The European Commission has opened a formal antitrust investigation into clothing manufacturer and retailer Guess, whose distribution agreements and practices may illegally restrict retailers from selling cross-border to consumers within the EU Single Market. The investigation follows on from a recent report by the Commission on the e-commerce sector, where it was found that more than 1 in 10 surveyed retailers experienced cross-border sales restrictions in their distribution agreements, limiting their ability to sell online to customers in other Member States.
Whilst companies are generally entitled to set up a distribution system that best suits their needs, the systems must comply with EU competition rules. In particular, consumers must be free to purchase from any retailer authorised by a manufacturer, including retailers across national borders. The agreements under investigation may breach EU competition rules which prohibit agreements between companies that prevent, restrict or distort competition within the EU's Single Market, which could result in invalidity of the agreement and/or a regulatory investigation and potential fines.
DLA Piper’s retail lawyers have been advising a range of FMCG clients in relation to the Commission’s sector inquiry and more generally on distribution strategies for the EEA and monitoring national and EU case law as it is being developed. For further information on the issue please contact the authors.