Online sales restriction in distribution agreements: another warning from a competition authority

Written on 17 Sep 2015

On 27 August 2015, the German Competition Authority, the Bundeskartellamt, found sports-shoe maker Asics’ online distribution practices to infringe German and European competition laws by hindering online trade.

Asics historically operated a selective distribution network, stringently controlling the way in which its products were sold on by its distributors. A key element of this selective distribution, which was heavily focused on by the Bundeskartellamt, was the prevention of Asics’ products from being sold by distributors via online marketplaces, such as Ebay or Amazon. Asics also restricted its distributors from using price comparison websites to advertise the products.

The Bundeskartellamt found that the restrictions implemented by Asics restricted the online sales activities of small and medium sized dealers who had been authorised to sell Asics products yet could not, by virtue of the restrictions, make use of a number of online media to connect with consumers.

In response to the finding, Asics emphasised that the restrictions in question were contained within its 2011 distribution policy and as such were no longer in operation. However, despite the infringements now being historic, the Bundeskartellamt’s evidently considered the restrictions prohibiting the use of online marketplaces and other restrictions of online sales to be sufficiently serious as to warrant an investigation.

What does this mean for businesses?

Competition authorities are increasingly receiving complaints from distributors regarding the online sales conditions being set by brand manufacturers. This German decision illustrates to some extent what we knew already: that any purported restriction on online sales is a serious infringement of EU competition law. That said, the position taken by the Bundeskartellamt in this decision also sets a precedent that restrictions on distributors from using online marketplaces may also be found to infringe EU competition law. 

Whilst decisions of other Member States’ national courts are not binding on English courts, they are nevertheless informative as to how EU competition law should be applied. Given the current focus on this area, it may be prudent for both suppliers and distributors to review their distribution policies and agreements, in particular to consider if they contain any restrictions on online selling, the use of online market places or price comparison websites. 

In a similar vein, the European Commission is currently conducting a sector inquiry into e-commerce which may provide further clarification on the legality of online sales conditions. Such developments will be watched with interest.

If you have any questions or concerns about this recent decision or should you require advice on your distribution agreements, please contact the OC Competition team.