CJEU sharpens stance on active sales bans in exclusive distribution
15 May 2025
On 8 May 2025, in Case C-581/23 Beevers Kaas (Judgment), the Court of Justice of the European Union (CJEU) held that parties to an exclusive distribution agreement cannot rely on the mere absence of active sales by non-exclusive distributors in order to demonstrate that an exclusive distribution system fulfils the requirements of Article 4(b)(i) of the Vertical Block Exemption Regulation 330/2010 (2010 VBER).
What you need to know
- Article 4(b)(i) of the 2010 VBER permitted restrictions on "active sales" by distributors in the context of exclusive distribution agreements.
- The Beevers Kaas judgment confirms that, in order to satisfy the criteria under Article 4(b)(i), the supplier is required to protect the exclusive distributor from active sales by other resellers of that supplier (referred to as the "parallel imposition requirement").
- To demonstrate the existence of a prohibition on active sales by non-exclusive distributors, there must be an agreement between the parties (such as evidence of the supplier's invitation and the buyers' acquiescence to a restriction on active sales). The mere absence of sales by non-exclusive distributors into the exclusive territory is not sufficient.
Background
On 8 May 2025, in Case C-581/23 Beevers Kaas, the CJEU held that parties to an exclusive distribution agreement cannot rely on the mere absence of active sales by non-exclusive distributors in order to demonstrate that an exclusive distribution system fulfils the requirements of Article 4(b)(i) of the 2010 VBER.
The Vertical Block Exemption Regulation provides a widely-applicable safe harbour for vertical agreements from the EU prohibition on anticompetitive agreements (set out in Article 101 of the Treaty on the Functioning of the European Union (TFEU)), provided the parties have market shares of less than 30% on their respective markets and the agreement does not contain any "hardcore" restrictions of competition (see our June 2022 update).
Under the 2010 VBER, restrictions on the territory into which, or the customers to whom, a buyer may resell goods or services were considered to be "hardcore restrictions" that remove the benefit of the block exemption from the whole agreement. However, Article 4(b)(i) of 2010 VBER provided a limited exception for restrictions on active sales into a distributor's exclusive territory or exclusive customer group. Active sales include all online and offline sales related activities directly addressed to specific customers, including through targeted advertising and promotions tailored to the customers' location or language. In this context, the European Commission's 2010 Guidelines on Vertical Restraints (2010 Guidelines) state that a territory or customer group is exclusively allocated when the exclusive distributor is "protected against active selling into its territory or its customer group by all other buyers" (referred to as the "parallel imposition requirement").
The 2010 VBER and 2010 Guidelines have been replaced by the Vertical Block Exemption Regulation 2022/720 (2022 VBER) and the European Commission's 2022 Guidelines on Vertical Restraints (2022 Guidelines). In the 2022 VBER and 2022 Guidelines, the definition of "exclusive distribution system" (Article 1(1)(h)) has been updated to incorporate the parallel imposition requirement. However, the Judgment is still relevant to exclusive distribution agreements under the 2022 VBER and 2022 Guidelines (which have retained the exception for restrictions on active sales) and has practical implications for suppliers that have appointed exclusive distributors, including the steps that suppliers must take to ensure that restrictions on active sales meet the requirements of the 2022 VBER.
The action before the Belgian courts
The background to the dispute centres on the alleged breach of an exclusive distribution agreement for Beemster cheese in Belgium. Beevers Kaas, Cono's exclusive distributor in Belgium, started proceedings before the Antwerp Court claiming that the distributor Albert Heijn (a supermarket that purchased Beemster cheese for markets outside of Belgium) had violated its agreement with Cono by reselling Beemster cheese in Belgium, despite being aware that Beevers Kaas had been appointed as the exclusive distributor.
Importantly, the exclusive distribution agreement between Cono and Beevers Kaas did not include an explicit obligation mandating Cono to protect Beevers Kaas from active sales by other distributors. Similarly, Cono's agreements with its other distributors did not contain a parallel restriction seeking to prohibit those distributors from making active sales in Belgium. Accordingly, Albert Heijn argued that the exclusive distribution agreement did not meet the "parallel imposition requirement" under paragraph 51 of the 2010 Guidelines and therefore did not satisfy the requirements of Article 4(b)(i) of the 2010 VBER.
The Antwerp Court of First Instance sided with Albert Heijn and rejected Beevers Kaas' action. On appeal, Beevers Kaas claimed that it enjoyed parallel imposition protection because all of its other distributors had, at least tacitly, acquiesced to an active sales ban.
Faced with the question of how a supplier must communicate to its non-exclusive distributors that active sales are prohibited in the territory that has been appointed to an exclusive buyer, the Antwerp Court of Appeal referred the case for a preliminary ruling by the CJEU seeking clarification as to whether the mere absence of active sales by other buyers in the exclusively appointed territory is sufficient to meet the requirements of Article 4(b)(i) of the 2010 VBER.
CJEU confirms application of the 'parallel imposition requirement' under the 2010 VBER
The Judgment confirms that, in line with Advocate General Medina's opinion of 9 January 2025, the parallel imposition requirement (which was contained in the 2010 Guidelines) is a condition which needs to be met in order for an exclusive distribution system to benefit from the exception under Article 4(b)(i) of the 2010 VBER.
Consequently, in order to grant territorial exclusivity to a distributor (i.e., Beevers Kaas), this must be accompanied by an active sales ban by the supplier (i.e., Cono) imposed on its other distributors (such as Albert Heijn) to protect the exclusive distribution rights of its exclusive buyer vis-à-vis all its other buyers.
As noted above, under the 2022 VBER, the definition of "exclusive distribution system" (Article 1(1)(h)) has been updated to incorporate the parallel imposition requirement.
The parallel imposition requirement must satisfy the conditions of an "agreement"
When assessing whether the parallel imposition requirement was met, the CJEU found that it was necessary to consider the concept of an "agreement" within the meaning of Article 101 TFEU, which requires proof that the parties expressed their joint intention to conduct themselves on the market in a specific way. In this context, the CJEU referred to its recent ruling in Super Bock (Case C-211/22), which found that whilst a purely unilateral policy of one party cannot form the basis of an "agreement", conduct which is apparently unilateral can qualify as an agreement if such conduct is an expression of the parties' "concurrence of wills".
Accordingly, and following the CJEU's approach in Super Bock (which concerned the application of resale price maintenance), the CJEU held that the existence of a parallel requirement to restrict active sales in the exclusive territory allocated to an exclusive distributor may be shown via either:
an express restriction on active sales in distribution contracts between the supplier and buyers who do not benefit from territorial exclusivity; or
the explicit or tacit acquiescence by non-exclusive buyers to an invitation from that supplier not to make those sales.
In other words, the party relying on the active sales ban exception must provide, based on objective and consistent indicia, proof of the combination of the existence of suppliers' invitation and buyers' acquiescence.
To that effect, the CJEU's ruling clarifies that:
such an invitation can encompass various forms of communications by a supplier to its non-exclusive distributors requiring them to respect an exclusive territory, such as a communication that refers to a specific clause or requirement stipulated in the supplier’s general terms and conditions; and
the absence of active sales by non-exclusive distributors is not sufficient to demonstrate the existence of an "agreement" (even if such distributors may have been aware of the exclusively allocated territory).
Finally, the CJEU ruled that the benefit of the exception under Article 4(b)(i) of the 2010 VBER is granted for the period for which the party relying on that provision can show the existence of a concurrence of wills between the supplier and its buyers to restrict active sales in an exclusive territory or customer group.
Implications for businesses
The Judgment has important implications for parties to distribution agreements that seek to benefit from the exception that applies to active sales bans under Article 4(b)(i) of the 2022 VBER (which has replaced the 2010 VBER), as failing to satisfy the requirements of that provision will likely mean that the restriction on active sales falls to be scrutinised under Article 101 TFEU.
In particular, a supplier that appoints an exclusive distributor must undertake positive actions vis-à-vis its other distributors to ensure not only their awareness, but also express acknowledgment, of the requirement to comply with a restriction on active sales into the exclusive distributor's territory. The simplest means to comply with this requirement would normally involve the insertion of an active sales prohibition in the distribution agreements with non-exclusive distributors. However, for agreements that are already in place, the Judgment provides important guidance on the other types of communications that may be sufficient to demonstrate the acquiescence of other distributors, provided that the supplier can prove that its non-exclusive distributors were genuinely made aware of the exclusivity requirement and have accepted it.
Additionally, the mere absence of sales into an exclusively allocated territory is not sufficient to demonstrate the existence of an agreement that prohibits active sales. However, this may constitute "a relevant element" in combination with other indicia, such as the existence of a system of monitoring and penalties established by a supplier to penalise distributors that do not comply with the ban on active sales.
The ruling of the Belgian referring court (which now needs to ascertain whether Cono’s other distributors expressly or tacitly acquiesced to a possible invitation from that supplier to restrict active sales) will provide further practical examples of the conduct that may (or may not) be deemed sufficient to demonstrate the existence of an active sales ban in the context of an exclusive distribution agreement.
