Commission investigates clothing manufacturer’s online trading
14th June, 2017
The European Commission has launched a formal investigation into the distribution arrangements and practices of clothing company Guess.
The investigation is the first following on from the Commission’s inquiry into the e-commerce sector which found that more than one in ten retailers surveyed were subject to cross-border sales restrictions in their distribution agreements.
What has happened?
Guess designs, distributes and licenses the use of its intellectual property to manufacture and distribute clothing and accessories under trademarks including GUESS? and MARCIANO.
The Commission has launched a formal investigation of Guess’ distribution arrangements and practices to determine whether Guess illegally restricts the sale of its products across borders in the EU single market.
The Commission has received information that Guess’ distribution arrangements restrict wholesalers from selling to retailers in other Member States and restrict authorised retailers from selling online to retailers or consumers in another Member State.
What might happen next?
The Commission will carry out a detailed investigation of the distribution arrangements of Guess, its wholesalers and retailers.
The Commission has powers to impose financial penalties on any of the businesses found to have infringed EU rules which prohibit arrangements that prevent, restrict or distort competition.
In addition, any unlawful arrangements are unenforceable and may expose the businesses involved to the risk of awards of damages for losses incurred by customers caused damage by the arrangements.
If it is found to have infringed competition rules, Guess could be required actively to implement a competition compliance programme to prevent any further infringements.
What does this mean for me?
Businesses selling consumer goods online are at greater risk of investigation for infringing competition rules. They should review their distribution arrangements to make sure that they do not infringe either the United Kingdom or the European competition law rules and implement competition compliance programmes to minimise the risk of an inadvertent infringement of the competition rules.
How can Ward Hadaway help?
A simple audit of your e-commerce operations will identify whether your business is involved in any activities that may infringe competition law. We can advise you how to operate on e-commerce markets and achieve your commercial objectives while minimising the risk of infringing the competition rules.
We have considerable experience in the application of competition law to e-commerce. In conjunction with our expertise in commercial law, Ward Hadaway is able to provide e-commerce businesses with advice on optimal e-commerce trading arrangements.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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