Selective distribution agreements under Article 101 TFEU and Article 5 of the Malta Competition Act : are they a threat to competition?

Abstract

This research project is intended towards examining whether selective distribution agreements are considered a threat to EU competition law. Essentially, such agreements comprise of arrangements whereby, the manufacturer selects its distributors on the basis of predetermined criteria, with the aim of protecting brand image. In fact, selective distribution systems are commonly resorted to by manufacturers for the distribution of luxury or complex products, such as designer watches or computer systems. Regulation 330/2010 and the Guidelines on Vertical Restraints, are essential tools in determining the effects that such agreements may have on competition, with the aim of identifying their ultimate impact on the functioning of the internal market. The said regulation takes the general approach that, where neither party has market power on its respective relevant market and where the agreement does not incorporate any hard-core restrictions on competition, such as the imposition of fixed or minimum resale prices on distributors, the selective distribution agreement is considered pro-competitive and therefore, does not trigger the application of the relevant competition rules. Nonetheless, falling outside the scope of Regulation 330/2010 does not automatically imply that a selective distribution system is anti-competitive. Rather, a further assessment is deemed necessary in order to determine whether the agreement in question satisfies all the necessary conditions to be considered an infringement of competition law. In this regard, the Commission and the Court of Justice of the EU, provide extensive guidance on the matter. Furthermore, this research project also delves into the recent developments on ecommerce in the context of selective distribution. The general treatment of internet sales is examined, with particular reference to the different forms that a prohibition on online sales may take. In this regard, the aforementioned Guidelines are considered to have made considerable contributions to the field. Additionally, a thorough analysis of the effects that such agreements have on the local relevant market, is conducted.