Physical and Virtual Selective Distribution in the EU Competition Law
Selective distribution in the EU Competition Law constitutes a case, in which vertical restraints are imposed in order the
manufacturer to promote and sell his products/services in the market. The manufacturer has undoubtedly the
leading role setting freely –within the context of the laws regarding competition- his own criteria under which
the distribution network shall operate. However, the development of the Internet has set new legislative
challenges, since the autonomous operation of on-line distribution has proven to cause imbalances in the rest
of the distribution system. Therefore, raises the question, if it is possible selective distribution and autonomous
on-line distribution to co-exist. And that question will stand as the topic of the following analysis. However, in
order our analysis to be methodologically sound, firstly we will analyze the current situation, its problem and its
ratio and then we will proceed to a recommendation of a solution.
The current legislative framework (Regulation 330/2010) has introduced various provisions regarding
on-line distribution, but yet has not found an answer to that issue. More specifically, article 4 (b) concerning
territorial restrictions states at first a general prohibition: vertical agreements are prohibited if, directly or
indirectly, lead to a “restriction of the territory into which – or of the customers to whom- a buyer party to the
agreement, without prejudice to a restriction on its place of establishment, may sell the contract goods or
services”. Price discrimination from territory to territory1 is the target for the party trying to impose such
restrictions: Consumers in high income territories, who are therefore considered as richer, will pay more than
the consumers in low income territories for the same goods. That means that borders, barriers have to be put
in order to prevent arbitrage2 or in other words to prevent the natural human tendency of making the most
advantageous choices; in terms of healthy competition conditions, finding and buying where prices are low and
reselling where prices are high.
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