Does a general and absolute ban on selling contract goods to end-users via the internet, imposed on authorised distributors in the context of a selective distribution network, in fact constitute a 'hardcore' restriction of competition by object for the purposes of Article 81(1) EC [Article 101(1) TFEU] which is not covered by the block exemption provided for by Regulation No 2790/1999 but which is potentially eligible for an individual exemption under Article 81(3) EC [Article 101(3) TFEU]?

The contractual clause amounts to a restriction by object under Article 101(1) TFEU, and the block exemption does not apply, but an individual exemption under Article 101(3) TFEU may be possible.

General ban on internet sales in selective distribution is a restriction by object under Article 101(1) TFEU.

European Court of Justice (Third Chamber) · 13 oktober 2011 · Judgment · Preliminary ruling

(Article 101(1) and (3) TFEU – Regulation (EC) No 2790/1999 – Articles 2 to 4 – Competition – Restrictive practice – Selective distribution network – Cosmetics and personal care products – General and absolute ban on internet sales – Ban imposed by the supplier on authorised distributors)

Rechtsvraag

Whether a general and absolute ban on selling contract goods via the internet by authorised distributors in a selective distribution network constitutes a restriction of competition by object under Article 101(1) TFEU, and whether such a clause can benefit from block or individual exemptions under Article 101(3) TFEU.

Regel

Art. 101(1), TFEU (Treaty on the Functioning of the European Union) (Prohibits agreements that prevent, restrict, or distort competition within the internal market)
Art. 101(3), TFEU (Allows exemptions to Art. 101(1) if the agreement contributes to improving the production or distribution of goods or promotes technical or economic progress, while allowing consumers a fair share of the resulting benefit)
Arts. 2-4, Regulation (EC) No 2790/1999 (Regulation on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices, providing block exemptions from the prohibition in Article 101(1) TFEU)

Conclusie

The court concluded that the clause prohibiting internet sales constitutes a restriction by object under Article 101(1) TFEU, as it is not objectively justified. The block exemption under Regulation No 2790/1999 does not apply, but the contract may still benefit from an individual exemption under Article 101(3) TFEU if the conditions are met.

Tijdlijn

27-06-2006 The Competition Authority opened an ex officio investigation of practices in the distribution sector for cosmetics and personal care products.
08-03-2007 The Competition Authority approved commitments by a group of undertakings, excluding Pierre Fabre Dermo-Cosmétique, to amend their selective distribution contracts to allow internet sales.
29-10-2008 The Conseil de la concurrence issued decision No 08-D-25, finding that Pierre Fabre Dermo-Cosmétique's ban on internet sales in its distribution contracts violated competition law.
24-12-2008 Pierre Fabre Dermo-Cosmétique filed an action for annulment and, alternatively, for amendment of the contested decision before the cour d’appel de Paris.
18-02-2009 The first president of the cour d’appel de Paris ordered a stay of execution of the orders made by the Competition Authority against Pierre Fabre Dermo-Cosmétique.
29-10-2009 The cour d’appel de Paris referred a question to the Court of Justice of the European Union for a preliminary ruling regarding the legality of the internet sales ban in the selective distribution network.
10-11-2009 The Court of Justice of the European Union received the referral from the cour d’appel de Paris.
11-11-2010 The Court of Justice of the European Union held a hearing on the case.
03-03-2011 The Advocate General delivered an opinion on the case at a sitting of the Court.
13-10-2011 The Court of Justice of the European Union delivered its judgment, ruling that the internet sales ban was a restriction by object under Article 101(1) TFEU and not covered by the block exemption of Regulation No 2790/1999.