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Individual Matas Dealers shall be free to use the internet to advertise or to sell their products

23. April 2008

The Danish Competition Authority (DCA) has treated a case concerning a general prohibition to sell over the internet. The prohibition was included in the rules of Matas (a chain of perfumery and chemist shops).

According to the rules, individual dealers were allowed to establish their own homepages if layout and content had previously been approved by Matas A/S. But they were not allowed to use the internet to sell their products.

Matas A/S argued that internet selling by individual dealers would imply a latent risk of irreparable damage to the image and brand of Matas.

The DCA found, however, that the prohibition against internet selling was an illegal restriction of competition in violation of section 6(1), cf. section 6(2)(ii) and section 6(3) of the Competition Act.

In that connection, the DCA made reference to the fact that the European Commission has defined a prohibition against internet selling as a serious anti-competitive restriction, which has as direct or indirect object to limit or control the sales by individual dealers. Furthermore, it follows from European as well as Danish case-law that restraints of dealers’ access to use the internet to sell their products are regarded as appreciable restraints of competition.

The DCA also found that the prohibition against internet selling was in conflict with the commitment given in connection with the CVC/Matas merger, according to which independent dealers would be free to make their own arrangements in relation to purchase and sale.

Matas then accepted to delete the prohibition and to replace it with specific guidelines for individual dealers’ homepages and webshops.

These guidelines contain a number of criteria regarding the quality of individual dealers’ homepages and webshops. These criteria i.a. refer to protection of image, customer service, loyalty to the chain, compatibility with marketing law etc., and they correspond with the quality standards which may be required for a shop or for advertising and promotion in general.

As Matas accepted to replace the anti-competitive prohibition against internet selling with quality standards for the dealers’ use of the internet site to sell their products, the DCA found no reason to issue an injunction or otherwise to pursue the matter.