The Bottom Line
- A new pricing playbook? The long-standing EU rule that suppliers cannot set minimum resale prices for their distributors is being challenged. This could open the door for more flexible pricing strategies in distribution networks.
- Review your contracts now. Companies must urgently review their distribution agreements and pricing policies. What was once considered a clear-cut, high-risk practice may soon require a more nuanced, effects-based legal assessment.
- The burden of proof may shift. A potential change from “always illegal” to “it depends” means competition authorities may have to work harder to prove harm, but businesses will need more complex economic analysis to defend their pricing arrangements.
The Details
The European Court of Justice (CJEU) is set to rule on a landmark case that could fundamentally alter how EU competition law treats pricing arrangements between suppliers and their distributors. At the heart of the matter is a Portuguese case involving the beverage company Super Bock Bebidas, which was fined heavily for allegedly imposing minimum resale prices on its independent distributors. For decades, this practice—known as Resale Price Maintenance (RPM)—has been treated as a “restriction by object,” meaning it is considered so inherently harmful to competition that it is automatically illegal, with no need to prove its actual negative effects on the market. This case forces the Court to re-examine that foundational principle.
The crucial development comes from the Advocate General’s (AG) opinion, which proposes a significant departure from the traditional hard-line approach. The AG argued that not all vertical price-fixing agreements are harmful enough to be automatically outlawed. He suggests that for an agreement to be classified as “illegal by object,” it must reveal a “sufficient degree of harm to competition.” This subtle but powerful shift moves the analysis away from a rigid, form-based prohibition (“Did you set a minimum price?”) towards a more substantive one (“Was this specific agreement, in its context, clearly harmful to competition?”).
Should the Court follow the AG’s reasoning, the legal landscape for supply chains across the EU will be transformed. For businesses, it could provide more leeway to implement certain pricing strategies designed to protect brand value, incentivize distributor service levels, or coordinate promotions, without the fear of automatic illegality. However, this potential flexibility comes with a cost: uncertainty. The simple, bright-line rule of “don’t do it” would be replaced by a more complex, case-by-case analysis. Legal and commercial teams will need to be prepared to conduct and document robust assessments of their pricing policies to ensure they can withstand regulatory scrutiny.
Source
Court of Justice of the European Union
