In early 2013, the German competition authority (Bundeskartellamt) opened investigations into the German online distribution systems of sporting goods manufacturers Adidas and Asics. Both companies operate selective distribution systems, and the Bundeskartellamt took the preliminary view that both companies were imposing on their distributors restrictions regarding online sales that went beyond what was justifiable to ensure quality.
On 7 May 2013, the Bundeskartellamt launched an online survey inviting the approximately 3,000 retailers selling Adidas products to provide data that could be used to examine whether Adidas’ online distribution conditions restricted online trade by prohibiting sales over open, third-party platforms. After assessing the results of the survey, the Bundeskartellamt informally notified Adidas that both the ban it imposed on sales through online market places and the restrictions it imposed regarding search engine advertising raised serious competition concerns.
On 2 July 2014, Adidas agreed to change its distribution terms to permit distributors to sell over online markets including Amazon.com and eBay and to use Adidas brand-related search terms for search engine advertising. On the same day, the Bundeskartellamt announced that it had closed the proceedings against Adidas.
However, the investigation against Asics is ongoing. On 28 April 2014, the Bundeskartellamt sent Asics Deutschland a Statement of Objections, expressing concern in relation to the following Asics distribution rules:
- the complete ban on the use of online marketplaces such as eBay or Amazon;
- the restriction on supporting price comparison engines;
- the prohibition of the use of the Asics brand names on third party websites; and
- the very detailed allocation of distributors into more than 20 categories, with implications for cross-deliveries to other authorised distributors, and product ranges that can be supplied to final customers.
Beyond the terms already addressed in the context of its Adidas investigation, the Asics investigation raises additional issues, including restrictions relating to metasearch engines.
A recent interview with Andreas Mundt, the President of the Bundeskartellamt, suggests that the Asics investigation could be resolved differently to the Adidas case. Mr Mundt noted that the Bundeskartellamt and Asics were negotiating quality criteria for online platforms that would not be anticompetitive. As such, Asics may manage to retain some degree of control over online supply of its products, particularly on third party sites.
If the negotiations are successful, this case could not only provide some comfort to brand holders operating selective distribution networks that they can exercise a degree of control over online sales on third party platforms, but also provide some much needed “how to” guidance.