Overview
A recent ruling from the Court of Justice of the European Union (CJEU) may require companies operating exclusive distribution agreements in the EU to reassess their contracting practices. In a preliminary ruling of May 8, 2025, the CJEU issued significant clarifications on the validity of exclusive distribution agreements under the EU competition rules. Essentially, if a seller wants to establish an exclusive distributor or retailer for a certain territory or product, it must enter into an explicit or at least tacit agreement with each of its other buyers, in which the other buyers agree to the limits on their own ability to resell. Without these agreements, the entire distribution agreement may not be compatible with Article 101 TFEU.
Underlying Facts
The preliminary ruling (C-581/23, Beevers Kaas) is based on the following facts: Cono, a Dutch cheese producer, and Beevers Kaas, an exclusive distributor of certain Cono cheese products in Belgium, entered into an exclusive distribution agreement. Beevers Kaas claims that the Albert Heijn companies, operating supermarkets in Belgium and the Netherlands, sells the same Cono cheese products in Belgium, although Cono produced them for markets outside Belgium. Beevers Kaas considered the sale of these products in Belgium as a breach of its exclusive distribution agreed with Cono. Albert Heijn contested this by invoking the absence of a valid exclusive distribution system, because Cono did not protect the exclusivity granted to Beevers Kaas with a prohibition of active sales into Belgium.
In the proceedings before the Court of Appeal of Antwerp, Beevers Kass and Albert Heijn disagreed on the conditions for a valid exclusive distribution system under EU competition law, notably regarding the "double imposition" requirement. It is undisputed that the exclusive distribution agreement does not contain an explicit active sales ban that would prohibit other resellers from obtaining supplies from Cono for distribution in Belgium. The exclusive distribution agreement only provides that Cono could not itself sell the cheese to Belgian distributors. Beevers Kaas, supported by an amicus curia of the Belgian competition authority, claims that a tacit agreement of all other resellers with the active sales ban can be inferred from the fact none of them actually sold the cheese products in Belgium. By contrast, Albert Heijn argues that Beevers Kass must demonstrate that the exclusive allocation and active sales ban were communicated to all existing resellers at the time of the agreement and subsequently to all new joiners.
The preliminary question addressed to the CJEU by the Belgian Court therefore related to the applicable conditions regarding the suppliers' parallel imposition requirement, and more specifically to the question whether it suffices that other buyers simply refrain in practice from actively selling into the exclusive territory to be exempted from the prohibition under Article 101 TFEU.
Preliminary Ruling
The ruling confirms unequivocally that suppliers are subject to the "parallel imposition" requirement when implementing an exclusive distribution system. Pursuant to Article 1(1)(h) VBER (Vertical Block Exemption Regulation of 2022), in an exclusive distribution system leading to the exclusive allocation of a territory or of a customer group by a supplier to up to five of its buyers, the supplier must at the same time restrict "all its other buyers from actively selling into the exclusive territory or to the exclusive customer group." This parallel imposition requirement thereby stipulates that the exclusive allocation by a supplier of a territory or customer group is necessarily linked to an obligation to grant buyers protection from active sales of other buyers. Further, the Court clarified that this parallel imposition requires an agreement within the meaning of Art. 101 TFEU, with the parties expressing their joint intention to conduct themselves in the market in a specific way, as opposed to a purely unilateral policy. Such an agreement can be concluded either explicitly (e.g., by contractual provisions on the active sales ban in the respective distribution agreement), or at least tacitly, under two cumulative conditions:
- Explicit invitation by the supplier: The supplier must invite the other buyers to comply with the ban on active sales in the exclusive territory. It does not suffice that the other buyers simply refrain from active sales into an exclusive territory without such invitation. Such an invitation may be made, e.g., through specific communication sent by the supplier to its buyers requiring them to respect an exclusive territory or a clause or specific mention to that effect in the supplier's general terms and conditions. This invitation shall also enable the supplier to implement the active sales ban in practice through a system of monitoring and penalties. According to the Court, the mere fact that the buyer does not sell the products in the exclusive territory, thus respecting the active sales ban, is not sufficient to conclude that the seller issued such an invitation to the sellers.
- Acquiescence by all other buyers: By contrast, to assume an agreement, the Court does not require direct proof of an explicit acceptance of the above-mentioned invitation by the buyers. Other objective indicia may suffice to comply with the relevant condition notably. Tacit acquiescence by the buyers of the invitation by the suppliers may be deducted from the fact that the other buyers refrain from active sales in the exclusively allocated territory. The exemption resulting from compliance with these two criteria may or may not be limited in time, which increases the burden of proof for the supplier.
In the same ruling, the CJEU also stated that the agreement with the seller may only benefit from the exemption granted by the VBER for the specific period for which the seller can prove at least tacit acquiescence, either with direct evidence or indirectly based on sufficient other indicia.
Takeaways
In exclusive distribution agreements, to allow for effective protection of buyers from active sales by other buyers into their exclusive territory, it is not sufficient that the buyers simply refrain from cross-border active sales, but the buyers must agree to refrain from such sales. In that regard, it is the supplier's obligation to ensure that all buyers are at least aware of the territorial allocation of the contractual territory and the prohibitions for others to actively sell in that territory.
In a multi-layered distribution system, these requirements must be observed at all relevant levels in the vertical chain. Between the seller and the wholesaler, this outcome must be achieved by a clearcut contractual provision ensuring that any wholesaler signing the agreement is informed that the contractual territory is either allocated to a wholesaler or reserved by the seller himself, and that the cross-border active sales ban applies to the whole contractual territory, without any exceptions. If the seller wishes to pass on these restrictions from the wholesale level down to the retail level, the agreement must also include a provision obliging the wholesalers to at least pass on similar information to the retailers. Otherwise, the protection offered by the VBER would not be effective, with the result that the entire exclusive distribution system might infringe Article 101 TFEU.
Please turn to the author of this newsletter, or to other members of Steptoe's antitrust team, if you wish to discuss any of these developments and their potential impact on your business.
