Full Speed Ahead: German Court Says ASICS Can’t Block Dealers from Using Price Comparison Engines
The German Federal Court of Justice recently upheld a finding by Germany’s national competition authority that sporting goods company ASICS cannot prohibit its dealers from using online price comparison engines. The court found that per se prohibitions on the use of price comparison engines that are not linked to quality requirements violate EU law. The court indicated that some restrictions on online sales may nonetheless be permissible, such as restrictions on the sale of luxury goods on third-party platforms to control product quality.
As background, ASICS implemented new rules for its authorized dealers in 2012, which included a prohibition on the use of price comparison engines, such as Google Shopping, and a prohibition on the use of the ASICS logo in online advertisements. The German competition authority found the rules unlawful and fined ASICS in an initial decision rendered in August 2015, which was upheld by the Düsseldorf Higher Regional Court. ASICS appealed to the Federal Court of Justice.
The Federal Court of Justice upheld the lower court’s decision, thus confirming the competition authority’s finding. The court reasoned that given the broad range of products available for sale on the Internet and the large number of suppliers, price comparison engines are a valuable tool for assisting consumers in making informed choices. Moreover, small dealers often use price comparison engines to attract consumers with low-priced offers. Prohibiting dealers from using price comparison engines amounts to an impermissible “hardcore restriction” of online sales under EU competition law.
Notably, the Federal Court of Justice distinguished the ASICS case from another recent case in which the European Court of Justice held that luxury cosmetic company Coty, Inc. was permitted to prohibit its authorized dealers from selling on third-party platforms, such as Amazon, in order to control product quality and brand image. The Federal Court of Justice observed that unlike Coty, ASICS does not sell luxury goods, and ASICS’s rules were far more sweeping than Coty’s in restricting consumers’ access to dealers’ internet offers. Thus, some limitations on online sales of luxury goods may be permissible, as long as they are narrowly tailored and applied consistently.
The President of the German competition authority, Andreas Mundt, lauded the court’s decision as critical for keeping markets accessible to small dealers, who derive most of their sales from search engines and online marketplaces. He also observed that many large companies have their own online stores or cooperate with large e-commerce platforms, like Amazon, and if these same companies impose restrictions on smaller dealers, the online business will be concentrated in the hands of large online retailers, to the detriment of consumers.
Arent Fox's Fashion & Retail Law group will continue to monitor developments in this area. If you have any questions, please contact Anthony Lupo, Katie Heilman, or the Arent Fox professional who usually handles your matters.