S-Markt & Mehrwert v AIDA Cruises (14d O 14/22)

1. CASE SUMMARY

A. Summary of facts

The claimant, S-Markt & Mehrwert, operates customer loyalty programmes under which consumers receive reimbursements when purchasing certain products or services. One of the claimant’s business activities concerns travel mediation services. The defendant, AIDA Cruises, offers cruise holidays and cooperates with travel agencies for the distribution of its products. The parties concluded an agency agreement under which the claimant promoted the defendant’s cruises in exchange for commission payments. As part of its business model, the claimant returned part of the commission received to its customers.

The agency agreement prohibited this practice. In particular, Clause 3(c) required the claimant to advertise only with prices made available to the public and prohibited it from promising or granting customers discounts, rebates, or other monetary benefits without the defendant’s prior consent. Clause 3(j) further prohibited the claimant from arranging bookings in a manner that granted third parties a monetary advantage. Despite these provisions, the claimant continued to offer loyalty programmes involving commission reimbursements. The defendant subsequently issued a warning letter and ultimately terminated the agreement. The claimant challenged the validity of the termination, arguing that the relevant contractual provisions infringed competition law.

B. Legal analysis

The Regional Court of Düsseldorf held that the contractual prohibition on passing on commission to customers infringed Section 1 of the Act against Restraints of Competition (‘ARC’), which is interpreted consistently with Article 101 TFEU. According to the court, the clause amounted to a form of resale price maintenance because it prevented intermediaries from freely competing through the sharing of part of their commission with customers.

B.1 - Applicability of Article 101 TFEU to commercial agents

The court first examined whether the claimant qualified as a ‘genuine’ commercial agent. Genuine commercial agents are generally considered part of the principal’s economic organisation, meaning that restrictions imposed on them fall outside the scope of Article 101 TFEU. Although the claimant bore only limited financial and economic risks, the court found that this alone was insufficient to establish genuine agency.

Referring to the European Court of Justice’s (‘ECJ’) judgment in Case 311/85, the court emphasised that, where intermediary services are concerned, the commercial agent must also be integrated into the principal’s distribution system. The decisive question was therefore whether the contested contractual restriction affected the market for cruises or the separate market for intermediary services.

The court concluded that the prohibition on commission reimbursements primarily affected competition between intermediaries. By preventing intermediaries from surrendering part of their commission to customers, the clause eliminated an important parameter of price competition in the intermediary services market. In contrast, it did not directly affect the cruise products themselves, since reimbursing a commission did not alter the contractual relationship between AIDA Cruises and the end customer.

Because the restriction targeted the intermediary services market rather than the product market, the claimant could not be regarded as sufficiently integrated into the defendant’s distribution system. The court further noted that the claimant acted as an intermediary for numerous principals, reinforcing its independent market position. Consequently, the commercial agent privilege did not apply and Article 101 TFEU was applicable.

B.2 - Restriction of competition and absence of exemption

The Regional Court of Düsseldorf held that the clause at issue infringed Section 1 ARC and Article 101 TFEU because it led to price maintenance, thereby restricting competition. The court further noted that, under German competition law, such a restriction must be appreciable. According to the court, that requirement was fulfilled in the present case, since price maintenance constitutes an intended restriction of competition for which appreciability is presumed.

The court further found that the restriction could not benefit from an exemption under Regulation 2022/720 (the Vertical Block Exemption Regulation or ‘VBER’). It considered the prohibition on commission reimbursements to constitute a hardcore restriction within the meaning of Article 4(a) VBER, since it effectively restricted the intermediary’s ability to determine its own resale price. As a result, the clause could not benefit from the VBER safe harbour.

2. QUOTES

“The commercial agent privilege is based on the idea that the application of Section 1 ARC (and Article 101(1) TFEU) to vertical agreements is intended to protect the freedom of competition of companies on the market, but not to regulate internal company hierarchies […]. When engaging sales agents, a distinction is therefore generally made between 'genuine' and 'non-genuine' commercial agents: Genuine commercial agents are functionally part of the hierarchy of a company. Instructions issued to them are therefore to be understood as internal company instructions to which Section 1 ARC and Article 101(1) TFEU are not applicable. In contrast, non-genuine commercial agents are not sufficiently integrated into the hierarchy and are therefore to be classified as companies operating independently on the market within the meaning of Section 1 ARC, Article 101(1) TFEU. Accordingly, the European Commission also states that Article 101 TFEU only applies to agreements between two or more companies and that the relationship between a commercial agent and a principal can, under certain circumstances, be classified in such a way that the commercial agent no longer acts as an independent market participant […].” (free translation of §50)

“In the case of regulations concerning the market for intermediary services, the applicability of the so-called commercial agent privilege requires a separate element of 'integration' of the sales agent into the distribution system.” (free translation of §68)

“The prohibition on passing on commission concerns the market for intermediary services, since - as the ECJ has already correctly observed […] - it restricts competition between intermediaries by preventing them from 'engaging in price competition through voluntarily passing on part of their commission to customers.' […] In contrast, the product market is not directly affected by the ban on passing on commission. […] However, this must be distinguished from the prohibition contained in the same provision of the agency agreement to promise or grant the customer benefits of monetary value, i.e. the prohibition to pass on commission. A reimbursement to the customer does not affect the content of the contract between the customer and the defendant […].” (free translation of §74 f.)

“There is also no case of a so-called block exemption, for which Section 2(2) ARC refers to the block exemption regulations of the European Union. The exemption of vertical agreements is governed by Regulation 2022/720 […]. According to Article 4(a) Vertical Block Exemption Regulation, agreements that restrict the customer's ability to determine its own sales price constitute so-called hardcore restrictions. Therefore, the prohibition of passing on commissions also constitutes an inadmissible hardcore restriction […].” (free translation of §86)

3. RELEVANT LEGISLATION

• Section 1 ARC
• Article 101 TFEU
• Regulation 2022/720

4. PRACTICAL SIGNIFICANCE

The judgment provides a detailed application of the commercial agent privilege in circumstances where restrictions affect the market for intermediary services rather than the underlying product market. Building on the ECJ’s case law, the court clarifies that commercial agents must not only bear limited risks but must also be sufficiently integrated into the principal’s distribution system to fall outside the scope of Article 101 TFEU. The case further illustrates that prohibitions on commission reimbursements may constitute resale price maintenance and qualify as hardcore restrictions under Article 4(a) VBER.