The Polish Competition and Consumer Protection Authority (Urząd Ochrony Konkurencji i Konsumentów, PCA) has fined pet food manufacturer Royal Canin Polska (RCP) and its five distributors for entering into an agreement restricting the mode and ways of distribution of RCP’s products. The fines amounted to PLN 3.2 million (€770,000) including a fine of PLN 2 million (€480,000) for Royal Canin Polska which, according to the PCA, initiated the agreement. The decision is not yet final and the companies have already lodged an appeal with the Court of Competition and Consumer Protection.
The PCA found that the above-mentioned companies agreed, via coordinated actions, to a scheme under which they limited distribution channels for RCP’s “Veterinary Diet” product by restricting sales only to bricks-and-mortar veterinary offices that do not offer sales through the Internet. According to the president of PCA, at a later date companies modified their practice by agreeing that products could only be distributed via resellers which ensured the supervision of veterinarians, therefore excluding also distribution through such outlets as veterinary technicians or veterinarian and zoological wholesalers.
During the course of the proceedings before the PCA, RCP argued that it was entitled to introduce the requirement of a prior consultation with veterinarians in order to ensure the safe and proper use of its products. According to the company, safe therapy and administration of Veterinary Diet products requires prior veterinary supervision, so RCP opted for a selective distribution system by choosing resellers on the basis of their qualifications and professionalism.
The PCA did not accept RCP’s position and stressed that dietetic feeds are not issued based on prescription and the applicable legislation places an obligation of safe therapy and correct use of products only on pet owners and not on the manufacturers. The President of PCA agreed that a prior consultation with a veterinarian may be advised by the pet food manufacturer; however, the choice of where to purchase should be solely the buyer’s decision.
Therefore, the PCA considered that restrictions limiting distribution channels by requiring a distributor to ensure supervision by a veterinarian were not necessary under applicable veterinary regulations. To the contrary, the president of PCA held that, under the same regulations, dietetic feeds may also be sold via remote communication means – for instance, through the Internet. In support of its argumentation, the President of PCA endorsed the conclusion presented in Pierre Fabre (C-439/09), a case in which the European Court of Justice refused to accept the justification that Internet sales of a product should be barred because a pharmacist was necessary to provide personal assistance to consumers about the product.
The RCP decision seems to be in line with the European Commission’s recent approach regarding online sales restrictions. Moreover, the case is already being called “the Polish Pierre Fabre case” and it certainly provides more guidance on the assessment of vertical agreements under competition law in Poland. The case also proves that regardless of the fact that most vertical cases in Poland concern resale price maintenance, the PCA is keen to diversify its enforcement priorities. With this decision as a precedent, further proceedings involving other markets cannot be far away. Therefore online distribution companies will have to double-check whether their agreements with resellers are in line with the recent decisional practice of the PCA, in particular by verifying if potential restrictions on online distribution stem from a legislative basis concerning specific products.
For more information please see this page. http://www.uokik.gov.pl/news.php?news_id=10856