Fines worth millions for restricting sales of products in the European Union

On the 30th of January 2020, the European Commission inflicted a fine of over 14 million euros to several companies operating in the same corporate group for restricting licensed sales of products related to successful movies in the European Economic Area.

In June 2017, the Commission opened an investigation on some distribution and licensing practices to evaluate if the adopted strategies unlawfully hindered dealers to freely sell the products of which they were buying the license in the European Single Market of the European Union.

At the end of the investigation, the Commission affirmed that the non-exclusive licensing agreements of one of these companies violated the European rules, in particular the article 101 of the Treaty on the Functioning of the European Union (TFEU) that bans agreements between companies that inhibit, limit or misrepresent the competition in the European Single Market.

This company had applied for over six years measures aimed to limit the sales outside specific territories by including in the contracts special terms that inhibited them by limiting the languages used in the products.

Moreover, the same company had limited sales by identifying clients or groups of “allocated” customers, compelling whoever would have closed sales with unallocated customers to pay the earning of such sales to the company.

Other limitations were identified in online sales with terms that allowed the sale only on specific retailers’ websites or that banned completely online direct sales.

The licensees were obligated to transfer these sale restrictions to their clients.

There was also a set of indirect measures designed to encourage the observance of these restrictions, such as the non-renewal of the contracts if the licensees didn’t respect the sales restrictions.

From the beginning, the investigated company cooperated actively with the European Commission recognizing the violation and by providing supplementary evidence. This cooperation entailed a reduction of the fine by 30%, which was established at 14,3 million euros.

In calculating the amount of the fine, the Commission took into consideration also the value of the sales involved, the extent and the duration of the infringement.

The film company wasn’t the only one to incur sanctions for these reasons.

A leading sportswear manufacturer and seller company suffered the same fate as it was fined over 12 million euros in March 2019 and a Japanese company was fined 6,2 million euros for limitations imposed in cross-border sales of products with images of comic books’ characters.