New sanction decision pronounced by the French Competition Authority for minimum advertised prices and online sales restrictions

Minimum advertised prices policy

Mobotix wholesale agreements required wholesalers not to advertise prices below the recommended resale prices (so-called “minimum advertised prices policies” or "MAP policies"). Mobotix also instructed its wholesalers to ensure that the resellers effectively complied with the minimum advertised prices.

A MAP policy differs from traditional resale price maintenance practices since pursuant to such MAP policies, the supplier does not prevent its resellers from selling below a minimum fixed price but only limits their ability to advertise prices below a certain price.

The Authority in this decision confirms that such practices are prohibited under French and EU competition law as they are considered as a form of indirect price fixing.

Indeed, resellers contractually bound not to display retail prices below the recommended resale price lose their commercial freedom to set prices and the ability to attract demand by advertising discounted prices. The Authority held that this type of clauses constitutes an infringement of competition by object as it limits or distorts price competition, regardless of the exact degree to which they were implemented.

This reminder is all the more important that this practice is not prohibited in all jurisdictions. For instance, under the US antitrust law, a MAP policy is considered licit if it only restricts the advertised price of a product but not its final sales price.

Internet sales restrictions

The Authority also held anticompetitive a set of clauses contained in the wholesaler’s agreement encouraging them to only select resellers which did not sell most of their products online.

The Authority rejected the two arguments raised to justify this practice:

• Firstly, the "pure players" exception allowing a supplier to require its distributors to have at least one physical outlet to be part of the distribution network was rejected as the exclusion did not only concerns resellers exclusively reselling online but also resellers having online sales “as their main activity”;
• Secondly, the exception allowing a supplier to require its distributors to sell at least a “certain absolute quantity of products offline” to ensure the proper functioning of the physical point of sale without limiting the share of online sales was rejected since the resellers excluded were those making most of their sales online, without reference to the requirement to sell a certain absolute quantity of products offline.

The full decision of the French Competition Authority is available here (in French).

For more information contact Thomas Oster and Claire Burlin.