5 May 2017
German Court Confirms Illegality of Shoemaker’s Prohibition on Dealers’ Use of Price Comparison Engines
According to a press statement of the German Federal Competition Office (FCO), on 5 April 2017 the Higher Regional Court of Düsseldorf upheld the previous finding of the FCO that, by prohibiting dealers from using price comparison engines, sports shoe manufacturer ASICS Germany had violated competition law.
In its decision of 26 August 2015, the FCO had found that, under its previous selective distribution system, ASICS prohibited dealers from using price comparison engines for the dealers’ online presence. This, according to the FCO, constitutes an infringement of competition law.
The FCO noted that price comparison websites are an effective tool to reach end-consumers online. This is especially the case if a dealer’s prices are particularly attractive to consumers so that the dealer’s details would be displayed in the upper level of the results list of the price comparison search. If the end consumer is unable to find these cheaper goods offered, he is unable to take into account such an offer while making a decision over where to purchase the product.
According to the FCO, a prohibition to use price comparison websites restricts the increase of competition that the internet makes possible. This is because the prohibition reduces the reach of dealers provided over the internet, which will, in turn, reduce the number of sales being made.
The FCO also found that a prohibition to use price comparison websites will lead to a reduction of online and offline price competition, since, as price competition is reduced online, price pressure on offline retailers also decreases.
The FCO, in its decision of 26 August 2015, had further found that ASICS infringed competition law by prohibiting dealers from using ASICS brand names on the websites of third parties to guide customers to the dealers’ own online retail spaces. The FCO also held that ASICS Germany prohibited its distributors from using online market places such as eBay or Amazon and considered that this might be an illegal restriction. However, the FCO did not decide on this conclusively, as it found that the restrictions discussed above each already rendered the distribution system of ASICS Germany illegal.
In November 2015, it was announced that ASICS Germany would be appealing the decision of the German Federal Competition Office to the Higher Regional Court of Düsseldorf.
In an FCO press statement, it is emphasised that the Higher Regional Court of Düsseldorf verbally announced that it is upholding the FCO’s findings, according to which ASICS Germany had violated competition law by prohibiting dealers from using price comparison engines.
The FCO states that the Court held that such prohibition would deprive dealers of advertising as well as sales opportunities, and it could not be justified by the protection of the company’s brand image. It can be expected that the Higher Regional Court of Düsseldorf’s written judgment, once published, will contain a more detailed reasoning.
As a response to the announcement of the Higher Regional Court of Düsseldorf, the President of the Federal Competition Office, Andreas Mundt, stated that it is important that producers do not prohibit their retailers from using price comparison engines, since the latter are important for consumers to obtain transparent price information and to be able to conduct a comparison of prices.
Price comparison engines are felt to be especially useful for small- and medium-sized retailers that would normally be difficult for consumers to find.
According to the press release, in its announcement the Higher Regional Court of Düsseldorf did not consider whether ASICS Germany’s earlier distribution system also constituted a violation of competition law as it prohibited dealers from using Google AdWords and from selling via online marketplaces. It has been reported that Asics was denied permission to appeal that ruling.