In another case on the freedom of German internet distributors, German brass ware manufacturer Dornbracht has been ordered to pay €820,00 to home ware electronic retailer Reuter over the terms of the brass ware manufacturer’s online distribution policy.
Dornbracht’s distribution policy (in the form of a rebate scheme) was said by Reuter to be discriminatory to internet sellers by allowing wholesalers an extra discount for goods sold to bricks and mortar sellers. Reuter were successful in its case and the Intermediate Court of Appeal in Dusseldorf awarded them damages of €820,000. The Court did not believe that Dornbracht’s original justification that the bricks and mortar sales were offering a higher level of customer service was permissible under competition law. The policy amounted to a discrimination against internet sales and was therefore a hardcore restriction under the Vertical Agreements Block Exemption Regulation 2010.
Of special significance in this case is the fact that Dornbracht removed the offensive pricing policy from its distribution agreement following intervention from the German Cartel Office in 2011. No fine was issued and no formal decision reached as Dornbracht gave up the policy voluntarily. The current case brought by Reuter is a private litigation case to recover the historical damage caused to them between 2008 and 2011 by the policy. The case is also of interest in that Reuter were successful in their claim for compensation without a formal regulatory decision against Dornbracht.
The case follows other recent German cases where courts and regulators have taken a dim of restrictions against third party platforms such as Ebay. These cases were first reported here. Suppliers throughout the EU but particularly in Germany are advised to continue to review their distribution agreements to ascertain that third party marketplaces and other electronic retailers are not unduly discriminated against. This latest case is adding to the growing chorus of court disapproval of such measures.