The Amsterdam preliminary relief judge has passed an interesting judgment on licensing conditions and competition law. The reason for the judgment was a dispute between IBTT, a company involved in designing and producing soft toys for various brands, and Dromenjager, the trademark owner of Woezel & Pip. Dromenjager grants licences to parties that market Woezel & Pip products. A licensing agreement is in place between IBTT and Dromenjager. The agreement prohibits IBTT from selling products to certain retailers, including Kruidvat. IBTT furthermore may not grant discounts without Dromenjager’s consent, and Dromenjager has made the discounts subject to a maximum. That gave rise to a dispute in which IBTT requested the court to order Dromenjager to allow sales to Kruidvat, on the grounds that the provisions of the licensing agreement are in breach of Dutch and European competition law.
The preliminary relief judge ruled in favour of IBTT. IBTT and Dromenjager are in a vertical relationship with each other. It follows from the Block Exemption and Guidelines on Vertical Restraints that the Block Exemption does not apply to an agreement if it contains what is known as “hardcore restrictions”. In light of the Expedia judgment (ECLI:EU:C2012:795), it must be assumed that hardcore restrictions are deemed to appreciably affect trade between Member States, as a result of which the de minimis notice does not apply. In the judge’s opinion, that position is supported by the Dutch Supreme Court judgment in the KNMvD/Agib case (ECLI:NL:HR:2017:1354). Turnover and market share play no role in hardcore restrictions, according to the judge.
The provisions of the licensing agreement are such hardcore restrictions, namely vertical price fixing and restriction of the customers that IBTT may supply. The judge noted that those provisions are very similar to those that NBC Universal applied and that the European Commission has classified as hardcore restrictions (and for which a high fine was imposed). The judge also noted that the licensing agreement did not provide for a selective or exclusive distribution system that would have allowed Dromenjager to protect its trademark or its marketing strategy. The conclusion is therefore that the provisions of the licensing agreement are in breach of Article 101 of the TFEU and are therefore void. The other provisions of the licensing agreement continue to apply, however. Any other finding would have had the undesirable result of IBTT no longer being allowed, for instance, to use the Woezel & Pip trademarks. Dromenjager was therefore ordered to allow sales to Kruidvat.
Action Sport’s appeal proceedings against sports manufacturer Nike also recently centred on the question whether a distribution agreement contained a hardcore restriction. The question in that case was whether a supplier may prohibit its distributor from selling products via (online) marketplaces. The Amsterdam Court of Appeal found, in keeping with the Coty judgment, that a marketplace prohibition was not a hardcore restriction and was therefore permitted (ECLI:NL:GHAMS:2020:2004).
This blog was also published on Mr-online.
Information on dawn raids of ACM can be found at invalacm.nl.
