On 27 August 2015, the German Federal Cartel Office (FCO) concluded its competition investigation into the online distribution system of Asics Deutschland, one of Germany’s leading athletics brands.
Under German and European competition law, manufacturers of branded products have a right to safeguard quality standards in the distribution of their products and impose requirements to this effect on their authorised dealers. However, these measures may not be allowed to excessively restrict small and medium-sized dealers in their ability to sell the products over the internet.
Such sales restrictions are likely to prevent consumers from enjoying the benefits of the availability of both offline and online sales. The FCO stated that a selective distribution system may not be used to eliminate a broad range of online offers and price reductions. In the present case, the FCO found the effect of Asics restrictions excessive and anti-competitive in nature.
Specifically; Asics prohibited its authorised online distributors from using the Asics brand name in their advertising, from participating in price comparison engines and tools, and from using prominent internet marketplaces and sports discount shops.
The repercussions of such strict limitations on online distribution can be highly detrimental to both distributors and consumers. Decreasing the sales opportunities of online distributors, for example by barring them from the use of major sales channels, jeopardises their very existence. This, in turn, reduces the consumer’s options of where they can shop and, in many cases, means that prices remain unchallenged. The FCO has been very clear that such market manipulation, aimed at leading consumers to buy directly from the manufacturer, will not be permitted.
Both the FCO and Asics Deutschland have since confirmed that Asics’ distribution policy has been amended and is now compliant with national and EU Competition laws. The EU Commission has also launched an inquiry into e-commerce and will be looking at various internet selling practices as well as the restrictions imposed by suppliers on their authorised distributors to prevent their use of on-line market places. The lead taken by the German authorities will no doubt be the subject of debate in the Commission’s investigation.