Vertical Agreements Special
For a long time vertical agreements (i.e. agreements for the sale or purchase of goods/services between parties operating at different levels in the supply chain) have not been a priority in the enforcement of competition law by competition authorities (public enforcement). However, this has changed in the last couple of years, especially since the European Commission ("Commission") initiated a sector inquiry into e-commerce to identify possible anti-competitive practices in vertical relations in 2015. The preliminary report of the e-commerce sector inquiry was published in September 2016, the final report is expected in the first quarter of 2017.
While awaiting the final report and position of the Commission and also the outcome of the much debated Coty-case before the Court of Justice of the European Union regarding marketplace bans (case C-230/16), many national competition authorities ("NCA's") take a cautious approach to vertical restraints. Within the ECN (European Competition Network) this subject is very much on the agenda. Some NCA's have been more active with respect to vertical restraints than others and sometimes enforcement policies show divergencies. There are also multiple decisions form national courts in this field. For the purpose of this newsletter we highlight some cases of the past year in which NCA's acted upon vertical restraints.
A bird's eye view of the 2016 NCA decisions regarding vertical restraints
• November 2016: the Belgian Competition Authority ("BCA") closed its investigation against real estate website operator Immoweb regarding the “Most Favoured Nation” clauses in its contracts with developers of software for real estate agencies. There was no formal decision by the BCA because of commitments offered by Immoweb to refrain from using MFN clause in its contracts.
• December 2016: the Bundeskartellamt imposed fines totalling €18.3 mln on three companies concerning vertical price fixing in the food retail sector. The authority's findings showed that between 2006 and 2009 the two regional retailers were involved in price fixing agreements on the shop prices for beer products.
• August 2016: according tot the decision of the Hungarian Competition Authority ("GVH"), Pick Szeged Szalámigyár és Húsüzem Zrt ("Pick") determined resale prices when distributing meat products processed by Pick during temporary sales (promotions) in the framework of its marketing strategy. The GVH has imposed a fine of HUF 44,000,000 (approx. EUR 142,000).
• July 2016: the Conseil de la Concurrence ("LCA") closed its investigation into a resale price maintenance agreement in the case SCAB Giardino Spa (Giardino), with a no-infringement decision. The LCA clarified that an RPM agreement is a competition restraint by object but it did not penalize the firms under investigation because it failed to establish that the supplier and distributor put in place such restrictive agreement.
• May 2016: the Competition and Markets Authority ("CMA") issued a decision finding that ITW, a fridge supplier, infringed competition law and imposed a fine of £2,3 mln for restricting online discounts. ITW operated a `minimum advertised price` policy and threatened dealers with sanctions if they advertised below that minimum price.
Outlook for 2017: ACM and further developments
ACM's enforcement practice regarding vertical agreements has been very limited, in line with its supervision of vertical agreements paper of 20 April 2015. Moreover, in the (abovementioned) Coty-case the Dutch government has apparently sided with the Commission's view on allowing market place bans. Perhaps the outcome of the Commission's e-commerce sector inquiry and the Coty-judgment in 2017 will bring a change. The current market study of ACM into online video platforms and the monitoring of the online hotel booking sector might already signal ACM's first steps towards a more active enforcement practice. It remains to be seen what 2017 will bring.
We continue to monitor the developments in this field and will keep you informed.
The Houthoff Buruma EU team is available at email@example.com or +32 (0)2 507 98 00.