European Commission fines Sanrio €6.2 million for restricting cross-border sales of licensed Hello-Kitty-products in the EEA

On July 9, 2019, the Commission imposed a fine of €6.2 million on Sanrio, manufacturer of Hello-Kitty-products, for vertical sales restrictions (see press release here).

Sanrio licenses its brand and other IP rights for use in several Hello Kitty merchandising products in the EEA.  In the (non-exclusive) licensing agreements in the EEA, Sanrio prohibited licensees to engage in cross-border sales of the licensed merchandise products, on the one hand by direct means (through clauses explicitly prohibiting these sales, obligations to refer orders for out-of-territory sales to Sanrio and limitations to the languages used on the merchandising products).  On the other hand, Sanrio also implemented these prohibitions in an indirect way, i.e., through audits and the non-renewal of contracts if licensees did not comply with the out-of-territory restrictions.  The Commission qualified the agreements as market partitioning within the EEA.  Typically, market partitioning is viewed as an antitrust infringement by object or as hardcore restriction, which means that for example the vertical block exemption regulation cannot apply, and that relying on an individual exemption is very difficult.

Sanrio cooperated with the Commission and thus obtained a reduction of its fine by 40%.  This was a cooperation outside of the leniency notice, which only covers horizontal cartels.  In vertical cases, a procedure for cooperation with the Commission has been recently developed and takes place on a similar basis as under the cartel settlement notice.  There is an overview on the procedure in a factsheet published on the Guess case (see here).

The case is another example that the Commission investigates and sanctions vertical infringements.  This may on the one hand be due to the results of the e-commerce sector inquiry.  On the other hand, the Commission seems to seek to take on cases in order not to leave this area of antitrust enforcement to the national competition authorities only.  Silke Heinz was quoted to possible reasons and the background to this in Global Competition Review (see here).

Booking.com prevails in court – „narrow“ MFNs now permissible in Germany

On June 4, 2019, the Düsseldorf Court of Appeals lifted the Bundeskartellamt’s prohibition decision of Booking.com’s “narrow” best price (or most favored nations, MFN) clauses in Germany. The court found that these clauses were necessary to ensure a “fair and balanced exchange of services between portal and hotels”.  The decision may have a significant impact on the assessment of best price clauses by digital platforms in Germany.  Silke Heinz wrote a post on Kluwer Competition Law Blog on the decision, see here.

Bundeskartellamt’s Facebook decision

On February 8, 2019, the BKartA decided that Facebook’s practice to collect and combine user data from third-party websites/apps, including from Facebook-owned services What’sApp and Instagram, without requesting user consent is an abuse of dominance.  It ordered Facebook to terminate the infringement, as well as to suggest solutions for an opt-out system, so that users refusing consent can continue using Facebook (and can only be subject to very restricted data collection and combination).  This is a far-reaching decision and aims right at Facebook’s business model.  Silke Heinz comments on the decision in Global Competition Review, see here.

She has also published a blog on the decision on Kluwer Competition Law Blog, see here.

Bundeskartellamt said to oppose Siemens/Alstom merger

Based on media reports, the Bundeskartellamt sent a letter to the European Commission opposing the planned merger, including with respect to the commitments the parties have offered.  Silke Heinz is quoted on this in Global Competition Review, inter alia on the national competition authorities only having an advisory role in European Commission’s merger control proceedings.  While they are heard, they cannot veto any Commission merger decisions.  You can find the article here.