Nike has terminated its agreement with one of its distributors, the Italian Action Sport, because they failed to comply with Nike's Selective Retailer Distribution Policy. The Court of Amsterdam agreed. On the basis of advocate general Wahl's opinion in the Coty case before the European Court of Justice, the Court of Amsterdam ruled that the Policy conditions are necessary to maintain Nike's brand image.
According to European jurisprudence a selective distribution system (such as that of Nike in this case) will not be contrary to competition law if the quality criteria (with regard to the distributor's professional competence, his staff and business structure) are objective, laid down uniformly and applied without discrimination. Furthermore, the selective distribution system has to be necessary to ensure the quality and correct use of the products in question.
The Court of Amsterdam is of the opinion that Nike's Policy meets those requirements. Nike products are prestigious products and the selective distribution system (is the conditions of which are objective and uniformly applied) aims to maintain Nike's brand image. The specific restriction in the Policy, the ban on selling products through unauthorised webstores/platforms (such as Amazon), is necessary to achieve that objective. The court took account of the fact that Nike admitted various platforms (such as Zalando) to its distribution system, allowing distributors to sell Nike products through authorised platforms and their own website.
Action Sport offered Nike products for sale on Amazon, which was not authorised by Nike. This was in violation of the current Policy. In view of the above, Nike was entitled to terminate the agreement with Action Sport on non-compliance.
Earlier, the German Bundeskartellamt considered that a similar restriction, which Adidas and ASICS had imposed on its distributors (ban on selling their products through (online) market places), was contrary to the competition rules. However, the European Commission is of the opinion that the use of platforms may be restricted if such use is not consistent with the (quality) standard required by the supplier (see the Guidelines on Vertical Agreements). In the final report of the e-commerce sector inquiry, the Commission also took the view that a ban on selling through a market place does not immediately qualify as a (hardcore) restriction of competition.
The prevailing opinion seems to be that the use of online platforms is not necessarily contrary to the competition rules. It depends on the specific circumstances of each case. The question is whether it is safe to include such a ban in a European distribution system which also encompasses the German market. The CJEU ruling in the Coty will hopefully provide more certainty in practice.