Frankfurt Appeal Court finds that brand owner’s ban on sales of branded goods via online portals is legal

Written on 23 Dec 2015

German backpack manufacturer Deuter today partially won its
appeal against a ruling by the lower regional court of Frankfurt in June 2014
which found that Deuter’s ban on sales of its branded backpacks by its retail
customers via online marketplaces, such as Amazon, and price comparison
websites was anti-competitive.

Although the Frankfurt Court of Appeals upheld the finding that Deuter’s restriction on its distributors use of price comparison websites was anti-competitive, the court concluded that a branded goods maker is allowed in principle to decide the conditions under which its products may be sold. The court argued that a branded goods manufacturer could take measures to ensure that sales conditions were such that the goods would be perceived as high quality products; and this includes restricting their sale via online marketplaces.

Germany’s National Competition Authority, the Bundeskartellamt, had previously requested that the case be referred up to the European Court of Justice (ECJ) for a ruling on the legality of bans of sales via online marketplaces. However, judges in Frankfurt did not allow that request to proceed, deciding instead to rule on the appeal themselves. 

The ruling can be further appealed by the parties to the German Federal Supreme Court and it remains to be seen whether further requests for clarity by the ECJ will be made.

The legality of online sales bans is a topical question and an important one for brand owners. However, this case will not necessarily help to resolve the question. In particular, this judgment is not only at odds with the European Commission’s stance that, generally, any prohibition on online sales is unlawful and infringes competition law, but also runs contrary to the decision of the Bundeskartellamt in August 2015, which found that Asics had infringed competition law by preventing its distributors from selling its products via online marketplaces and advertising using price comparison websites.