On 7 April 2016, the Higher Regional Court of Celle held that resale price maintenance in the framework of a promotion offered to pharmacies for the sale of a dietary product did not constitute an appreciable restriction of competition and therefore did not infringe competition law.
In 2014, under the terms of a promotional offer, the defendant, a manufacturer of the diet product A-Vitalkost, offered pharmacies a 30% discount on a one-off direct order of 12 to 90 cans of the product. This offer was conditional on the pharmacy displaying at least three cans of the product on a shelf or display provided by the defendant, and on the pharmacy respecting a minimum retail price of € 15.95. The claimant, an association for the prevention of unfair competition, sought an injunction against the defendant for resale price maintenance.
The Court held that the setting of a minimum price for the products in the promotional offer constituted a restriction of competition under Article101TFEU and under the equivalent provision of German competition law. It added that price fixing is a hardcore restriction, which can generally be regarded as a restriction of competition without the need to assess its actual effects on competition. However, the Court ultimately concluded that the specific offer in question did not amount to an infringement of Article 101 TFEU or of the equivalent provision of German competition law because the effect of the restriction on competition was not appreciable. In reaching this conclusion, the Court noted that (i) the promotional offer was limited in time and applied only to a one-off sale of 12 to 90 cans of the product, (ii) the pharmacies were free to choose whether or not to participate in the promotional offer, and (iii) the market for dietary products sold by pharmacies is very large and, therefore, the economic impact of the restriction on pharmacies and consumers was very small.
The Court stated that, in order to determine whether a restriction of competition is appreciable, one must take into account all relevant considerations, including quantitative factors (for example, market shares), qualitative factors (for example, the gravity of the restriction) and other relevant circumstances in the market. The Court rejected the claimant's argument, which was based on the Expedia ruling of the European Court of Justice ("ECJ"), that appreciability can be presumed in case of a restriction by object. Although the Court acknowledged that a hardcore restriction under Article101TFEU is likely to be a restriction of competition by object, it held that even a restriction by object cannot always be presumed to constitute an appreciable restriction that infringes Article 101 TFEU.
An appeal against this judgment of the Higher Regional Court of Celle has been lodged to the German Federal Court of Justice. The German Federal Court of Justice may thus need to rule on the contentious issue of whether or not, in light of the Expedia ruling of the ECJ, a restriction by object (assuming the pricing restriction at issue is considered to qualify as such) always amounts to an appreciable restriction of competition under Article 101 TFEU.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
