Introduction

A 2016 Celle Regional Court decision on a clear resale price maintenance case has been heavily debated because the court held that restrictions of competition by object can be compatible with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) if they have no potentially significant effects on competition (for further details please see "Does resale price maintenance infringe competition law?"). Some commentators have derived from the latest European Court of Justice (ECJ) case law that restrictions of competition by object (eg, resale price maintenance cases) are per se illegal and that there is no room to consider the potential effect on competition.

The Federal Supreme Court has since overruled the Celle Regional Court decision based on the merits of the case, leaving it open as to whether the potential effects on competition must be considered in resale price maintenance cases.(1) The Federal Supreme Court explicitly raised the question of whether resale price maintenance in rare cases can be compatible with Article 101 of the TFEU if it can have no significant effect on competition (eg, due to the limited scope of the agreement). In the end, the court left the question open and relied on its finding that in this case there was a significant effect on competition.

By raising the question of per se illegality (irrespective of the potential effect on competition) and leaving it open, the Federal Supreme Court made the lack of legal certainty in this area of law obvious. Practitioners can only hope that the Federal Supreme Court or the ECJ will offer some clear guidance in the near future.

Decision

Almased – a manufacturer of low-calorie diet food – offered pharmacies a discount on Almased's purchase price on the condition that they would not resell it below the resale price of €15.95. The rebate was available for up to 90 units per pharmacy and the pharmacies had one year to make use of the special offer. The discounted purchase price was offered to pharmacies only and not to other sales channels also used for Almased (eg, drugstores or online dealers). The case was brought to the civil courts by a consumer protection organisation, which argued that the minimum resale price condition violated competition law.

The Celle Regional Court focused on the limited order volume of 90 units per pharmacy and concluded that under such circumstances the offer was unable to have an appreciable effect on competition. The Federal Supreme Court, on the other hand, focused on the total number of units (up to 1.8 million) made available to pharmacies under the offer. It concluded that due to the high number of units covered, the minimum resale price condition could have a significant effect on competition.

The Federal Supreme Court considered its previous decisions, according to which maximum resale price agreements were considered to have no significant effect on competition if conducted for only a short promotion period. It concluded that minimum resale price agreements must be seen differently.

Comment

It is clear from the Federal Supreme Court decision that minimum resale price agreements bear a significant competition law risk, even if agreed for only a short promotion period and a limited number of products. Such agreements can avoid competition law only if concluded with a few customers. In these cases, it remains undecided whether the parties can escape the prohibition of Article 101 of the TFEU if the agreement can have no significant effect on competition. Ultimately, the Federal Supreme Court avoided answering whether restrictions of competition by object are covered by the cartel prohibition, even if due to their limited scope they can have no potentially significant effect on competition.

For further information on this topic please contact Nantje Johnston at CMS Hasche Sigle by telephone(+49 40 37 63 00) or email (nantje.johnston@cms-hs.com). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.

Endnotes

(1) The decision is available in German.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.