Is Selective Distribution Possible on the Internet? On Restrictions of Online Search Advertising and Online Sales in the Guess Case

Abstract

This comment discusses the case AT.4028 of 17 December 2018, where the European Commission imposed a fine of 39.8 million Euro on clothing company Guess for several restrictive provisions in agreements with its distributors in the EEA, including restrictions of online search advertising and online sales. The case demonstrates that e-commerce leads to disintermediation within the supply chain, which in turn leads to tensions between the manufacturer of branded products and authorized distributors operating in a selective distribution system. The case does not provide, however, much practical guidance on how to align online and offline channels into one distribution system supporting a prestigious image of branded products. Therefore, an example of a distribution system integrating online and offline sales from the practice of the Australian Competition and Consumer Commission is presented.

Keywords

• brand products
• e-commerce
• online sales
• online search advertising
• vertical restraints