Getting the Deal Through – Vertical Agreements 2015

260 Pages·2015·2.33 MB·English

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Vertical Agreements 2015
Contributing editor
Stephen Kinsella OBE
Sidley Austin LLP
Publisher The information provided in this publication is
Gideon Roberton general and may not apply in a specific situation.
[email protected] Legal advice should always be sought before taking
any legal action based on the information provided.
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[email protected] No photocopying: copyright licences do not apply. Encompass Print Solutions
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[email protected] ISSN 1753-9250
© Law Business Research Ltd 2015
CONTENTS [ Exclusively for: Sidley Austin LLP | 13-Apr-15, 03:51 PM ] ©Getting The Deal Through
Increased Scrutiny of Most-Favoured-Nation India 104
Clauses in Vertical Agreements 6 Amit Kapur, Farhad Sorabjee and Amitabh Kumar
Noëlle Lenoir, Marco Plankensteiner and Elise Créquer J Sagar Associates
Kramer Levin
Ireland 112
Argentina 9 Helen Kelly and Darach Connolly
Julián Peña Matheson
Allende & Brea
Israel 119
Austria 15 Boaz Golan and Nimrod Prawer
Guenter Bauer and Robert Wagner B Golan Law Firm
Wolf Theiss
Japan 126
Brazil 22 Nobuaki Mukai
Alexandre Ditzel Faraco, Ana Paula Martinez and Momo-o, Matsuo & Namba
Mariana Tavares de Araujo
Levy & Salomão Advogados
Latvia 134
Ivo Maskalāns and Andris Dimants
Bulgaria 29 Attorneys at Law Borenius
Ivan Marinov and Emil Delchev
Delchev & Partners Law Firm
Malaysia 140
Sharon Tan
Chile 36 Zaid Ibrahim & Co
Pedro Rencoret and María Jesús Cifuentes
Pellegrini & Cía
Mexico 147
León Ricardo Elizondo
China 43 Legal and Economic Avantgarde SC
Lei Li
Sidley Austin LLP
Netherlands 154
Minos van Joolingen and Martijn Jongmans
Colombia 51 Banning NV
Ximena Zuleta-Londoño and Alberto Zuleta-Londoño
Cardenas & Cardenas Abogados
Norway 162
Thomas Sando and Aksel Joachim Hageler
Denmark 56 Advokatfirmaet Steenstrup Stordrange DA
Christina Heiberg-Grevy
Accura Advokatpartnerselskab
Poland 169
Dorothy Hansberry-Bieguńska and
European Union 63 Małgorzata Krasnodębska-Tomkiel
Stephen Kinsella OBE, Patrick Harrison and Hansberry Tomkiel Spk
Rosanna Connolly
Sidley Austin LLP
Portugal 176
Joana Gomes dos Santos
France 74 Caiado Guerreiro & Associados
Muriel Perrier
Vivien & Associés
Romania 183
Carmen Peli, Manuela Lupeanu and Oana Bucsa
Germany 81 Peli Filip SCA
Markus M Wirtz and Silke Möller
Glade Michel Wirtz
Russia 192
Alexander Egorushkin and Igor Panshensky
Greece 90 Antitrust Advisory
Christos Golfinopoulos
Golfinopoulos Law Office
Serbia 199
Guenter Bauer and Maja Stankovic
Hungary 97 Wolf Theiss
Chrysta Bán
Bán, S Szabó & Partners
2 Getting the Deal Through – Vertical Agreements 2015
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Singapore 206 Ukraine 235
Kala Anandarajah, Dominique Lombardi and Tanya Tang Igor Svechkar and Oleksandr Voznyuk
Rajah & Tann Singapore LLP Asters
Spain 213 United Kingdom 242
Manuel Contreras and Fernando Reina Stephen Kinsella OBE, Patrick Harrison and
Herbert Smith Freehills LLP Rosanna Connolly
Sidley Austin LLP
Switzerland 220
Franz Hoffet, Marcel Dietrich, Gerald Brei and Alain Girard United States 252
Homburger Joel Mitnick
Sidley Austin LLP
Turkey 228
Bora İkiler and Ali Kağan Uçar
Moroğlu Arseven
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[ Exclusively for: Sidley Austin LLP | 13-Apr-15, 03:51 PM ] ©Getting The Deal Through PREFACE
Preface
Vertical Agreements 2015
Ninth edition
Getting the Deal Through is delighted to publish the ninth
edition of Vertical Agreements, which is available in print,
as an e-book, via the GTDT iPad app, and online at www.
gettingthedealthrough.com.
Getting the Deal Through provides international expert
analysis in key areas of law, practice and regulation for
corporate counsel, cross-border legal practitioners, and
company directors and officers.
Throughout this edition, and following the unique Getting the
Deal Through format, the same key questions are answered
by leading practitioners in each of the 34 jurisdictions featured.
Our coverage this year includes new chapters on Bulgaria,
Latvia, Poland, Singapore and Turkey.
Getting the Deal Through titles are published annually in
print. Please ensure you are referring to the latest edition or to
the online version at www.gettingthedealthrough.com.
Every effort has been made to cover all matters of concern to
readers. However, specific legal advice should always be sought
from experienced local advisers.
Getting the Deal Through gratefully acknowledges the efforts
of all the contributors to this volume, who were chosen for their
recognised expertise. We also extend special thanks to the
contributing editor, Stephen Kinsella OBE of Sidley Austin LLP,
for his continued assistance with this volume.
London
March 2015
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Increased Scrutiny of Most-Favoured-
Nation Clauses in Vertical Agreements
Noëlle Lenoir, Marco Plankensteiner and Elise Créquer
Kramer Levin
Most-favoured-nation (MFN) clauses in the context of vertical agree- Hotel booking platforms cases
ments are, strictly speaking, most-favoured-customer clauses and consist To date, more than 10 European national competition authorities (NCAs)
essentially in arrangements between suppliers and distributors whereby have taken up the battle against price parity clauses in online hotel
the supplier grants the distributor a price that will not be less favourable booking platform contracts with hotels as a common cause within the
than the prices granted to its other customers (eg, European Commission, European Competition Network (ECN), in coordination with the European
Hollywood film studios and digitisation of European cinemas, IP/11/257, and Commission. In particular, the French, Swedish and Italian NCAs are pilot-
E.ON Ruhrgas Gazprom, IP/05/710). From this concept different structures ing market tests in commitment procedures that could lead the way for
of MFN clauses have emerged. other NCAs.
MFN clauses can be reversed into ‘most-favoured-supplier’ clauses On 15 December 2014, the three aforementioned authorities simul-
whereby a buyer will assure the seller that it will match the best price taneously published commitments put forward by Booking.com after
offered by one of its competitors disclosed to it by the seller (eg, European extensive pan-European negotiations, which were submitted to public con-
Commission, Hollywood studios/European pay-TVs, IP/04/1314 and sultation in each country until the end of January 2015.
Universal Music Group/EMI, COMP/M.6458). They also bear similarities In its contracts with hotels, Booking.com obliges them to always offer
to ‘English clauses’, which require buyers to report to their suppliers any their best prices, maximum room capacity, best cancellation and booking
better offers made by competing suppliers, and allowing them to accept conditions compared with what they offer on other platforms and through
such offers only if the initial suppliers do not match them (European their direct booking channels, on or offline. Similar clauses exist with
Commission Guidelines on Vertical Restraints, OJ C 130 of 19 May 2010, regard to other important platforms such as Expedia or HRS.
p1, para. 129; European Court of Justice, judgment of 13 February 1979, The proceedings were initiated in each country following complaints
Hoffmann-La Roche, 85/76). These clauses are usually considered unlawful filed by the main hotel unions against Booking.com, Expedia and HRS.
as they lead to artificially fixing prices. There are concerns that the MFN clauses may qualify as anti-competitive
During 2014, competition authorities have in particular developed agreements prohibited under Article 101 of the Treaty on the Functioning
their analysis of MFN clauses in the online sales sector. An overview of of the European Union (TFEU) and national equivalents. MFN clauses
recent European cases provides clearer guidelines for assessing MFN may result in a restriction of competition between platforms since the level
clauses and their compatibility with competition law. of commissions applied to hotels by platforms cannot affect room rates
applied to end-users, which incentivises platforms to raise commission
Recent case law concerning across-platform parity clauses rates. Furthermore, MFN clauses raise barriers to entry for new platforms
The use of sales platforms for e-commerce has triggered the development and create eviction risks. These effects are amplified as it appears that simi-
of ‘retail-MFN’ arrangements, which provide an assurance to the platform lar clauses are applied by all of Booking.com’s competitors on the market.
that the supplier will not sell its products or services at lower prices via The French NCA has also mentioned that Booking.com’s practices risk
another platform. These clauses have caught the attention of competition qualifying as an abuse of dominant position, prohibited under article 102
authorities in Europe in recent cases that provide guidance on the analysis of the TFEU and its national equivalents.
that may be carried out in relation to such clauses. Booking.com’s commitments offered in France, Sweden and Italy are
identical and consist in the removal of ‘wide MFN clauses’ and equivalent
E-books and online marketplaces measures, which means the removal of price parity clauses with respect to
On 12 December 2012 and 25 July 2013, the European Commission adopted third-party booking service providers, on or offline (‘indirect channels’).
decisions accepting commitments from five major publishers and Apple pro- This should consequently stimulate competition between platforms and
viding for the termination of agency agreements with Apple, the prohibition restore the hotels’ ability to price-differentiate between platforms; however,
of restrictions on retailers’ ability to set prices and an explicit ban on retail- Booking.com would be able to continue using ‘narrow MFN clauses’ pre-
MFN clauses for a period of five years (e-books case, COMP/AT.39847). To venting hotels from offering lower prices through their on and offline direct
counter Amazon’s low e-book retail prices major publishers together with sales channels, with an exception left open for the hotels’ closed networks,
Apple had planned to jointly convert the sale of e-books from a wholesale such as loyalty programmes. The three NCAs have admitted that allowing
model to an agency model and publishers were able to pressure Amazon narrow MFNs may be necessary to prevent hotels from free-riding on the
into converting. Combining the agency model and the introduction of MFN important investments made by the booking platforms, such as the cost of
clauses in contracts between Apple and the publishers, the latter retained marketing and maximum visibility through search engines. Booking.com
control over retail prices, which could be maintained at a certain level and has proposed to enforce these commitments throughout the EEA.
Apple was assured that if a retailer other than itself were to offer a lower price Expedia and HRS have not yet offered commitments. Head of the
for an e-book, the publisher had to match that price in the iBookstore. French NCA, Bruno Lasserre, has explained that an agreement was first
The European Commission considered that the MFN clauses had sought with Booking.com, the market leader. Once Booking.com’s com-
effects similar to resale price maintenance (RPM) clauses, namely facili- mitments are approved following their market test, it is expected that
tating collusion by increasing price transparency, softening competition Expedia and HRS should offer similar commitments.
between rivals, encouraging price increases and preventing the emergence In France, on 18 November 2014, the Minister of Economy also referred
of lower prices. to the competition authority for an opinion on the nature of contractual
Another case was closed in 2013: that of Amazon’s price parity policy. relations between hotels and online booking platforms requesting that it
Amazon’s policy restricted sellers’ ability to offer lower prices on competing examine in particular the demands of the hotel industry to enforce a man-
platforms. Amazon decided to end its Marketplace price parity in Europe date contract model prohibiting the platforms from interfering in setting
after investigations were initiated by the OFT and the Bundeskartellamt. prices to end-customers. Parallel to competition authority proceedings, the
6 Getting the Deal Through – Vertical Agreements 2015
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Minister of Economy has initiated civil proceedings against Expedia and commitments, Booking.com is allowed to enforce narrow MFN clauses
Booking.com alleging breaches of article L442-6 of the French Commercial with respect to all of the hotels direct channels, on and offline.
Code, which prohibits significant imbalances in contractual obligations and
clauses enabling automatic alignment on favourable conditions granted to Guidance: criteria for assessing MFN clauses
a competitor. A draft law was also put forward to amend article L442-6IId It is useful to recall that article 101(1) of the TFEU prohibits agreements
of the French Commercial Code in order to tackle price parity clauses more between companies that have as their object or effect the restriction of
efficiently. While this project is still on standby, a working group within the competition. Article 101(3) of the TFEU exempts, under certain conditions,
French parliament is currently studying the issue. such agreements if they create efficiencies or promote technical or eco-
In the United Kingdom, as a result of recent developments, investiga- nomic progress. Similar provisions exist at national level in Europe. Under
tions have taken a new turn. On 31 January 2014, the OFT had accepted EU competition law, vertical agreements may also be exempted under
commitments from Booking.com, Expedia and IHG to restore the ability the vertical agreements block exemption regulation, if certain condi-
of online travel agents (OTAs) to offer discounts enabling them to grant dis- tions are met and if the agreement does not contain hard-core restrictions
counts to closed groups of customers without publicly disclosing their level (Commission Regulation No. 330/2010 of 20 April 2010 on the application
(Decision OFT1514dec). While the OFT had identified MFN clauses in its of article 101(3) of the TFEU to categories of vertical agreements and con-
statement of objection, the commitment decision focused on restrictions on certed practices).
OTAs’ freedom to use discounts and contained no assessment of rate parity
provisions. This decision was quashed by the Competition Appeal Tribunal Potential anti-competitive object or effect of MFN clauses
(CAT) on 26 September 2014 following an appeal brought by Skyscanner, In the European Commission Guidelines on vertical restraints, MFN
a price comparison website (CAT, Skyscanner/CMA [2014] CAT16). The arrangements are not analysed as a standalone restriction but only as a
CAT considered that the OFT had failed to properly take into consideration means to reinforce the effectiveness of RPM policies by reducing the buy-
objections to the proposed commitments raised by Skyscanner and others, er’s incentive to lower the resale price (Guidelines on Vertical Restraints,
and failed to consider the possible impact on price transparency of a restric- cited above, para. 48). If they are used to create or facilitate RPM, MFN
tion on disclosure of price information. The case was referred back to the clauses are considered as having as object the restriction of competi-
Competition and Markets Authority (CMA) (the OFT’s successor), which has tion and qualify as a hard-core restriction under article 4a) of Regulation
decided not to challenge the court ruling, but instead to reopen the investi- No. 330/2010, preventing the agreement from benefiting from the block
gation that will be led in light of recent market developments including the exemption. In other cases, MFN arrangements may be a way of carrying
market tests launched by the French, Swedish and Italian NCAs. out a wider anti-competitive agreement, for example, when they are used
In Germany, the investigations into online booking platforms have to soften rivalries, facilitate collusion and increase price transparency
proceeded at a different pace. On 20 December 2013, the Bundeskartellamt between competitors.
prohibited HRS from using any MFN arrangements and ordered the Except in these cases, MFN clauses will generally not be considered
removal of the clause from its contracts (Decision B9 – 66/10 HRS-Hotel anti-competitive by object, but may restrict competition by their effects.
Reservation Services). Making no distinction between wide and narrow A typical restrictive effect of MFN clauses is foreclosure of new entrants
MFN clauses, the Bundeskartellamt identified significant restrictions of and raising barriers to entry. A retailer wishing to enter the market by offer-
competition by effect (removal of incentive by booking platforms to offer ing lower prices to end users will try to negotiate lower prices with suppliers
lower commissions or adopt new sales strategies, foreclosure of poten- in order to reduce its costs. Such a strategy will not be successful if the exist-
tial new entrants) that are strengthened by the presence of MFN clauses ing retailers benefit from MFN clauses since the suppliers will grant the same
in contracts with other major platforms such as Booking.com or Expedia. prices to the existing retailers who will in turn be able to lower their prices to
It further rejected any potential positive effects, noting that a potential end-users, hampering competition through prices by the new entrant. This
free-riding problem is at best minimal and any possible positive effects do effect will be strengthened in a concentrated market where the new entrant
not outweigh the negative effects on competition. On 9 January 2015, the has no opportunity to turn to other suppliers or where MFN clauses are gen-
Düsseldorf Higher Regional Court rejected HRS’s appeal against the 20 eralised. Considering their exclusionary effects, MFN clauses may also help
December 2013 decision, thus confirming the prohibition of HRS’s ‘best- maintain or reinforce market positions and thus may qualify as an abuse
price’ clauses (OLG Düsseldorf, VI – Kart 1/14 (V)). HRS can now appeal under article 102 of the TFEU in a context of dominance.
the judgment before the Federal Court of Justice. The ruling is a somewhat In addition, MFN clauses typically restrict sellers in their ability to
isolated decision adopted while a pan-European solution is being elabo- discriminate between customers, which is economically legitimate, except
rated by other NCAs. HRS has declared it is considering further legal steps in a situation of dominance. Indeed, setting different prices for different
and considers itself at a competitive disadvantage since it is the only group sales channels is a legitimate way of reacting to differing distribution costs
in Europe that has stopped using MFN clauses. Proceedings are still ongo- or levels of competitive pressure. Application of MFN clauses may result
ing in Germany against Booking.com and Expedia. in uniform prices being applied to all customers, unless the seller retains
the possibility to increase prices for certain customers by not agreeing to
Private motor insurance in the United Kingdom MFN clauses with them. This effect is strengthened where MFN clauses
Following an investigation of the private motor insurance market by the are generalised. A seller restricted in its freedom to discriminate will most
UK Competition Commission, the CMA published on 24 September 2014 probably lose the incentive to lower prices to buyers, and subsequently
its final report containing measures it expects to increase competition in raise its prices.
the car insurance market and on 7 January 2015 a Draft Order covering the In the hotel booking platforms cases in Europe, NCAs agree that MFN
remedies identified in the final report on competition concerns, which was clauses are likely to have an anti-competitive effect through reducing com-
recently undergoing consultation. petition between platforms or foreclosing entry of new platforms on the
The final report had identified the presence of MFN clauses between market that will not be able to attract hotels by offering lower commission
major price comparison websites (PCWs) and car insurers that required rates. MFN clauses also have an overall commission-raising effect since
parity between PCWs and the insurers’ own direct channels. The CMA raising commissions will not result in room rates being higher than the
structured its analysis around the effects of wide and narrow MFN rates applied in other sales channels covered by price parity clauses.
clauses. It considered that any anti-competitive effects of narrow MFN In assessing potential anti-competitive effects of MFN clauses, it is
clauses were unlikely to be significant and that such clauses could ensure always necessary to take into consideration the situation on the market.
that PCWs maintain their credibility and continue to offer a time saving MFN clauses are more likely to lessen competition in a market where buy-
and search cost-reducing service that enhances inter-brand competition ers or sellers, individually or collectively, have sufficient market power.
and consumer price sensitivity. On the contrary, wide MFN clauses have Buyers who are able to use their negotiating strength to impose restrictions
an adverse effect on competition as they reduce entry, innovation and on a seller in order to ensure they are receiving the best terms available will
competition between PCWs. Furthermore, they prevent price competi- in turn strengthen their market power.
tion between PCWs and lead to higher commission fees and, ultimately, MFN clauses are also more likely to be harmful in highly concentrated
premiums. Drawing consequences from this report, the Draft Order pro- markets rather than in markets involving an important number of actors
poses the prohibition of wide MFN clauses and equivalent measures while competing fiercely. Indeed, in a concentrated market, a seller using MFN
authorising narrow MFN clauses affecting the insurers’ own websites clauses enabling it to increase its prices will have less risk of losing its custom-
only but not their offline direct channels. It must be noted that through its ers to competing sellers. The cumulative effect of MFN clauses in a highly
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concentrated market will increase such restrictive effect. Harmful effects of Conclusion
MFN clauses will be all the more likely if the market is riddled with them. When concluding vertical agreements containing MFN clauses, parties
If MFN clauses appear to have restrictive effects on competition, their must be cautious in assessing whether the efficiency gains that are sought
potential positive effects may allow them to be exempted under article sufficiently outweigh any potential anti-competitive effect of the MFN
101(3) of the TFEU. clause. Contracts containing MNF clauses therefore require a case-by-case
analysis at an early stage by companies to avoid or at least anticipate scru-
Potential positive effects of MFN clauses tiny by competition authorities.
The typical positive effect of MFN arrangements is to provide buyers with Guidance on assessing MFN clauses is currently emerging from coor-
a certain protection against price increases by suppliers. They also allow dinated efforts between NCAs. Diverging approaches seem to be gradually
buyers to reduce costs of frequent negotiations and market research to find converging and have in common at least an effects-based approach taking
out whether they are getting the best price available. into account the circumstances surrounding the use of MFN clauses. In the
MFN clauses may also be a legitimate way of protecting specific context of the hotel booking platforms in particular, regulators appear to be
investments incurred by buyers on request of the seller, as they provide seeking a common approach, with the benefit that coordinated investiga-
such buyers with a further incentive to commit to investments by granting tions should entail less of a burden for companies.
extra assurance of recouping costs over time. As the Head of the French NCA has explained, the advanced stages
In this respect, NCAs appear to be attempting to fine-tune their analy- reached by national investigations and the expertise already built up
ses of MFN clauses, differentiating between wide and narrow MFN, admit- by NCAs has led to an innovative form of decentralised cooperation
ting that the latter may be necessary to protect the business model of online rather than a reallocation of cases to the European Commission, despite
platforms such as hotel booking portals or price comparison websites. Such the potentially pan-European effects of the investigated practices. This
platforms invest significant amounts to offer high-quality services, such as approach has been possible through a consistent substantive analysis
attractive platforms, improved presentation of products and quality user that the ECN is developing (Lasserre, ‘Dix ans après: Quel avenir pour le
comments. Réseau Européen de la Concurrence?’, in Concurrences, No 4-2014, p74).
In any case, if MFN clauses are scrutinised by European competition The outcome of the different ongoing market tests in the first few
authorities and considered as potentially restrictive of competition, the months of 2015 should shed further light on how NCAs are to assess MFN
onus lies upon the parties to prove that their pro-competitive effects out- clauses in the future.
weigh such restrictive effects.
Noëlle Lenoir [email protected]
Marco Plankensteiner [email protected]
Elise Créquer [email protected]
47 avenue Hoche Tel: [phone]
75008 Paris Fax: [phone]
France www.kramerlevin.com
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Argentina
Julián Peña
Allende & Brea
Antitrust law economic efficiency, although more inclined to consumer surplus than to
total surplus.
1 What are the legal sources that set out the antitrust law
applicable to vertical restraints?
Responsible authorities
The legal sources that set out the antitrust law applicable to vertical
restraints are Law 25,156 (Antitrust Law) of 1999 as modified in 2001 and 4 Which authority is responsible for enforcing prohibitions
2014, and its regulatory Decree No. 89/2001. The Antitrust Law provides on anti-competitive vertical restraints? Where there are
in its article 1 that acts and behaviours related to the production or trade of multiple responsible authorities, how are cases allocated? Do
goods and services that limit, restrict or distort competition or constitute governments or ministers have a role?
an abuse of a dominant position in a market in a manner that may result The agencies responsible for enforcing prohibitions on anti-competitive
in a damage to the general economic interest, are prohibited and shall be vertical restraints are the CNDC and the Secretary of Trade of the Ministry
sanctioned pursuant to the rules of this law. of Economy and Finance (the Secretary, together with the CNDC, are
referred to as the authorities). The CNDC is the agency responsible for
Types of vertical restraint investigating anti-competitive behaviour and for recommending to the
secretary the measures to be taken. The Secretary is the final governmen-
2 List and describe the types of vertical restraints that are
tal decision-maker. Resolutions issued by the Secretary may be appealed
subject to antitrust law. Is the concept of vertical restraint
directly to the federal Court of Appeals. Neither the Minister of Economy
defined in the antitrust law?
and Finance nor any other governmental agency can formally intervene in
Neither the concept nor the types of vertical restraints are defined in the antitrust cases.
Antitrust Law. Article 2 of the Antitrust Law, however, contains a list of
some of the anti-competitive practices that could be considered unlawful. Jurisdiction
This list includes some examples of vertical restraints, such as:
• ‘(a) fixing, imposing or manipulating, directly or indirectly, in agree- 5 What is the test for determining whether a vertical restraint
ment with competitors or individually, any form of price and purchase will be subject to antitrust law in your jurisdiction? Has the
conditions or conditions relating to the sale of goods, furnishing of ser- law in your jurisdiction regarding vertical restraints been
vices or production’; applied extraterritorially? Has it been applied in a pure
• ‘(i) conditioning the sale of goods to the purchase of other goods or to internet context and if so what factors were deemed relevant
the use of a service, or conditioning the furnishing of services to the when considering jurisdiction?
use of other services or to the purchase of goods’; and To be subject to the Antitrust Law, a vertical restraint must have an effect
• ‘(g) subordinating the purchase or sale to the condition of not using, on the Argentine market. Article 3 of the Antitrust Law provides the fol-
purchasing, selling or supplying goods or services produced, pro- lowing: ‘all natural or legal, public or private, profit or non-profit persons
cessed, distributed or marketed by a third party’. performing economic activities in whole or part on the national territory
and those performing economic activities outside the country are subject
Thus, the vertical restraints that are subject to the Antitrust Law include: to the provisions of this law to the extent their acts, activities or agreements
• resale price maintenance (setting either minimum, maximum or affect the national market’. Therefore, the Antitrust Law has adopted the
sometimes suggested resale prices); effects doctrine, which could be enforced extraterritorially (that is, an act
• tying arrangements; performed or an agreement signed abroad could be challenged by the
• exclusive dealing arrangements; authorities provided it has effects in the domestic market).
• exclusive distributorship arrangements; and In practice, there have so far been no known vertical restraint cases in
• customers and territorial restraints. which such sanctions or remedies have been imposed.
The list of anti-competitive conducts in article 2 of the Antitrust Law is not Agreements concluded by public entities
comprehensive. It merely sets out examples of some of the behaviours that
6 To what extent does antitrust law apply to vertical restraints
could be prohibited if they fall under the general prohibition contained in
in agreements concluded by public entities?
article 1.
According to article 3 of the Antitrust Law, there are no limitations on
Legal objective its enforcement with respect to vertical restraints occurring as a result
of agreements concluded by public or state-owned entities. In fact, the
3 Is the only objective pursued by the law on vertical restraints authorities have investigated such conducts in the past. However, both the
economic, or does it also seek to promote or protect other authorities and the courts have not considered practices unlawful if a verti-
interests? cal restraint agreed by the parties is adopted based on a federal or local
The objective pursued by the Antitrust Law on vertical restraints is mainly governmental regulation. The rationale used by the authorities to sustain
to preserve the general economic interest. The Antitrust Law provides that these criteria is that the goal of the Antitrust Law is not to judge other gov-
anti-competitive practices, such as vertical restraints, with the purpose ernmental decisions since these regulations are subject to the respective
or effect of restricting or distorting competition in a manner which may administrative or judicial review.
be contrary to the general economic interest are prohibited. The general
economic interest has been interpreted as comparable with the concept of
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Sector-specific rules Parent and related-company agreements
7 Do particular laws or regulations apply to the assessment of 11 In what circumstances do the vertical restraints rules apply
vertical restraints in specific sectors of industry (motor cars, to agreements between a parent company and a related
insurance, etc)? Please identify the rules and the sectors they company (or between related companies of the same parent
cover. company)?
The Patents for Inventions and Utility Models Law (Law No. 24,481, as The Antitrust Law does not apply to agreements between a parent and a
amended by Laws No. 24,572 and 25,859, together the Patents Law) pro- related company because the Antitrust Law establishes in its article 3 the
vides certain rules regarding anti-competitive practices. In connection principle of economic reality. Therefore, it considers companies controlled
with the total or partial licensing of patents, the Patents Law prohibits by the same parent company as belonging to the same economic group.
those restrictive trade clauses:
• affecting the production; Agent–principal agreements
• restricting competition; or
12 In what circumstances does antitrust law on vertical
• imposing any other procedure, such as:
restraints apply to agent–principal agreements in which an
• exclusive transfer-back requirements;
undertaking agrees to perform certain services on a supplier’s
• requirements preventing any challenge to validity;
behalf for a sales-based commission payment?
• mandatory joint licences; or
• any other of the practices specified in the Antitrust Law. The authorities have relied on both US and European law to distinguish
between purchase-resale and agency relationships and their respective
The Patents Law provides that compulsory licences shall be granted in case antitrust consequences. In light of those precedents, the authorities set
the patentee performs anti-competitive practices. It reads: ‘the right to use out the criteria to distinguish a valid sales agency from a resale price main-
a patent shall be granted without the patentee’s authorisation if the compe- tenance (RPM) arrangement. The authorities held in Trisa-TSCSA (2002)
tent authority has determined that the patentee has committed anti-com- that RPM exists when the following elements are present: transfer of the
petitive practices’. In such event, the authorisation shall be granted without legal title to the product from the seller to the reseller, and the transfer of
the need for any special procedure. the entrepreneurial risks from the seller to the reseller (the Trisa-TSCSA
For the purpose of the Patents Law, the following shall, among others, standard). However, in order for the RPM to be sanctioned by the authori-
be considered as anti-competitive practices: ties, the parties must have enough economic power to be able to cause
• the establishment of excessive or discriminatory prices of the patented damage to the general economic interest.
products as compared to the average prices prevailing in the market, in Consequently, under the Trisa-TSCSA standard, setting the sales
particular, if prices offered on the market are significantly lower than prices will be legal when provided in the context of a sales agency where
those offered by the patentee for the same product; the principal retains the legal title to the product and the entrepreneurial
• the refusal to supply the local market under reasonable commercial risks of the transaction. Conversely, in a principal–agent relationship
terms; where there is a transfer of title and of the entrepreneurial risks from the
• the obstruction of commercial or production activities; and principal to the agent, an RPM arrangement would be unlawful depending
• any other conducts punishable by the Antitrust Law. on its competitive effects.
There are no known cases in which a vertical restraint in an agency
The regulatory decree of the Patents Act provides that the antitrust author- agreement has been sanctioned by the authorities.
ities shall first determine if the practices are unlawful.
Another sector with particular regulation of vertical restraints is the 13 Where antitrust rules do not apply (or apply differently) to
distribution of newspapers and magazines. This sector has been regulated agent–principal relationships, is there guidance (or are there
by the Ministry of Labour and the antitrust authorities rejected a claim on recent authority decisions) on what constitutes an agent–
vertical restraints in 1992 because of the special regime this sector has. principal relationship for these purposes?
There is no guidance on what constitutes an agent–principal relationship.
General exceptions The authorities held in Trisa-TSCSA that in order to accept the existence of
an agency agreement, the principal has to keep the legal title to the product
8 Are there any general exceptions from antitrust law for
and bear the entrepreneurial risks of the transaction. However, in Trisa-
certain types of agreement containing vertical restraints? If
TSCSA the authorities failed to provide a detailed analysis with regard to
so, please describe.
the entrepreneurial risks that should remain on the principal for the rela-
Although the Antitrust Law does not specifically provide an exception for tionship to be qualified as an agency.
certain types of agreement containing vertical restraints, pursuant to the
general principle set out in its article 1, the Antitrust Law does not prohibit Intellectual property rights
those agreements containing vertical restraints when the parties do not
have sufficient market power as to cause a damage to the general economic 14 Is antitrust law applied differently when the agreement
interest. containing the vertical restraint also contains provisions
granting intellectual property rights (IPRs)?
Agreements The Antitrust Law does not provide any special treatment for any deter-
mined sector or activity. However, as explained in question 7 above, the
9 Is there a definition of ‘agreement’ – or its equivalent – in the
Patents Law establishes some special rules and procedures. These rules
antitrust law of your jurisdiction?
and procedures have not yet been applied in any case since the Patents Law
There is no definition of ‘agreement’ or its equivalent in the Antitrust Law. was enacted in 1994.
10 In order to engage the antitrust law in relation to vertical Analytical framework for assessment
restraints, is it necessary for there to be a formal written
agreement or can the relevant rules be engaged by an 15 Explain the analytical framework that applies when assessing
informal or unwritten understanding? vertical restraints under antitrust law.
In order to engage the Antitrust Law in relation to vertical restraints, it is The Antitrust Law does not prohibit any vertical restraints per se. All verti-
not necessary for there to be a formal written agreement and the relevant cal restraints are analysed under the rule of reason. In order to determine
rules can be engaged by an informal or unwritten understanding. Pursuant whether a vertical restraint infringes the Antitrust Law, the CNDC first
to article 1, the Antitrust Law will be applicable to anti-competitive acts determines whether there is a vertical restraint and examines the expla-
or behaviour regardless of the way these are manifested, whereas article nation given by the parties to justify their behaviour. The agreement con-
3 of the Antitrust Law sets out the economic reality principle by which the taining the undertakings does not necessarily have to be a formal one. If
Antitrust Law takes into consideration the true nature of the act or behav- an anti-competitive restraint is perceived by the CNDC, it will analyse the
iour, regardless of how these are manifested. market structure. For this purpose the CNDC first defines the relevant geo-
graphic and product market. Once the relevant market is determined, the
10 Getting the Deal Through – Vertical Agreements 2015
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