On September 30, 2020, the United States Court of Appeals for the Third Circuit reversed a historic district court award ordering disgorgement of $448 million in profits to consumers of testosterone replacement drugs under Section 13(b) of the Federal Trade Commission (FTC) Act, adding fuel to the fire of the current circuit split over this section’s interpretation. We outline the key details and offer our analysis of the issue in our client alert.
On September 9, 2020, a federal judge in California dismissed antitrust claims brought by hiQ Labs, Inc. against LinkedIn Corp., holding that hiQ’s antitrust claims failed to properly define the relevant market. This case highlights the rising likelihood of data-related disputes by commercial parties and the potential for data access restrictions to prompt competition claims. Our recent client alert details the case and its implications.
With reports of excessive pricing on the rise around the globe, it is critical that companies understand the price gouging rules and regulations and their enforcement in each country where they do business. Our team has compiled a global price gouging resource guide to help our clients navigate the differing approaches taken by governments and regulatory authorities.
Continuing our podcast series on price gouging laws, members of our global antitrust lawyers focus on the situation around price gouging (excessive pricing) in the EU, France, Germany and the UK in our latest instalment.
The COVID-19 crisis has cast new light on excessive pricing practices in Europe, our team explains the impact the pandemic has had on enforcement activity and suggest practical ways that businesses can protect themselves from price gouging practices. Please click here to listen to our latest podcast.
In certain jurisdictions, having a tailored and comprehensive compliance programme in place may reduce the size of a fine resulting from anticompetitive activity.
Members from across our global competition team have come together to analyse the approaches of key jurisdictions and whether they offer discounts for businesses that have breached competition rules but have a compliance programme in place. We have found that, in general, there is a trend towards more jurisdictions considering reductions on fines as a means by which to encourage more widespread compliance efforts and would suggest that it is definitely worth companies investing time and energy in fostering a compliance culture. Please click here to view our full client alert and comparison table.
The Department of Justice’s Antitrust Division updated its Merger Remedies Manual for the first time in more than a decade. The updates improve upon the 2004 Manual by providing a significantly more detailed account of the Division’s approach to preserving competition pre- and post-merger. Our team highlights the various revisions and additions to the Manual in our recent alert.
As the Amsterdam Court of Appeal recently confirmed in Action Sport v Nike (decision of 14 July 2020, ECLI:NL:GHAMS:2020:2004), the prohibition of sales on third-party platforms contained in selective distribution agreements of brand manufacturers in the EU can be in line with EU competition law irrespective of whether or not the relevant products are luxurious.
The Appeal Court’s decision confirmed the judgment of the lower instance court that arose out of a dispute between Nike and Action Sport, a former authorized reseller of Nike. Nike’s terms underlying its selective distribution system prohibited resellers from trading the contractual products via third party marketplaces, i.e. online platforms operated by non-authorized resellers. When Action Sport refused to comply with this restriction, Nike terminated the distribution arrangement and ceased to supply Action Sport.
The decision is of particular relevance as third-party platform bans imposed by brand manufacturers in the context of selective distribution terms have been the subject of heavy controversy in the EU in recent years. In 2017, the European Court of Justice (ECJ) decided in the landmark ruling in Coty v Parfumerie Akzente that a clause in a selective distribution agreement preventing resellers from selling on any third party websites can be in line with EU competition law if the following requirements are met:
- resellers are chosen on the basis of objective criteria of a qualitative nature, applied uniformly and without discrimination;
- the products in question necessitate selective distribution in order to preserve their quality and proper use; and
- the restrictions imposed do not go beyond what is necessary to achieve this.
In Coty, the ECJ considered that the preservation of a luxury image of Coty’s brands can suffice to justify restrictions on resale associated with selective distribution systems. The Court also found that since third party platforms would typically sell all kinds of goods, the sale of Coty’s products on these websites would prejudice the luxury image maintained through selective distribution and the exclusion of non-authorizes resellers.
Since then, there has been a controversy about whether the legality of platform bans should be reserved to luxury products under EU competition rules. National competition authorities in the EU have taken different views in this regard. For example, the French Competition Authority (FCA) has taken a more liberal view when considering a third-party platform ban imposed on resellers by garden equipment manufacturer Stihl in its selective distribution terms to be in line with competition law despite non-luxury goods being concerned (see FCA’s decision of 24 October 2018 confirmed by the Paris Court of Appeal). However, the German Federal Cartel Office (FCO) follows a more restrictive approach and warned companies that the scope of the Coty judgment should be limited to luxury products only, and that it should not be perceived to grant a blanket authorisation for brand owners outside luxury segment to prevent sales on third party sites.
With its decision in the Nike case, the Amsterdam Court of Appeal has made a strong point that not only luxury brand owners may lawfully impose and enforce platform bans vis-à-vis its authorized resellers in selective distribution agreements in the EU. The ECJ only mentioned luxury products in the Coty case because these were the subject of the questions posed to the ECJ for its preliminary judgment, i.e. the facts of the case before it. Following the Amsterdam Court of Appeals, the ECJ’s substantive assessment must not be limited to products of this kind. A justification of third-party platform bans under EU competition law may not generally be excluded for non-luxurious products but it cannot generally be confirmed for luxury products either. Rather, an individual case-by-case assessment is required, taking the distribution terms, the characteristics of the products concerned and the brand image into account.
The decision in the Nike case is a step in the right direction. The FCO, despite not being bound by Dutch jurisprudence, should reconsider its view to the benefit of a consistent interpretation of EU competition law across Member States and to prevent legal uncertainty for brand manufacturers in Germany seeking to self-assess their relevant distribution strategies, models and underlying terms.
For the latest update on the various European measures that regulate the aviation sector, including a summary of the measures adopted by the European Union to deal with the impact of the COVID-19 pandemic, read our recent client alert here.
As part of Reed Smith’s three -part global price gouging podcast series, this week our regulatory enforcement lawyers Dora Wang and Asha Sharma analyse the rules and regulations designed to tackle price gouging in the People’s Republic of China, and to deal with anti-competitive conduct in Hong Kong. In the episode, Dora and Asha also consider how one can report price gouging/anti-competitive conduct, as well as defend oneself against antitrust risks or price gouging claims.
You can also access our previous episode here, where our regulatory enforcement lawyers Danielle Stewart, Michelle Mantine and Jennifer Driscoll provide an update from a U.S. perspective.
Our U.S. team members recently joined Reed Smith’s Countering the Crisis podcast to provide an overview of the U.S. laws around price gouging in light of COVID-19. The episode addresses various ways to spot and report alleged price gouging, as well as ways to protect against price gouging claims. Our team also shares their thoughts on pending legislation and what clients can expect in today’s changing landscape. This is the first of a three-part podcast series relating to global price gouging laws—stay tuned for more.