The sales landscape in Germany, and in the entire European Economic Area, finds itself in an extremely dynamic and massive upheaval; this equally applies to the legal framework conditions for industry and trade.
Here, branded item companies and retailers will have to increasingly accept that their operative business will be more heavily influenced and (in part) regulated by measures and decisions by the European Commission, by antitrust divisions, and even the courts than in the past. This doesn’t just affect sporting goods, but practically every consumer product. However, the sporting goods sector seem to be under special observation. ISPO.com presents the latest developments.
The European Commission’s digital single market project
The project to create a uniform, digital single market (“DSM”) has the objective of eliminating all barriers in online retail between the individual EU member states.
The first specifically noticeable measure for industry and trade was between late 2015 and early 2016, a detailed survey of a variety of manufacturers and retailers in some select industries (incl. consumer electronics, cosmetics, apparel, and shoes), also among them numerous sporting goods retailers and manufacturers.
In its own words, Brussels combined it with the goal of creating a better overview of the operation of the domestic market, and its rules and practices applicable between manufacturers and industry. The sporting goods industry, with its negligible number of selective sales agreements, was particularly a focus of the Commission.
The Commission’s surveys – which were first sent to retail (including online marketplaces, price search engine portal, payment system suppliers, and others) and only then in a second series to manufacturers – were extremely comprehensive. Also demanded was the submission of detailed sales contracts.
Over 8000 sales contracts read by the European Commission
The Commission publicly presented the preliminary results of its sector inquiry on October 6 in Brussels. Through the survey campaign, the Commission was able to get a detailed view into 8,000 sales contracts, among other things. As early as September 15, the agency published its preliminary report with a total volume of more than 290 pages. This can be downloaded in English here.
Every interested party can send their thoughts and comments to the Brussels agency at the following email address until November 18, 2016: COMP-E-COMMERCE@ec.europa.eu.
The author of this article is a member of the joint working group DSM of the World Federation of the Sporting Goods Industry (WFSGI) and the Federation of the European Sporting Goods Industry. There will be a corresponding joint statement to the Commission at the federation level.
Are individual firms under threat of antitrust proceedings?
Important: The Commission emphasizes in its report that the sector inquiry is not specifically directed against individual firms, however the statement applies at the same time that – should the results of the study uncover anti-competitive practices – Brussels absolutely reserves the right to then take corresponding action on an individual basis. That is how it stands in the European Commission’s preliminary report from 09/15/2016.
Commission’s final report announced for the first quarter of 2017
The European Commission intends to present a final report on the results of its sector inquiry in the first quarter of 2017, in order to then introduce derived specific measures for realizing a uniform, digital single market.
Transnational online sales likewise on the Commission’s radar
The Commission already presented an initial draft of a geoblocking regulation in May; an elimination to the greatest extent possible of geoblocking practices is thereby its declared goal and likewise part of the DSM project (the German language version can be consulted here >>>).
Geoblocking roughly means that end users who want to shop online across national lines, for example, have their payment procedure cancelled or are redirected to a website for an online shop in their respective country. Based on the results of the Commission’s sector inquiry, France leads the top charts of limitations of these sorts of transnational online purchases, while the least prevalent are those in Denmark.
The proposal for a regulation is now going to consultation in the European Parliament, among others, and to the national parliaments. Experts are expecting that the current draft will still be heavily edited, if it comes at all.
Same retail price in all of Europe?
However, connected with this could at the least be an actual compulsion to a standardization of the prices required for branded products in all member states of the European Economic Area – and that, even though there are many, many factual grounds that justify the different prices, such as different VAT rates, environmental taxes, or logistical costs.
Another effect that Brussels would then generate would be significant additional bureaucratic costs that would affect both manufacturers and retailers.
The author: Attorney Dr. Jochen M. Schäfer
Dr. Jochen M. Schäfer is an attorney, and has been the in-house lawyer for the World Federation of the Sporting Goods Industry (WFSGI) and the Federation of the European Sporting Goods Industry (FESI) for many years. He counts numerous renowned companies in the industry among his clients, with a consulting emphasis on national and international sales, IP and risk management, and contract design. He is available for any questions at email@example.com, or on his cell at +49-151-16407932.