The CNMC has accepted commitments offered by Adidas Spain ("Adidas") and closed the investigation that had been initiated in November 2018, following a complaint lodged by BCINCOPE (an Adidas franchisee), for an alleged infringement of articles 1 SCA and 101 TFEU in the Spanish retail market for clothing and footwear, consisting in the imposition of certain restrictions on Adidas' distribution network.
| what you need to know - key takeaways |
- The CNMC confirms its preference to use commitments to close a case when they are sufficient to address the anticompetitive concerns identified.
- The CNMC maintains its focus on vertical restraints.
- This case offers important insights for companies into how the CNMC will analyse traditional and more recent (such as online) forms of vertical restrictions.
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This case offers important insights for companies into how the CNMC will analyse traditional and more recent (such as online) forms of vertical restrictions. Although Adidas changed its contracts with distributors and franchisees over the years to adapt them to current rules and regulations, some of them were not updated, and it was in these ones in which the CNMC identified clauses, which it considered raised anticompetitive concerns, namely:
- Bans on online sales and advertising (e-commerce): some contracts prevented franchises from selling Adidas' products other than in physical point of sales; others obliged members of the distribution network to request a web URL authorisation to Adidas to sell online; and others prevented distributors from using Adidas' brand as a keyword in the paid results of search engines;
- Post-contractual non-compete obligations: some contracts contained a one year duration non-competition clause, which was considered by the authority to be overly broad as it generally prevented the franchisees from investing in any of Adidas' competitors. The prohibition was not limited to the premises in which the Adidas' franchisee carried out its activities (and so could not benefit from the exemption of article 5.3 b) of Regulation 330/2010);
- Bans on cross selling between franchisees and/or other distributors: some clauses obliged Adidas' distributors and franchisees to only acquire their products from the manufacturer, preventing them from contacting other members of the distribution network for this purpose. As a result, members were only allowed to sell their products to final consumers;
Allegations of resale price maintenance were also investigated, but no supporting evidence was identified by the CNMC.
In order to address the anticompetitive concerns identified by the CNMC in the non-updated contracts, Adidas offered to:
- clarify that Adidas authorises its distributors and franchisees to sell online, both through its own website or through marketplaces; the modification of the URL authorisation process; and to allow the use of Adidas brands as keywords in online advertising;
- remove the post-contractual non-compete clause; and
- clarify that cross-sales within its distribution network (between distributors and franchisees) are allowed (sales to non-authorised distributors being prohibited).
The CNMC considered that the commitments offered by Adidas addressed the concerns identified and that they met the procedural and material criteria established by the CNMC in its Notice on commitments (Comunicación de la CNC sobre terminación convencional de expedientes sancionadores).
This case offers important insights for companies into how the CNMC will analyse traditional and more recent (such as online) forms of vertical restrictions and into how the commitment procedure is applied in practice (see also AGIC GNSUR, MEDIAPRO FÚTBOL or SCHWEPPES cases).
With thanks to Teresa Prado of Ashurst for her contribution.
