makes its controversial and precarious journey through the UK Parliament and which in relation to State aid has provided little certainty. The preservation of Article 108(3) TFEU, which makes no sense in a post-Brexit world unless it is adapted or amended, has prompted discussions of exactly how State aid will be dealt with, a crucial decision which may well shape the future of State aid regulation in the UK for many years to come.
Online distribution in the spotlight: time to ensure your system is fit for purpose
In August, the Advocate General published his opinion on the much anticipated judgement in the case of Coty v Pafumerie Akzente, giving a potential preview of the decision, stating that in certain circumstances a prohibition on third party platforms is acceptable. If the CJEU agrees, we should expect greater business clarity on when the use of marketplaces can be restricted.
Another warning on the risks of banning online sales
At the end of August, the CMA announced that it had imposed a fine of £1.45 million on Ping Europe, a leading manufacturer of golf equipment, for operating an online sales ban by preventing its resellers from selling Ping golf clubs over the internet. The CMA’s demand that Ping end the ban, even while noting the legitimate commercial reasons Ping had for imposing it, served as a timely warning that an absolute prohibition of online sales will not be tolerated.
Selective Distribution is again in the spotlight in France
The French Court of Cassation has in two recent decisions confirmed a recent trend in case law favouring legal protection of selective distribution networks. However, by remaining silent on other outstanding issues, such as the validity of contractual clauses prohibiting resale of products by online marketplaces, uncertainty surrounding those issues remains.
Game changer in Competition compliance? Compliance programmes may lead to lower fines, Germany’s Supreme Court rules
Back in May, the German Supreme Court handed down a judgement in a case of tax evasion which may have a significant impact on German competition law. The Court’s remarks on compliance management systems may force the German Courts to consider whether and to what extent the implementation of management compliance systems should be taken into account as a mitigating factor when deciding the fine to be imposed on any company in breach.
Hotel price parity clauses in Italy
The Italian Parliament has recently decided to ban price parity clauses imposed on hotels by travel agents in a new law in force as from 29 August 2017. Compared to the past approach taken by the Italian Antitrust Authority in cases involving Booking.com and Expedia, the law may result in a far less favourable attitude toward narrow “Most Favoured Nation clauses”.
Spain; new judgement affecting the interpretation of the Single Economic Unit Doctrine
The Spanish High Court has issued a judgement which interprets the Single Economic Unit Doctrine away from settled case law of the Court of Justice of the European Union (CJEU), by implicitly restricting the CJEU interpretation of the doctrine and its rebuttable presumption solely to subsidiary companies controlled 100% by the parent company.
The future of State aid regulation in the UK after Brexit: what could follow after the Repeal Bill?
As the European Union (Withdrawal) Bill makes its way through Parliament, the position in relation to State aid remains unclear. While the list of preserved Articles includes Article 107(1) and 108(3) of the TFEU, the inability for Article 108(3) to work in UK Law post-Brexit without amendment or adaptation prompts discussion of how this will be achieved.