Hugo Boss, Kaufmann and Ginsborg v Danish Competition and Consumer Authority (KL-1-2020, KL-2-2020 and KL-3-2020)

1. CASE SUMMARY

A. Summary of facts

This case concerns an unlawful exchange of information in a dual distribution scenario.

Hugo Boss Nordics is a supplier of Hugo Boss apparel, selling the clothing both directly and through independent distributors. Kaufmann and Ginsborg are such independent distributors.

Over a period from January 2014 to November 2017 resp. December 2014 to April 2018, Hugo Boss Nordics exchanged information on prices, discounts and volumes in relation to future sales on the retail market with Kaufmann and Ginsborg.

The Danish Competition Appeals Tribunal considered that the exchange of information also concerned Hugo Boss Nordics’ retail business rather than only its wholesale business, rendering the exchange an unlawful exchange of sensitive information between competitors. The Danish Competition Appeals Tribunal thereby upheld the decisions of the Danish Competition Council.

B. Notes on case history

On 24 June 2020, the Danish Competition Council decided that Hugo Boss Nordics, Kaufmann and Ginsborg had entered into an unlawful exchange of information on prices, discounts and volumes, contrary to Section 6 of the Danish Competition Act and Article 101(1) TFEU.

The Danish Competition Council found that the concerted practice was horizontal and therefore the practice did not fall within the scope of the block exemption regulation for vertical agreements. The concerted practice also did not fulfil the conditions for individual exemption under Section 8(1) of the Danish Competition Act or Article 101(3) TFEU.

Hugo Boss appealed the decision to the Danish Competition Appeals Board on 22 July 2020.

C. Legal analysis

The Danish Competition Appeals Tribunal first assessed whether the relevant information exchanges constituted a ‘vertical agreement’ in accordance with Article 1(a) of the (then applicable) Commission Regulation 330/2010, analyzing whether the conduct concerned the conditions under which the parties could purchase, sell or resell the products from Hugo Boss. The Tribunal decided that the information exchange was horizontal rather than part of the parties' vertical relationship. Although Article 2(4) of Regulation 330/2010 did provide a block exemption for some dual distribution scenario’s, the exchanges at hand could therefore not be block exempted.

The Tribunal went on to assess whether the relevant information exchanges should be considered as "by object" infringements of competition. The majority opinion ruled that, since the information exchanges concerned prices, discounts and volumes in relation to future sales on the retail market where Hugo Boss Nordics, Kaufmann and Ginsborg were actual competitors, such exchange was decided to constitute a restriction by object.

The Danish Competition Appeals Tribunal therefore upheld the decisions of the Danish Competition Council, finding that the exchange of information on prices, discounts and volumes in relation to future sales on the retail market constituted a competition law infringement by object in violation of Section 6 of the Danish Competition Act and Article 101(1) TFEU.

2. QUOTES

"The information forwarded by Hugo Boss was not of a nature or a content that concerned Hugo Boss’ business as a supplier. On the contrary, the information clearly concerned Hugo Boss’ retail business. It was therefore not information usually disclosed by a supplier to a buyer in connection with purchase or distribution agreements regarding resale of Hugo Boss’ products, but an exchange of information between competitors." (free translation)

"For the very reason that the concerted practice had an effect between competitors at the same level of trade and did not concern the conditions on which the parties could purchase, sell or resell clothes from Hugo Boss, it is not a vertical agreement covered by the block exemption of Regulation 330/2010, cf. Article 2(4)(a), cf. Article 1(1)(a)." (free translation)

3. RELEVANT LEGISLATION

• Section 6 of the Danish Competition Act
• Article 101 TFEU
• Regulation 330/2010
• Regulation 2022/720
• Vertical Guidelines

4. PRACTICAL SIGNIFICANCE

The case reminds suppliers selling goods or services both directly and through independent distributors, thereby competing with these independent distributors on the downstream market, to carefully consider the type of information exchanged with distributors.

As was the case under Regulation 330/2010 (the former vertical block exemption regulation), Article 2(4) of Regulation 2022/720 provides a block exemption for certain dual distribution scenario’s. The conditions under which information exchange in dual distribution scenario’s may also be block exempted, are now covered specifically in Article 2(5) of Regulation 2022/720.

The new Vertical Guidelines, as adopted under Regulation 2022/720, also provide further guidance on information exchange in dual distribution scenario’s. Paragraph 99 of the Vertical Guidelines provides a non-exhaustive list of examples of information that may, depending on the particular circumstances, be directly related to the implementation of the vertical agreement and necessary to improve the production or distribution of the contract goods or services. Paragraph 100 of the Vertical Guidelines holds examples of information that is generally unlikely to fulfil the two conditions set out in Article 2(5) of Regulation 2022/720 when exchanged between a supplier and a buyer in a dual distribution scenario.