1. CASE SUMMARY
A. Summary of facts
Tipp-Ex, a company active in correction products for documents, marketed its products throughout the EU and in a large number of non-EEC countries. In Germany, it sold its products to specialist traders, department stores, and two authorized dealers. In the other Member States, Tipp-Ex employed an exclusive distribution system with distributors located in France, Belgium, the Netherlands and the United Kingdom. The collaboration between Tipp-Ex and the exclusive distributors was mainly based on oral agreements.
Tipp-Ex took active measures towards its dealers and exclusive distributors to prevent parallel imports and exports. It made the supply of its dealers in Germany, and of its exclusive distributors dependent on the fact that they do not supply customers who are known to, or who are believed to, resell the goods in other Member States. Tipp-Ex required detailed proof of the identity of the recipients of goods supplied and conducted post-delivery checks. Tipp-Ex affixed a special country code to its products and requested an exclusive distributor to trace the source from which a parallel importer obtained Tipp-Ex products. Tipp-Ex exerted strong pressure on its dealers and exclusive distributors. It complained to its exclusive distributors about reimports at prices far lower than those charged locally, and stressed that this would have direct consequences for the dealer concerned.
When Tipp-Ex established that a dealer sold contract products in Germany, instead of a third country as agreed, Tipp-Ex terminated the commercial relationship. Moreover, Tipp-Ex imposed sanctions in order to prevent the exclusive distributors from supplying to known parallel importers. When the French exclusive distributor despite Tipp-Ex’ warnings continued to sell contract products to a known parallel importer, its exclusive distribution rights were withdrawn and transferred to a new distributor (the French subsidiary of Beiersdorf).
The French subsidiary of Beiersdorf was initially largely dependent on the parallel importer in question and for a while offered the same pricing conditions as the terminated exclusive distributor. Over time, it became less dependent on the parallel importer and rendered conditions for the parallel importer less attractive. The parallel importer complained that such behaviour was discriminatory.
As a consequence of the continued pressure by Tipp-Ex after its subsidiary had taken over the distributorship, Beiersdorf headquarters strongly urged its subsidiary to withdraw the special sales terms and to increase prices in order to prevent reimports.
B. Legal analysis
B.1 - Article 101(1) TFEU
Agreements and concerted practices
The restrictive measures which Tipp-Ex has taken in the exercise and on the basis of its contractual relations with its exclusive distributors and dealers in order to prevent parallel imports into Member States are an integral part of those agreements, since all parties adopted Tipp-Ex’s ideas regarding the mutual protection of territories. The Commission added that it was immaterial whether or not that business policy corresponded with the dealers’ own interests. This conduct amounts at least to a concerted practice within the meaning of Article 101(1) TFEU. (§48-50)
Restrictions of competition
The agreements and concerted practices (i.e. prohibition of sales to parallel importers; requiring detailed proof of the identity of the recipients of goods and conducting post-delivery checks; affixing a special country code to products and requesting to trace the source of parallel imported products) were considered to restrict competition as they were designed to prevent customers from exporting. In the case of the written agreements, this was clear from the wording of the agreement. In the case of the oral agreements, this was clear from the manner in which they have been implemented. (§51)
Notably, requiring detailed proof of identity of the final recipients of the goods and conducting post-delivery checks were considered means of ensuring absolute territorial protection. (§52)
The Commission stated that the restrictive measures which Tipp-Ex employed towards its dealers and exclusive distributors were a real obstacle to parallel trade, and therefore concluded that the agreements and concerted practices had not only as their object, but also as their effect an appreciable restriction of competition within the common market. (§59)
Tipp-Ex intentionally and effectively partitioned national markets contrary to Article 101(1) TFEU.
B.2 - Article 101(3) TFEU - no block exemption
Tipp-Ex’ exclusive distribution agreements did not qualify for an exemption under the block exemption applicable at the time (Regulation 67/67), as the agreements imposed on the parties obligations restrictive of competition which went beyond the restrictions that were permissible under Articles 1(1) and 2(1) of Regulation 67/67. Furthermore, according to Article 3(b), Regulation 67/67 did not apply in the case of agreements that were likely to limit the opportunities for intermediaries and final customers to obtain Tipp-Ex products in the common market. (§66)
The written authorized dealer contracts also did not fulfil the conditions to benefit from the block exemption as the provisions of the agreement aimed at conferring on the contracting parties extensive territorial protection which was not provided for in the Regulation. (§67)
B.3 - Article 101(3) TFEU – no individual exemption
The conduct did not meet the conditions for an individual exemption. In particular, there was no indication that restricting the opportunities for parallel trade was indispensable to the attainment of the objective of improving the distribution of goods. (§70)