On 5 April 2017, the Düsseldorf Higher Regional Court (the "Court") handed down its highly anticipated decision against sports equipment manufacturer ASICS. The Court has confirmed the decision of the German Federal Cartel Office ("FCO") against ASICS in 2015, in which the FCO ruled that ASICS's selective distribution system in relation to running shoes infringed EU and German competition law.
Until early 2015, ASICS operated a selective distribution system in Germany which prohibited its authorised retailers from:
- using the ASICS brand name as a key word in Google Adwords;
- using the support of price comparison websites through setting up application-specific interfaces; and
- selling or advertising ASICS products via online marketplaces.
In its decision, the FCO ruled that the prohibitions on the use of brand names and price comparison websites constituted hard-core restrictions of competition by object. Therefore, the FCO concluded that these restrictions did not qualify for exemption from the prohibition provided for under Article 101(1) of the Treaty on the functioning of the EU on the basis of the European Commission's so-called "Vertical Agreements Block Exemption Regulation".
In its decision, the FCO did not reach a conclusion on whether ASICS's restriction on selling or advertising products via online marketplaces amounted to an infringement of EU and/or German competition law since, according to the FCO, it was able to find the entire distribution system unlawful separately on the basis of each restriction on the use of the ASICS brand name and the restriction on the use of price comparison websites.
The Court has now confirmed the FCO's findings that the general prohibition on the use of price comparison websites constitutes a hard-core restriction of competition by object which is not exemptible. This restriction deprived retailers of advertising and sales opportunities and could not be justified on the grounds of protecting the company's brand image and/or the need for pre-sale services. As regards the protection of the company's brand image, according to the Court, consumers are capable of distinguishing between the presentation of brands on price comparison websites and the presentation of brands by manufacturers and their authorised distributors. Thus, the prohibition on the use of price comparison websites is not necessary to protect the company's brand image. As regards pre-sale services, the presiding judge pointed out that consumers of running shoes do not necessarily need or want such services, or if so, could obtain the necessary services via alternative means such as the Internet.
The Court did not have to decide on the legality of the other restrictions found in ASICS's distribution system (i.e. the restriction on the use of Google AdWords and the sale of products via online marketplaces), as the general prohibition on using price comparison engines already led to the unlawfulness of ASICS's distribution system.
As regards the ban on using online marketplaces, a similar case is pending before the Court of Justice of the EU ("CJEU"). In that case, the Frankfurt Higher Regional Court asked the CJEU for a preliminary ruling on whether perfume manufacturer Coty's selective distribution system, which banned retailers from selling its products through online market place Amazon, constitutes an infringement by object.
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