See most recent developments in EU Law on Online Distribution

1. Private and Confidential Martin Rothermel
Webinar February 28, 2019
TRICKY DISTRIBUTION UNDER
EUROPEAN UNION LAW

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Contents
1 Guess? 3
2 Asus, Denon & Marantz, Philips, Pioneer 6
3 Coty 8
4 Asics 10
5 HRS, Booking, Expedia 12
6 Geoblocking Regulation 14
7 Taylor Wessing 16

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Guess? – The decision (CASE AT.40428)
EU Commission Dec. 17, 2018: 40 Mio. € Fine for several hardcore restrictions

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Guess? – The legal framework in the EU
 General Prohibition: Art. 101 TFEU (Treaty on the Functioning of the European Union) prohibits „all
agreements between undertakings, decisions by associations of undertakings and concerted practices
which may affect trade between Member States and which have as their object or effect the prevention,
restriction or distortion of competition within the internal market, and in particular those which: (a)
directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control
production, markets, technical development, or investment; (c) share markets or sources of supply; (d)
…; (e) ….”
 Some so called Block Exemption Regulations as the Block Exemption for Vertical Agreements
(VBER), #330/2010 exempt from the General Prohibition, provided that (1) market share is below 30%
and (2) agreement does not contain hardcore restraints, such as (a) price fixation, (b) restriction of
territories even in passive sales (c) restriction on end customers in selective systems (d) restriction of
cross supplies in selective systems (e) restrictions on spare parts
 EU Regulation 1/2003 and guidelines on procedures and fines
allow for a max. fine of 10% of total turnover (group of companies /
singe economic unit) in the preceeding business year but may be
reduced by 50% if company is cooperative and may be reduced by
100 % for whistle blower.

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Guess? – The case
 Selective Distribution System in 14 EEA countries solely via Guess? Europe or subsidiary and with
one third party wholesaler (distributor) in other 16 EEA countries (about 8.000 approved brick & mortar
retailers in EEA; no Guess? in Iceland) – all wholesaler have about the same Guess? template
agreement with the restrictions as fined (see the initial slide on the decision above)
 EU Commission initiated proceeding in June 2017 as follow up of the E-Commerce Sector Inquiry
(see very comprehensive report published May 10, 2017); Guess? did not defend but was very
cooperative and explained how much fine Guess would expect and accept
 System was effective for 1400 days from Jan 1, 2014 until October 31, 2017
 EU Commission indentified relevant sales in an amount of 250-300 Mio. € in the year 2017 and took
a base amount of 7% (possible is a max. of 30% plus 25%) since vertical restraints have less impact on
competition than horizontal restraints and Guess? market share was not very high > basic amount was
75 – 85 Mio. € and Commission reduced it due to cooperation to 39,821,000 €

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Asus, Denon & Marantz, Philips, Pioneer (CASES AT. 40465/69, 40181/82)
EU Commission July 24, 2018: 111 Mio. EURO Fine for price fixation

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Asus, Denon & Marantz, Philips, Pioneer
 Asus (headquartered in Taiwan) monitored the resale price of retailers for certain computer hardware
and electronics products such as notebooks and displays in Germany and France between 2011 and
2014. Asus intervened with retailers selling those products below the resale prices recommended by
Asus and requested price increases. > Fine: 63 Mio. €
 Denon & Marantz (headquartered in Japan) engaged in resale price maintenance with respect to
audio and video consumer products such as headphones and speakers of the brands Denon, Marantz
and Boston Acoustics in Germany and the Netherlands between 2011 and 2015. > Fine: 7 Mio. €
 Philips (headquartered in the Netherlands), engaged in resale price maintenance in France between
the end of 2011 and 2013 with respect to a range of consumer electronics products such as kitchen
appliances, coffee machines, vacuum cleaners, home cinema and home video systems, electric
toothbrushes, hair driers and trimmers. > Fine: 29 Mio. €
 In parallel to resale price maintenance with respect to products such as home theatre products, iPod
speakers, speaker sets and hi-fi products, Pioneer (headquartered in Japan) also limited the ability of
its retailers to sell-cross border to consumers in other Member States in order to sustain different resale
prices in different Member States between 2011 to the end of 2013 and concerned 12 countries
(Germany, France, Italy, the United Kingdom, Spain, Portugal, Sweden, Finland, Denmark, Belgium, the
Netherlands and Norway) > Fine: 10 Mio. €
 > All fines were reduced due to cooperation on 60% or 50%

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Coty - CASE C-32/16
ECJ December 6, 2017: Platformsales (Ebay, Amazon) may be prohibited
1. …a selective distribution system for luxury goods designed, primarily, to preserve the luxury image
of those goods complies with Article 101(1) TFEU to the extent that resellers are chosen on the basis of
objective criteria of a qualitative nature that are laid down uniformly for all potential resellers and applied in a
non-discriminatory fashion and that the criteria laid down do not go beyond what is necessary.
2. … Article 101(1) TFEU … is not precluding a contractual clause, … which prohibits authorised
distributors in a selective distribution system for luxury goods designed … to preserve the luxury image of
those goods from using, in a discernible manner, third-party platforms for the internet sale of the contract
goods, on condition … that it is laid down uniformly and not applied in a discriminatory fashion, and that it is
proportionate in the light of the objective pursued, ….
3. Article 4 of VER Block Exemption Commission must be interpreted as meaning that, …, the
prohibition imposed on the members of a selective distribution system for luxury goods, which operate as
distributors at the retail level of trade, of making use, in a discernible manner, of third-party platforms for
internet sales does not constitute a restriction of customers, within the meaning of Article 4(b) of that
regulation, or a restriction of passive sales to end users, within the meaning of Article 4(c) of that regulation

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Coty
 Long awaited decision, clarifying some Pierre Fabre Judgement (C-
439/09) interpretations and aligns with line Metro Case Decision (26/76)
and other Perfume Case Decisions (L’Oréal 31/80, Givenchy / Leclerc T-
88/92, Yves Saint Laurent Parfums / Leclerc T-19/92)
 Started in Germany with decisions of Regional Court Frankfurt 2013
and Higher Regional Court Frankfurt 2016
 Other German Case law since 2007: Scout, Casio, Deuter – on the
question of prohibition of sales plattforms (some different judgements)

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Asics – KVZ 41/17
German FCJ December 12, 2017: Price Search Engine use can not be prohibited
Apart from the fact that the „ ASICS distribution system 1.0" does not include luxury goods, ….
the dealers concerned were prevented form the use and the functionality of price search engines.
The dealers could also not allow any third party to use any ASICS trademark on the website of a third
party to refer customers to the website of a dealer. So, they were forbidden to advertise or sell contract
goods via the Internet presence of a third party, unless third party's platform would not be displayed.
With such a combination of restrictions - unlike in …. the Coty case practically substantial access to the
Internet offer of authorised dealers has been restricted.
In the Bundeskartellamt's (German Cartel Office) view, a clause according to which the retailer in
general, i.e. irrespective of the concrete design of the price comparison machine, is prohibited
from making such a machine available by interfaces, represents a Restriction of passive sales to
final consumers. It is a hardcore restriction pursuant to Art. 4 letter. c Vertical BER.

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Asics
 Long fight between German Cartel Office and ASICS until Decisions on August 26,
2015 and confirmation by the Higher Regional Court of Dusseldorf April 5, 2017 and
then German Federal Court of Justice

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HRS, Booking, Expedia – some Court Decisions
German Cartel Office and Courts: No best prices clauses if +30% market share
On February 16, 2017 the District Court of Cologne did not prohibit best price clauses in hotel contracts
since market share of expedia.de is below 30%.
On December 22, 2015 the German Cartel Office and later the Düsseldorf Higher Regional Court (May
4, 2016) prohibited best price clauses in hotel contracts of booking.com.
On January 9, 2015 the Düsseldorf Higher Regional Court confirmed a decision of the German Cartel
Office of December 20, 2013 which prohibited the further implementation of the best price clause in
hrs.de contracts and at the same time initiated proceedings against the hotel portals booking and
expedia for similar clauses in hotel contracts. The best price clauses oblige hotels to provide the hotel
portal with the lowest possible hotel price, the highest possible room availability and the most favourable
booking and cancellation conditions on the Internet.

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HRS, Booking, Expedia
 Did you experience practical impacts ???
 Special Laws in Italy, Austria, Switzerland

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Geoblocking Regulation – brandnew rules
EU Regulation 2018/302 effective since December 3, 2018: No Geoblocking§
Unrestricted access to websites, Art. 3 Geoblocking-Regulation
Geoblocking by nationality, residence or domicile of the customer to refuse access to local websites is
prohibited. Rather, customers must be left to decide which local website they want to visit.
No discriminating general terms and conditions, Art. 4 Geoblocking-Regulation
Discriminatory use of different terms and conditions (including prices!) for access to goods/services based on
geodata is not permitted. The customer from a Member State not actually supplied has to be given the
possibility to collect the products in a Member State supplied. Companies are not obliged to supply all
Member States.
Same terms of payment, Art. 5 Geoblocking-Regulation
Terms of payment may not vary according to the nationality, residence or place of establishment of a
customer. If, for example, a company allows a purchase on account once, it must make this option available
to all customers.
Fine up to 300,000 € for infringements
The competent authority is the Federal Network Agency (§ 116 TKG). In future, a fine of 300,000 € may be
due for violations (§ 149 Ic, II No. 2 TKG).

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Geoblocking Regulation
 …who does really care?

16. Taylor Wessing >

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Your Taylor Wessing Team
Key areas of expertise
 Commercial Agreements & Distribution
Martin Rothermel heads Taylor Wessing’s practice area Commercial
Agreements and Distribution in Germany. He advises companies on supply,
quality assurance, distribution (e-commerce, commercial agency, authorized
dealers, franchising systems) and product liability. His areas of practice
comprise the structuring of contracts and representation of clients in legal
disputes. His clients include national and international enterprises from trade
and industry. Martin regularly publishes expert articles and gives presentations
on international supply and sales (including CISG), distribution and e-commerce
law as well as product liability.
Martin studied in Würzburg and worked as a trainee lawyer for Siemens AG,
Munich, and Procter & Gamble Comp. in the US. He earned his doctor’s degree
in antitrust law and was admitted to the bar in 1999. He then worked as legal
Counsel to a medium-sized IT company and as a management consultant for
Roland Berger Strategy Consultants. He also worked for a domestic commercial
law firm before he joined the Taylor Wessing Munich office in 2004.
Languages
 English, German
Key areas of expertise
 Corporate/M&A
Alexander R. Roth is co-head of the Taylor Wessing office in Menlo Park, CA,
USA and joint coordinator of Taylor Wessing’s international US Group. As an
attorney with an in-depth experience in the areas of commercial and corporate
law he advises national and international companies and investors, frequently
US-American companies, on complex national and cross-border corporate
transactions in the areas of Private M&A, Distressed M&A, Private Equity, Joint
Venture and Venture Capital. He further advises in particular North American
growth companies in the technology sector on their international expansion and
on investments in Europe and Asia, frequently in connection with acquisitions or
establishing a presence in Germany.
Alexander is a specialist lawyer for commercial and corporate law.
Languages
 German, English, Italian
Dr. Martin Rothermel
+49 89 21038-121
m.rothermel@taylorwessing.com
Partner
Munich
Alexander R. Roth, M.Jur. (Oxford)
+1 203 654 7633
a.roth@taylorwessing.com
Partner
Menlo Park

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