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What must online sales be allowed to do? – Recent decisions on online distribution restrictions

##1. General ban on sales via online marketplaces

Selling goods via online marketplaces has long been a thorn in the side of many manufacturers. Many online marketplaces still have the aura of – rightly or wrongly – being sold off and “flea markets”. Many manufacturers resort to selective sales in order to generally exclude online sales via dealer online shops or marketplaces. With little success.

A sporting goods manufacturer prohibited its dealers from selling via online marketplaces without exception as part of its selective sales system. In the opinion of the Federal Cartel Office, this results in serious restrictions on competition. In its press release of April 28, 2014, the Federal Cartel Office reiterated the clear legal position that manufacturers are allowed to select their dealers according to certain criteria and set quality requirements. However, the ban on using online marketplaces and price comparison portals serves to control price competition, which is simply not enforceable under antitrust law. Bans on using the manufacturer's brands on third-party websites or very differentiated sales systems with more than 20 dealer categories are also not covered by the exemption from antitrust bans (Federal Cartel Office, press release of April 28, 2014). The outcome of a case against another sporting goods manufacturer is still pending.

On June 5, 2014, the Schleswig Higher Regional Court (judgment, ref: 16 U (Kart) 154/13) made it clear that a brand manufacturer may not exclude the sale of its products via internet platforms as a whole. At the same time, the Schleswig Higher Regional Court confirmed that restrictions on online sales are only permissible as quality requirements within the framework of selective sales systems if these quality requirements do not go beyond those of stationary ones. Without such a selective restriction to certain sales partners, restrictions on online trading are inadmissible.

##2. Quality criteria within the framework of selective distribution systems

The KG Berlin also confirmed in its legally binding scout decision from September 2013 that quality characteristics for dealer selection are acceptable under sales antitrust law. However, it is necessary that they be applied without discrimination when selecting dealers and also when implementing the sales system. This is not the case if retailers are prohibited from selling via online marketplaces and the manufacturer offers the products in discount stores without restricting this to discontinued models (KG, judgment of September 19, 2013, 2 U 8/09).

In its case report dated October 24, 2013, Ref: B7-1/13-35, the Federal Cartel Office commented on another variant of prohibition clauses. There, dealers were allowed to sell the contract products via an online marketplace as a “third party”, but the criteria were so strict that the dealers' online sales were in fact significantly restricted. At the same time, however, the operator of this online marketplace was himself licensed as a dealer and therefore had his own online marketplace. The Federal Cartel Office has objected to this, so that the use of an online marketplace cannot be prohibited if the operator of this online marketplace is fully integrated into the manufacturer's electronic sales as a dealer. Such clauses should therefore be avoided or “repealed” by making it clear to retailers that the manufacturer will no longer rely on the relevant clause.

##3. Prohibition of the use of price comparison providers

According to the Federal Cartel Office's press release of April 28, 2014, as shown above, the ban on retailers from using price comparison providers also in itself represents an inadmissible core restriction of competition. The suspicion that price competition is intended to be controlled by such a ban lies near. Even without the connection to further restrictions on online sales, this clause is critical.

##4. Best price and price parity clauses

Price parity and best price clauses are also critical under antitrust law.

A leading operator of an online marketplace has imposed a price parity obligation on its users in its contractual clause. Afterwards, the retailers who used the online marketplace were obliged not to offer all products that were offered on this online marketplace online - i.e. either on other online marketplaces or in their own online shops. According to the Federal Cartel Office's case report, this represents a horizontal core restriction between competitors, which is neither essential for the efficiency of this specific online marketplace nor does it ensure appropriate consumer participation (Federal Cartel Office, case report B6-46/12 from November 26, 2013). There was already a lack of a vertical agreement across several market levels because the users and the operator were competitors. After a corresponding investigation by the Federal Cartel Office, the marketplace operator has given up its traders' obligation to so-called price parity.

The Federal Cartel Office also dealt with the best price clauses of a hotel portal (Federal Cartel Office, case report B9-66/10 from March 5, 2014). According to this best price clause, hotel companies were obliged to offer the lowest hotel room price, the highest possible room availability and the most favorable booking and cancellation conditions, including via the hotel portal. The Federal Cartel Office prohibited the implementation of this clause on December 20, 2013 because the hotel portal had a market share of over 30%, so that an exemption under the vertical BER was not possible. An individual exemption would also not be considered. In addition, there is an unfair hindrance to small and medium-sized hotel companies. The hotel portal lodged a complaint against this. Best price clauses are therefore critical when the market strength exceeds 30%. If the market share is below this, an exemption is at least not excluded according to the Federal Cartel Office's case report, because the Federal Cartel Office does not assume a core restriction in this respect.

##5. Double price system, here functional discounts for hybrid dealers

Some manufacturers avoid direct influence on their dealers' Internet presence. They therefore proceed indirectly by providing economic incentives for their dealers, for example in the form of functional discounts, to keep their sales via the Internet as low as possible.

A manufacturer of household appliances had introduced performance discounts in its annual agreements with specialist dealers who offered the household appliances both in stores and online (so-called hybrid dealers). These performance discounts were based on the manufacturer's selling price and were lower the more sales the specialist retailer achieved through its online shop. In the opinion of the Federal Cartel Office, this was economically a double price system prohibited by antitrust law: In a double price system, a retailer is granted different purchase prices economically, for example through different discounts. It therefore creates incentives for the respective specialist retailer to restrict the sale of household appliances via the Internet or not to do so at all. This represents an indirect restriction on Internet sales. Discounts may therefore not be linked to the differentiation between stationary retail and Internet retail (Federal Cartel Office, case report B7-11/13 of December 23, 2013).

A brand manufacturer of garden products had also introduced tiered functional discounts for its hybrid dealers. The discount depended on whether the respective product was sold to end customers in brick-and-mortar stores or in the retailer's online shop. The retailer could only achieve the full discount if it sold the product in brick-and-mortar stores. This is also a double price system that the Federal Cartel Office objected to (Federal Cartel Office, case report B5-144/13 from November 27, 2013).


Restrictions on online trading are permissible in the context of selective distribution if these are quality requirements that (i) correspond to those of stationary retail and (ii) the manufacturer himself observes. Restrictions are generally not permitted outside of selective distribution systems. This applies accordingly to platform bans. Other accompanying clauses such as best price or price parity provisions can be critical. This also applies to the ban on the use of price comparison portals.

Anwalt Gesellschaftsrecht und Handelsrecht

dr Andrelang, LL. M

Specialist lawyer for international business law

Specialist lawyer for commercial and corporate law


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