Antitrust Law Daily Wrap Up, ANTITRUST NEWS: German competition authority finds ASICS unlawfully restricted online sales of running shoes, (Aug 27, 2015)

By Michael Menzhuber, J.D., LL.M.

The Bundeskartellamt, the German competition authority, has concluded its proceeding on anti-competitive clauses in ASICS Deutschland’s distribution system. ASICS, which is accused of having restricted the online sales activities of small and medium-sized authorized dealers, can appeal the Bundeskartellamt's declaratory decision to the Düsseldorf Higher Regional Court. In the meanwhile, however, it has amended the clauses that were objected to, according to the authority’s announcement.

ASICS has, in the past, prohibited its dealers from using price comparison engines for their online presence and from using ASICS brand names on the websites of third parties to guide customers to their own online shops. In the Bundeskartellamt's view, this prohibition primarily served to control price competition in both online and offline sales and created the risk that: (1) small and medium-sized distributors, in particular, would not be able to compensate for the loss of reach resulting from this prohibition; and (2) consumers would be prevented from enjoying the benefits of the availability of both offline and online sales.

ASICS, the market leader for running shoes in Germany, selects its authorized dealers according to strict quality criteria, as part of its "selective distribution." However, a selective distribution system may not be used to eliminate the broad range of online offers and the ensuing price reduction trends. German and European competition law does permit manufacturers of branded products a broad scope to safeguard quality standards in the distribution of their products and impose requirements to this effect on their authorized dealers. However, such measures may not be allowed to restrict small and medium-sized dealers, above all, in their ability to sell the products also over the Internet.

The Bundeskartellamt also expressed concern that the distributors were prohibited, without exception, from using online marketplaces such as eBay or Amazon. However, no decision had to be taken on this point in view of the other online restrictions which have proved to be anti-competitive.

The Bundeskartellamt's decision is intended to initiate a process of discussion, also at the European level, on the assessment under competition law of the prohibition of the use of online marketplaces and other restrictions of online sales. Numerous complaints from distributors about the conditions for online sales set by brand manufacturers have been received by the competition authorities. The European Commission's current sector inquiry into e-commerce may also provide further insights on this issue and further decisions by the authorities or the courts are expected.

Companies: ASICS Deutschland

News: Antitrust FranchisingDistribution