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4 October 2021
0
Tipp-Ex (IV/31.192)

Jurisdiction

Jurisdiction:
Europe
Official language:
German

Case ID

(Judicial) Authority:
European Commission
Case number:
IV/31.192
Name of parties:
Tipp-Ex Vertrieb GmbH & Co KG (‘Tipp-Ex’) (Germany), Beiersdorf AG (Germany), Burotex SA (Belgium), Esveha-Rijam BV (The Netherlands) and Tipp-Ex (Leslie McLean) Limited (United Kingdom)
Date of decision:
10/07/1987

Information re: proceedings

Type of proceedings:
Decision on the merits
Instance:
Competition authority
Connected decisions:

Judgment: European Court of Justice 8 February 1990, no. C-279/87, in which the Court dismissed the application of Tipp-Ex for a declaration that the European Commission’s (‘Commission’) decision of 10 July 1987 is void.

Additional information:
Tipp-Ex was fined EUR 400,000 for actively partitioning markets from 1979 until 1982. Beiersdorf was fined EUR 10,000 because it was actively involved during the second half of 1982 in Tipp-Ex’s market-partitioning measures. However, the European Commission (‘Commission’) took into account that Beiersdorf played a subordinate role. The other exclusive distributors were not fined since they followed the policy pursued by Tipp-Ex only partially and with reluctance and only under considerable pressure.

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)

2. QUOTES

"As the Court of Justice has held in several judgments (cf., in particular, judgment of 25 October 1983 in Case 107/82 AEG-Telefunken, and Judgment of 17 September 1985 in Joined Cases 25 and 26/84 Ford-Werke), the conduct of an undertaking does not constitute a unilateral act outside the scope of Article [101 TFEU] where it forms part of the contractual relations between the undertaking and its dealers. An agreement was entered into between Tipp-Ex and its authorized dealers. All authorized dealers adopted Tipp-Ex's ideas regarding the mutual protection of territories and hence these became an integral part of the agreement. It is immaterial whether or not that business policy coincides with the dealers' own interests." (§49)

"The agreements and concerted practices restrict competition as they are designed to prevent customers from exporting." (§51)

"[…] Tipp-Ex has exerted strong pressure on individual dealers and in particular on […], threatening them with, and even imposing, sanctions in order to prevent them from supplying the complainant, ISA France, who was known to be a parallel importer. […] yielded at least partly to this pressure. Pressure was also brought to bear indirectly on the other exclusive distributors via an information campaign. They were meant to interpret Tipp-Ex's communications concerning the /ISA France cases as a serious warning not to sell to parallel importing or exporting dealers. The continuation of contractual relations between Tipp-Ex and the exclusive distributors Burotex, Esveha-Rijam and Tipp-Ex (Leslie McLean) is proof that these undertakings were prepared to accede to Tipp-Ex's wishes." (§52)

3. RELEVANT LEGISLATION

  • Article 101 TFEU
  • Regulation 67/67

4. RELEVANT LITERATURE

/

5. PRACTICAL SIGNIFICANCE

The Commission confirmed that:

  • unilateral conduct that forms part of a distribution agreement can be assessed on the basis of Article 101 TFEU;
  • the application of Article 101 TFEU is not affected by the fact that the relevant conduct does not coincide with the business interests of all the parties;
  • pressure not to engage in parallel trade restricts competition and is not eligible for an individual or block exemption. The case identifies a number of techniques to stop and monitor parallel trade: requiring proof of identity of recipients, post-delivery checks, affixing country codes to products, requiring distributors to trace sources of supply of products.

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