“We believe it is fundamental to the process of selling Ping Golf Clubs that the consumer is custom-fitted to ensure they receive clubs that are custom-built to their own specifications. We want to ensure that a personal conversation takes place between the account holder and the consumer so that the account holder can fully explain the benefits of Ping customfitting and make appropriate arrangements to arrange an appointment to fit the customer. This process cannot take place during an Internet transaction and it is for this reason we believe that Ping Golf Clubs should not be sold on the Internet.”
“To some of you this may sound restrictive in these difficult times and will result in fewer sales for Ping. However, it emphasises our commitment to our core philosophies and demonstrates that the quality of what we do is more important than the quantity. It is a commitment for the long-term strength of the brand and we believe that the vast majority of our customers understand and support these policies, and we thank you for this support.”
“1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”
“the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment.”
“56. Only conduct whose harmful nature is proven and easily identifiable, in the light of experience and economics, should therefore be regarded as a restriction of competition by object, and not agreements which, having regard to their context, have ambivalent effects on the market or which produce ancillary restrictive effects necessary for the pursuit of a main objective which does not restrict competition.”
“what can traditionally be seen to follow from economic analysis, as confirmed by the competition authorities and supported, if necessary, by case-law.”
“The internet is a powerful tool to reach a greater number and variety of customers than by more traditional sales methods, which explains why certain restrictions on the use of the internet are dealt with as (re)sales restrictions. In principle, every distributor must be allowed to use the internet to sell products. In general, where a distributor uses a website to sell products, that is considered a form of passive selling, since it is a reasonable way to allow customers to reach the distributor. The use of a website may have effects that extend beyond the distributor's own territory and customer group; however, such effects result from the technology allowing easy access from everywhere. If a customer visits the web site of a distributor and contacts the distributor and if such contact leads to a sale, including delivery, then that is considered passive selling. The same is true if a customer opts to be kept (automatically) informed by the distributor and it leads to a sale. Offering different language options on the website does not, of itself, change the passive character of such selling.”
“(54) However, under the Block Exemption the supplier may require quality standards for the use of the internet site to resell its goods, just as the supplier may require quality standards for a shop or for selling by catalogue or for advertising and promotion in general. This may be relevant in particular for selective distribution. Under the Block Exemption, the supplier may, for example, require that its distributors have one or more brick and mortar shops or showrooms as a condition for becoming a member of its distribution system. Subsequent changes to such a condition are also possible under the Block Exemption, except where those changes have as their object to directly or indirectly limit the online sales by the distributors. Similarly, a supplier may require that its distributors use third party platforms to distribute the contract products only in accordance with the standards and conditions agreed between the supplier and its distributors for the distributors' use of the internet. For instance, where the distributor's website is hosted by a third party platform, the supplier may require that customers do not visit the distributor's website through a site carrying the name or logo of the third party platform.”
“(56) … Within a selective distribution system the dealers should be free to sell, both actively and passively, to all endusers, also with the help of the internet. Therefore, the Commission considers any obligations which dissuade appointed dealers from using the internet to reach a greater number and variety of customers by imposing criteria for online sales which are not overall equivalent to the criteria imposed for the sales from the brick and mortar shop as a hardcore restriction.”
“I therefore consider that a general and absolute ban on selling goods to end-users via the internet imposed on authorised distributors in the context of a selective distribution network which prevents or restricts parallel trade more extensively than such restrictions inherent to any selective distribution agreement and which goes beyond what is objectively necessary in order to distribute those goods in an appropriate manner in the light not only of their material qualities but also their aura or image, has the object of restricting competition for the purposes of [Article 101(1)].”
“47. … Article 101(1) TFEU must be interpreted as meaning that, in the context of a selective distribution system, a contractual clause requiring sales of cosmetics and personal care products to be made in a physical space where a qualified pharmacist must be present, resulting in a ban on the use of the internet for those sales, amounts to a restriction by object within the meaning of that provision where, following an individual and specific examination of the content and objective of that contractual clause and the legal and economic context of which it forms a part, it is apparent that, having regard to the properties of the products at issue, that clause is not objectively justified.”
“148. … the CMA was correct to find that the ban reveals in itself a sufficient degree of harm to competition to constitute an object restriction, notwithstanding Ping’s legitimate aim. The potential impact of the ban on consumers and retailers is real and material. It significantly restricts consumers from accessing Ping golf club retailers outside their local area and from comparing prices and it significantly reduces the ability of, and incentives for, retailers to compete for business using the Internet.”
“98. We accept Ping’s submission that objective justification and proportionality are not in themselves relevant to an assessment of whether an agreement is an infringement by object. The law on ‘object’ is set out authoritatively by the Court of Justice in Cartes Bancaires which makes no reference to proportionality. We should emphasise that we do not see any contradiction between Pierre Fabre and Cartes Bancaires. In particular, we do not consider that it was the intention of the Court of Justice in Pierre Fabre to devise a special form of ‘by object’ assessment which incorporates proportionality considerations specifically for internet sales bans. On the contrary, it can be seen that the Court of Justice conducted a standard (albeit brief) assessment of the nature of the restriction in its relevant context at paras 35-38 of the judgment. The Court of Justice then went on to consider the separate question of ‘objective justification’ in paras 39-44 and concluded that the internet sales ban was unlikely to be proportionate. The reference to “objective justification” at para 47 of the Pierre Fabre decision is, in our view, best understood as a reference back to the Metro criteria, compliance with which would take the internet sales ban outside the prohibition in Article 101(1). 99. We therefore consider that the CMA erred in law by conducting a full proportionality analysis as part of its assessment under Article 101(1) of whether Ping’s internet policy was “objectively justified”
“1. From the early days of EU competition law, much ink has been spilled on the dichotomy between restriction of competition by object and restriction by effect. It may thus come as a surprise that this distinction, stemming from the very wording of the prohibition in (what is now) Article 101 TFEU, still requires interpretation by the Court. 2. The distinction is relatively easy to make in theory. Its practical operation is nonetheless somewhat more complex. It is also fair to say that the case-law of the EU Courts has not always been crystal clear on the subject. Indeed, a number of decisions given by the EU Courts have been criticised in legal scholarship for blurring the distinction between the two concepts.”
“It is impossible to (or at least I am unable to) draw, in abstract terms, a bright line between (the second step of) an object analysis and an effects analysis.”
“ … even supposing it to be established that the parties to an agreement acted without any subjective intention of restricting competition, but with the objective of remedying the effects of the crisis in their sector, such considerations are irrelevant for the purposes of applying [Article 101(1)]. Indeed, an agreement may be regarded as having a restrictive object even if it does not have the restriction of competition as its sole aim but also pursues other legitimate objectives.”
“45. … The reason is that a purely formal assessment of an agreement, completely detached from reality, could lead to condemning innocuous or procompetitive agreements. There would be no legal or economic justification for prohibiting an agreement that, despite conforming to a category of agreements that is usually considered anticompetitive, is nonetheless, because of some specific circumstances, outright incapable of producing any deleterious effect in the marketplace, or is even procompetitive. 46. That is why the Court’s case-law has always been consistent on this point: the assessment of a practice under EU competition rules cannot be made in the abstract, but requires an examination of that practice in the light of the legal and economic conditions prevailing on the markets concerned. The importance of this principle is confirmed by the fact that it has been found to be valid with regard to both Article 101(1) TFEU and Article 102 TFEU. Not even when dealing with forms of conduct like price fixing, market sharing or export bans, which are generally recognised to be particularly harmful to competition, can the economic and legal context be totally ignored.”
“80. In that regard, it might be added that the Court has long recognised that agreements that pursue a ‘legitimate objective’ are not necessarily caught by Article 101(1) TFEU. This means that agreements that have both procompetitive and anticompetitive effects are caught by the prohibition of Article 101(1) TFEU only where the latter prevail. For example, a reduction of price competition may be acceptable when it is a means to increase competition in relation to factors other than price. More generally, agreements that, despite being restrictive of the parties’ freedom of action, pursue the objective of, for example, opening up a market or creating a new one, or allowing new competitors to access a market, may be procompetitive. It equally follows from settled case-law that, under certain conditions, restrictions which are directly related and necessary to the implementation of a main operation, which is in itself not anticompetitive, do not constitute restrictions of competition within the meaning of Article 101(1) TFEU. 81. Accordingly, any time an agreement appears to have ambivalent effects on the market, an effects analysis is required. In other words, when a possible procompetitive economic rationale for an agreement cannot be ruled out without looking at the actual effects on the market, that agreement cannot be classified as restrictive ‘by object’. …”
“38. The Court has, moreover, already held that, in order for the agreement to be regarded as having an anti-competitive object, it is sufficient that it has the potential to have a negative impact on competition, that is to say, that it be capable in an individual case of resulting in the prevention, restriction or distortion of competition within the internal market. Whether and to what extent, in fact, such an effect results can only be of relevance for determining the amount of any fine and assessing any claim for damages …”
“48. Furthermore, those agreements would also amount to a restriction of competition by object in the event that the referring court found that it is likely that, having regard to the economic context, competition on that market would be eliminated or seriously weakened following the conclusion of those agreements. In order to determine the likelihood of such a result, that court should in particular take into consideration the structure of that market, the existence of alternative distribution channels and their respective importance and the market power of the companies concerned.”
“following a concrete and individual examination of the wording and aim of those agreements and of the economic and legal context of which they form apart, it is apparent that they are, by their very nature, injurious to the proper functioning of normal competition on one of the two markets concerned.”
“254. … The Decision imposed on Ping a fine of£1.45 million . This equates to a fine of£290,000 per year of the infringement. In our view, this is within the correct ballpark figure for an infringement of this nature, taking into account the specific circumstances of the infringement including Ping’s financial position and its genuinely held intention to promote custom fitting. We note our finding that the CMA erred in treating Ping’s managing director’s involvement as an ‘aggravating factor’ justifying an uplift in the penalty at step 3 of its penalty calculation. We have also considered whether the CMA effectively ‘remedied’ this error in step 4 of its calculation by substantially reducing the fine amount produced by the first three steps of the calculation. In our view, however, the fine imposed is slightly too high and a further small reduction is therefore appropriate. Rather than mechanistically applying a 10% reduction to the fine we will take a view in the round. On consideration, we consider that a fair and proportionate fine, taking into account that it was not an ‘aggravated’ infringement, should be£1.25 million . This equates to a fine of£250,000 in each year of the infringement.”£250,000 in each year of the infringement.”