Dissolution due to deviation from recommended prices: unacceptable under competition law
An important statement was recently made with regard to margin management and ditto pricing policy.
A manufacturer of mattresses is confronted with a dealer who, on his own initiative, offers 20% internet discounts on the recommended retail price of the mattress manufacturer in question.
Subsequently, immediately after the launch of the promotion on this website, a large number of dealers put pressure on the mattress manufacturer to end the dealer’s conduct in question. The mattress manufacturer has always taken the position that it does not care in itself to what extent dealers give consumers discounts, but that it cannot afford that in the future major dealers would no longer want to sell its products because they cannot live with the hefty discount practices of another dealer.
Since the mattress manufacturer even terminates the dealer agreement for this specific reason, there is an extremely far-reaching sanction for non-compliance with the recommended consumer prices. This conduct is contrary to competition law. After all, the bottom line is that the entrepreneur who does not adhere to the recommended prices is excluded in the most far-reaching way. After all, there is no discussion as to whether or not there is indirect soft incentive to maintain a certain consumer price and/or whether or not this course of action is fully justified. No, there will be a flat termination, specifically for that reason and that is unacceptable under competition law.
It is good that the Court of Appeal has understood this state of affairs and has subsequently declared the termination of the cooperation relationship null and void.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Legal Franchise Statistics 2019: slight decrease in number of franchise disputes
In 2018, 44 judgments were published on Rechtspraak.nl, 12 of which were appeal cases and one in cassation (a prognosis issue against Albert Heijn).
Article De Nationale Franchisegids: “Judge again rules in favor of Domino’s franchisees” – dated September 3, 2019 – mr. RCWL Albers
At the beginning of 2018, almost all franchisees of Domino's and the Association of Domino's Pizza Franchisees submitted two issues to the court in Rotterdam.
Article De Nationale Franchisegids: “The interim termination of the franchise agreement” – August 12, 2019 – mr. JAJ Devilee
A franchise agreement can end prematurely in many ways.
Article De Nationale Franchise Gids: “Parliamentary questions asked about (false) self-employment franchisees” – dated 24 July 2019 – mr. M. Munnik
Parliamentary questions have recently been asked about the so-called bogus self-employment within the relationship between franchisor and franchisee.
Article Franchise+: “With our franchise formula you will earn mountains of gold.” dated 10 July 2019 – mr. AW Dolphin
The distinction between permissible promotions and misleading information remains a gray area, despite the relevant legislation.
Franchisee may purchase a range of foreign products after mandatory formula change – June 6, 2019 – mr. JAJ Devilee
The District Court of East Brabant recently dealt with an important matter in preliminary relief proceedings in which a franchisee was completely involuntarily forced to adopt an alternative formula.