Online Sales and Antitrust Law: What Prohibitions may Manufacturers impose?

Manufacturers are displeased with retailers reselling their contract products on internet platforms such as Amazon or eBay. Therefore, provisions prohibiting such onward sales are increasingly being included in distribution agreements. From a legal perspective, such provisions are controversial. In a recent ruling, the Higher Regional Court (Oberlandesgericht – OLG) of Frankfurt upheld the validity of a provision used by a manufacturer of branded backpacks to prohibit retailers from reselling its backpacks on internet platforms such as Amazon. However, the products must be sold via a selective distribution system in order to ensure the validity of the provision. In a selective distribution system, the manufacturer selects the authorised resellers of its products on the basis of objective criteria, which may relate, for example, to an appealing presentation of the goods. On the other hand, the court considered a provision in a distribution agreement prohibiting a retailer from advertising its online product range via price comparison portals or price search machines to be invalid. Such a prohibition is not deemed necessary for the maintenance of a brand image (OLG of Frankfurt, judgment of 22 December 2015, case no: 11 U 84/14).

In practice, the German Federal Cartel Office (Bundeskartellamt) takes a considerably more restrictive approach. In 2014, the Federal Cartel Office initiated proceedings against several manufacturers of sporting goods on the grounds that their terms and conditions for e-commerce transactions comprised, among other things, a prohibition against the reselling of their sporting goods via the major online marketplaces eBay and Amazon. The Federal Cartel Office itself has announced that it intends to take greater action against this practice of manufacturers of branded goods in future. Therefore, in spite of the OLG ruling, the use of such clauses in distribution agreements cannot be given a “green light”.