Termination of the continuing performance contract leads to price maintenance

Supreme Court of The Hague

In a very recent judgment, the Supreme Court ruled that the fact that agreements (or, in this case, concerted practices) that have the object or object of restricting competition does not automatically justify the conclusion that a restriction of competition must always be regarded as appreciable. be qualified. With this ruling, the Supreme Court clearly distances itself from the view, which has been defended in the literature, that hardcore restrictions and, more generally, agreements that are restrictive of competition by object, are not subject to the requirement of an appreciable influence on competition. . 

In short, the aforementioned case involved the following. Batavus, a producer of bicycles, has terminated its trading relationship with one of its dealers (X) without stating reasons. X sold the bicycles online at high discounts. A number of large customers of Batavus objected to the way in which X sold the bicycles. Batavus itself had no objection to the way in which X sold the bicycles, but under pressure from a significant number of its customers, Batavus ultimately decided to terminate the trading relationship with X to prevent it from losing the other customers.

According to the Supreme Court, the termination of deliveries to X due to the termination of the continuing performance contract between the parties, viewed in conjunction with the pressure exerted on Batavus by the dealers, can be regarded as a concerted practice prohibited by Article 6(1) of the Mw. According to the Supreme Court, the termination was not a free and autonomous choice by Batavus. The termination is therefore part and final piece of a concerted practice.

The Supreme Court is of the opinion that the concerted practice had the object of restricting competition, since the real reason for the cancellation was the dissatisfaction of a number of important customers about the high discounts offered by X. This means that the maintenance of the customary margins of the buyers and thus resale price maintenance was the object of the termination by Batavus. This limited price competition between the distributors, because X could no longer benefit from the cheaper purchase prices at Batavus, where other distributors continued to enjoy that advantage.

Resale price maintenance is understood to mean: agreements or concerted practices that directly or indirectly aim to impose a fixed or minimum resale price or a fixed or minimum price level on the buyer. The suspension or termination of agreements is regarded as indirect resale price maintenance when it is related to the observance of a certain price level. The latter is the case here.

Resale price maintenance is a so-called hard core restriction. According to the European Commission, a hard core restriction creates the suspicion that an agreement is in violation of the cartel prohibition. A hard core provision thus aims to restrict competition. This view is in line with European case law. In this context, the Court of Justice has determined that the consequences of an agreement need not be examined if it is established that it has an anti-competitive object (Consten and Grundig). Although the European Commission indicates that the presumption is a rebuttable presumption, it can be concluded from the decision-making practice and case law that the approach to resale price maintenance can so far be regarded as a de facto per se prohibition. In other words: resale price maintenance is already prohibited by virtue of its purport.

As a result of the foregoing, discussion has arisen in the literature about whether the analysis of a hard core restriction should also consider the extent to which competition is restricted. It is argued that a weak position of the parties involved in the relevant market should lead to the conclusion that a negative effect on competition is not regarded as appreciable and that the current regime offers sufficient scope to argue in specific cases that there is no infringement of competition law.

The Supreme Court has now determined that despite the fact that there is price maintenance and therefore a restriction by purpose, it cannot be ruled without any known further investigation that a restriction of competition must always be qualified as appreciable. The Supreme Court thus applies an extra test when assessing price maintenance agreements. Irrespective of the fact that resale price maintenance is prohibited by its purport, according to the Supreme Court, it should still be considered whether the resale price maintenance is appreciable.

Mr AF Greving – Franchise Attorney

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