In a high-profile case around selective distribution, the competition chamber of Frankfurt's higher state court (Oberlandesgericht) has decided that Deuter Sport should be allowed not to deliver to retailers who sell their products through marketplaces such as Amazon. On the other hand, the court found it unacceptable from a competition standpoint to prohibit promotion of the products by authorized retailers through price comparison websites.
The decision issued on Dec. 22, in a case filed by an unidentified German retailer, partially overrules an earlier June 2014 verdict by the regional court in Frankfurt, which had found that the interests of selective distribution could not justify measures to prevent authorized retailers from selling their products through third-party online marketplaces, in particular through Amazon. It also partly contradicts the position of the Bundeskartellamt, Germany's cartel office, which has been investigating the selective distribution policies of Adidas and Asics.
The cartel office has acknowledged that brands should have the right to define qualitative criteria relating to the presentation of their products, but stated that this should not amount to an outright, general prohibition for retail partners to use marketplaces. In the Asics case, the Bundeskartellamt rules that German and European competition law did not allow suppliers to prevent retailers from using online marketplaces or price comparison websites.
The Frankfurt Oberlandesgericht apparently displayed more understanding for the supplier's motives to underline brand quality. It may discourage other retailers from seeking compensation when they are effectively prevented from selling a specific supplier's products on online marketplaces.
The ruling is not necessarily a final one. The higher Frankfurt court's decision may still be appealed to the Bundesgerichtshof, the German Federal Supreme Court. Such an appeal would probably bring more certainty for all sides about the legal framework around some aspects of online distribution in Germany – and perhaps in Europe, since the Supreme Court may then put specific questions to the European Court of Justice (ECJ). It would probably take one to three years for the verdict to come out. The retailer himself may not appeal to the ECJ until the Supreme Court has handled the case – if it comes to that at all.
Uncertainties about selective distribution may also be directly or indirectly addressed by the European Commission's efforts to establish and regulate a single digital market, and by the sector inquiry launched by the Competition DG into online retailing last year. They may well lead to broader changes in regulations relating to online trade and European distribution, as described below.
Meanwhile, the higher Frankfurt court's decision in the Deuter case indicates that the German cartel office's position on selective distribution is not undisputed, and that courts may have varying interpretations of the applicable EU regulations and guidelines, which date back to 2010.
The Deuter case was filed by the retailer after a dispute over a new contract. The German company asked the retailer in 2012 to sign adjusted terms, setting out its selective distribution guidelines. After the retailer refused to sign this adjusted contract, Deuter decided to cease delivering.
The argument put forward by the higher regional court in Frankfurt is that a supplier should be able to protect its brand by implementing a selective distribution system that effectively enables it to control the way in which the products are displayed. It also underlines the supplier's interest in providing qualitative advice to customers and to clearly indicate the quality of the brand. Deuter declined to comment until it received further details on the decision.