Companies are constantly entering into agreements to organise their activities: supply contracts, distribution agreements, technological partnerships, etc. These practices, which are at the heart of the freedom of competitionHowever, even if most of these collaborations are beneficial and legitimate, they can cross the yellow line and fall under the ban on anti-competitive agreements. With the Internet facilitating the exchange of information and coordination between economic players, the risks of collusion can be increased, while new forms of restrictions are appearing in commercial relations, all of which can have a negative impact on competition. major challenges for competition law on the internet.
Understanding where the boundary lies between a legitimate commercial agreement and a prohibited practice is fundamental for any business operating online. The rules, stemming from European law (Article 101 of the Treaty on the Functioning of the European Union) and French law (Article L. 420-1 of the French Commercial Code), aim to preserve healthy competition for the benefit of consumers and other businesses. This article explores the main forms of horizontal agreements (between competitors) and vertical restrictions (between suppliers and distributors) that can pose problems in the digital environment.
Horizontal agreements in the digital age
Horizontal agreements, concluded between competing companies operating at the same economic level, are generally considered to be the most serious restrictions on competition. The Internet can unintentionally facilitate or amplify some of these practices.
Exchanges of sensitive information
Online platforms, professional forums or even simple instant messaging can become places where competitors exchange strategic information (future prices, commercial strategies, production volumes, costs, etc.). If such an exchange reduces market uncertainty and enables companies to align their behaviour, it may be classified as an agreement by object, i.e. prohibited in itself, even without proof of a negative effect on the market. Caution is therefore called for: the information exchanged must remain public or be sufficiently aggregated and dated so as not to reveal a competitor's individual strategy. B2B marketplaces must be particularly vigilant about the confidentiality of data passing through their systems, as the European Commission emphasised in the case. Strict technical and organisational measures (partitioning, dedicated staff, etc.) are needed to prevent the platform from becoming a vehicle for collusion..
Platform control and the risk of exclusion
When several competitors join forces to create or manage a platform (marketplace, reservation system, etc.), there may be a risk of anti-competitive exclusion, sometimes akin to "collusion". abuse of a dominant position on the internet. If the platform becomes essential for operating on a given market, its owners could be tempted to deny access to other competitors or impose discriminatory conditions, thereby distorting competition to their advantage.. The analysis will depend on the structure of the market and whether or not the platform is indispensable..
Boycotting online competitors
Traditional companies may be tempted to organise themselves to slow down the development of a "pure player" competitor (selling exclusively online) deemed to be too aggressive in terms of prices or commercial methods. This can take the form of a concerted boycott, for example by putting pressure on a common supplier to stop supplying the online competitor, or by threatening to reduce their own orders.. Such practices have been condemned, notably in the United States in the automobile sector, where traditional dealers put pressure on Chrysler to limit its sales to an online distributor.or in Germany for an online distributor of spare parts. A concerted boycott is a serious infringement of competition law.
Agreements on prices or conditions of sale
The most common form of agreement is direct or indirect price fixing. The Internet can make it easier to monitor competitors' prices, increasing the temptation to agree to keep them at a certain level. The case of the single book price in Germany illustrates how a system of fixed prices, even potentially legal at national level, can come into conflict with European competition law when applied to cross-border sales via the internet.. The European Commission intervened to ensure that this system did not partition the market and prevent German consumers from buying cheaper books on foreign websites..
Vertical restraints specific to e-commerce
Vertical restraints are those contained in agreements between companies located at different levels of the production or distribution chain, typically between a supplier and its distributors. While they may sometimes be justified (to protect investments, ensure a quality service, etc.), they must not excessively restrict competition. European law has put in place a specific framework, in particular through the Block Exemption Regulation (BER) 2022/720 and its Guidelines.which is largely applicable to e-commerce.
The general framework: a conditional safety zone
The general principle of the BER is to automatically exempt from the prohibition of Article 101 TFEU vertical agreements entered into by undertakings whose market share (that of the supplier and that of the buyer) does not exceed 30%.. This exemption provides an appreciable 'safety zone'.
However, this exemption does not apply if the agreement contains certain so-called "hardcore" restrictions, considered to be particularly harmful. Furthermore, even below the 30% threshold, certain specific clauses may be excluded from the benefit of the exemption. This is the case for several Internet-related practices.
Active sales vs. passive sales: the freedom to sell online
A fundamental distinction is made between "active sales" (targeted solicitation of customers in a specific territory or group of customers) and "passive sales" (response to unsolicited requests from individual customers).. A supplier may prohibit its exclusive distributors from making active sales outside their designated territory or customer base, but it may not never prohibit passive sales.
However, the European Commission considers that the operation of an online shop is by nature a form of passive selling. Even if the site attracts customers outside the distributor's contract territory, fulfilling their orders (including by delivering them) is passive selling and cannot be prohibited.. Simply prohibiting online sales to a distributor is therefore tantamount to prohibiting passive sales, which constitutes a hardcore restriction..
Be careful, however: certain online actions can be reclassified as active sales. For example, using advertising banners or referencing specifically targeting customers in another territory, or offering a site in a language specifically used in that territory (with the exception of English, which is considered to be widely understood throughout the EU) may be seen as active canvassing..
Selective distribution and the internet: quality vs. exclusion
In a selective distribution network (where distributors are chosen according to qualitative criteria, typical for luxury or technical products), can the supplier restrict online sales?
The supplier can impose quality criteria on its authorised distributors for their website, just as it would for a physical shop. These criteria must be objective, non-discriminatory and proportionate to the objective of preserving the brand image or quality of service (e.g. presentation of the site, quality of online advice, after-sales service).. The Autorité de la concurrence has approved such criteria, while ensuring that they are not so excessively restrictive as to render online sales meaningless (e.g. refusal to require a dedicated site or excessive limitations on orders)..
However, the supplier may not not impose conditions for online sales that are not broadly equivalent to those imposed for offline sales. The requirements may differ to take account of the specific nature of the Internet, but they must pursue the same objectives and achieve comparable results..
One sensitive issue is the ban on selling via third-party platforms (marketplaces). If the qualitative criteria can be met by the platform or by the seller on the platform, an absolute ban on using these platforms may be considered an excessive restriction..
Similarly, while a supplier may require its authorised distributors to also have a physical shop ("brick and mortar"), thereby excluding "pure player" sellers, it cannot generally prohibit an authorised distributor (who has a shop) from selling also online.
Pricing: fixed prices and "double pricing
Imposing a minimum or fixed resale price on distributors is a hardcore restriction, prohibited regardless of market share.. Price transparency on the Internet can make it easier for suppliers to monitor prices and increase the temptation to impose price floors.. The Autorité de la concurrence has sanctioned such practices, for example in the tableware sector, where a manufacturer used an "Internet Charter" to encourage its online retailers to comply with recommended prices..
Another practice is "dual pricing": the supplier charges the same distributor a different wholesale price for products intended for resale online and for those intended for resale in shops. This practice is considered a hardcore restriction if it has the object or effect of restricting online sales or limiting the distributor's ability to sell in certain territories.. However, it may exceptionally be justified and benefit from an individual exemption if the supplier can demonstrate that the price difference is objectively necessary to compensate for differences in investment or costs between the online and offline channels, and that it is proportionate.. Analysis is carried out on a case-by-case basis.
Parity clauses: the example of Booking.com
Parity clauses (or "most favoured nation" clauses) are common on online intermediation platforms (hotels, comparison services, etc.). A "broad" parity clause obliges a seller (e.g. a hotel) to offer the platform conditions (price, availability, etc.) that are at least as favourable as those it offers on its own website. all its other distribution channels, including its own direct channels (website, telephone) and competing platforms.
These broad clauses are considered problematic because they can reduce competition between platforms (by preventing a platform from offering better commissions in exchange for lower rates) and limit the seller's ability to differentiate its offers, particularly on its own site.. The exemption regulation now excludes from its scope wide parity clauses imposed by platforms on user companies for retail sales.. Restricted" parity clauses (which do not prevent the seller from offering better conditions than on its direct channels) are generally accepted. The Booking.com case, in which several European authorities, including the French Competition Authority, intervened to have the broad parity clauses changed, is a good illustration of this problem..
The special case of the automotive sector
Motor vehicle distribution has long benefited from a specific exemption system, but is now largely aligned with the general system of vertical restrictions.. The rules explicitly confirm the right of dealers to use the internet to sell vehicles, including via referral sites.. The manufacturer may impose quality standards for the dealer site, but may not prohibit its use for sales..
To sum up, while vertical agreements are a normal part of doing business, their content must be carefully examined in the light of competition rules, especially when they relate to online sales. The fundamental freedom of a distributor to respond to passive requests via the internet and to set its prices freely must be preserved.
The agreements you conclude for your online activities may involve risks in terms of competition law. To help you secure your contracts and commercial practices, our firm can provide you with a specialist legal advice.
Sources
- Article 101 of the Treaty on the Functioning of the European Union (TFEU)
- Article L. 420-1 of the French Commercial Code
- Commission Regulation (EU) No 2022/720 of 10 May 2022 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices
- Commission notice - Guidelines on vertical restraints (2022/C 248/01)
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