On 19 April 2016, the Frankfurt Court of Appeal referred important questions on selective distribution to the European Court of Justice ("ECJ"). The ECJ’s judgment, which isn’t expected until the end of 2017, at the earliest, will bring much needed clarity to one of the most debated antitrust issues in Europe, particularly in Germany.
The preliminary reference to the ECJ stems from a lawsuit between a manufacturer of luxury cosmetics and one of its authorised dealers. In essence, the Frankfurt Court of Appeal seeks guidance from the ECJ as to whether a manufacturer can prohibit its authorised dealers from using third party internet platforms for the sale of the contract goods. In addition, one question aims at clarifying the ECJ’s 2011 Pierre Fabre judgment, which could be interpreted to mean that maintaining the prestigious image of the contract goods is not a legitimate aim within the context of the Metrocase law – which would mean that an according distribution system would likely constitute a restriction of competition within the meaning of Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”) and would therefore require exemption under the Vertical Block Exemption Regulation ("VBER") or under Article 101(3) TFEU.
The following is a summary of the four questions referred by the Frankfurt Court of Appeal to the ECJ:
- Can a selective distribution system for the sale of luxury and prestigious goods, which primarily aims at maintaining the luxury image of the goods, fall outside of Article 101(1) TFEU?
- If the answer to question 1 is “yes”, can the selective distribution system also fall outside of Article 101(1) TFEU if the retailers are entirely prohibited from involving apparent third parties in internet sales, regardless of whether the qualitative standards of the manufacturer are missed in each particular case?
- Is Article 4(b) of the VBER to be interpreted to mean that a prohibition on retailers from involving apparent third parties in internet sales is a by-object restriction of the customers to whom the retailers may sell?
- Is Article 4(c) of the VBER to be interpreted to mean that a prohibition on retailers from involving apparent third parties in internet sales is a by-object restriction of passive sales to end users?