Distribution Agreements Germany
Can a supplier restrict the geographic areas or categories of customers to which its distribution partner resells? Are exclusive territories allowed? Can a supplier reserve certain customers for themselves? If not, how are the restrictions on such behaviour applied? The distinction between active distribution efforts and passive sales that are not actively requested, and how are these terms defined? There is a persistent trend in simple or multichannel distribution distribution to cross-distribution or even Omni-Channel. The trend combines all channels to offer customers a flawless shopping experience and integrates services such as: This also applies to the Internet: sales on online shops are not to be excluded in principle. However, a supplier can only require its distributor to comply with certain quality standards, particularly in the area of selective distribution (vertical restriction guidelines of May 10, 2010, point 51 and 54). The European Court of Justice, at the time of the decision on the request for a preliminary decision of the Frankfurt Oberlandesgericht on the interpretation of European rules on cartels and abuse of dominant position, namely art. 101 AE AND ART. 4 B) and c) VBER, reviewed details of online resale restrictions in selective distribution systems (decision of 19 April 2016, Coty Deutschland, 11 U 96/14 (Kart)). In accordance with the judgment of the European Court of Justice of 6 December 2017 (Coty Deutschland, reference number C-230/16), luxury goods manufacturers may deter distributors from selling products on third-party platforms if such a contractual clause fulfils the following three conditions: “i) this clause is intended to preserve the luxury image of the products in question; (ii) that it be established in a uniform manner and that it is not applied in a discriminatory manner; and (iii) it is proportionate to the objective pursued.” If these “Metro” criteria for selective distribution (dating back to the Metro case of November 25, 1977, number 26/76) are not met, the clause may, however, benefit from an exemption under Section 101, paragraph 3, of the EUSF under Article 101, paragraph 3 of the TFUE, since the ban on the sale of third-party online platforms does not, at least according to the court, constitute a restriction characterized within the meaning of Article 4 of the VBER, which would exclude the application of the category exemption to the global vertical agreement (see guidelines on vertical restrictions of 10 May 2010, point 47). In particular, the prohibition of the third-party platform would not constitute a restriction on customers within the meaning of Article 4 of the BVBER or a restriction on passive sales to end-users within the meaning of Article 4, point (c) of the VBER. The Tribunal left open the question of whether this interpretation also applies to non-luxury products and selective distribution outside of selective distribution – which is now, since the German Competition Authority immediately declared, on 6 December 2017, via Twitter: Are restrictions on the distribution of competing products in distribution contracts enforceable during the duration of the relationship or thereafter? Competition bans on distributors and franchisees apply if they comply with cartel and abuse of dominance rules.
As a general rule, agreements that target or cause restrictions on competition are prohibited by cartel law, i.e. by the German Anti-Competition Restrictions Act (GWB) and by Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFUE). The details are explained above with any type of distribution channel. Yes, a supplier may restrict the sale of e-commerce through its distributors (particularly distributors or franchisees) under German and EU cartel and abuse of dominance legislation, in accordance with the principle that suppliers are hardly allowed to ban the sale of goods (or services) online entirely because they are considered passive sales (cf.