Bundeskartellamt ensures equal opportunities for online sales in the new Liebherr distribution model

After an intervention by the Bundeskartellamt, Liebherr-Hausgeräte Vertriebs- und Service GmbH has agreed not to use certain clauses in its sales conditions which in the authority’s preliminary view would have resulted in disadvantaging online sales. The Bundeskartellamt initiated the proceeding in response to complaints raised by market participants. Liebherr has now relaxed a number of requirements it had imposed on online retailers in early 2021.

Andreas Mundt, President of the Bundeskartellamt: “Brand manufacturers such as Liebherr can define quality requirements to be met by retailers who sell their products. Following complaints from market participants, however, we ascertained that in some cases Liebherr set considerably stricter requirements for online sales than for offline sales, which retailers had to meet to qualify for rebates. Retailers who use both distribution channels and do not meet the strict online requirements risk losing the rebate for brick-and-mortar sales as well. Such clauses can substantially impair the attractiveness of online sales and even cause some retailers to cease their online activities altogether. From a competition law point of view this is unacceptable. Upon our intervention Liebherr adjusted the criteria in question and made them more flexible. Consumers will thus still be able in the future to benefit from active price competition between retailers, both online and offline.”

In Germany Liebherr sells its household appliances through Liebherr-Hausgeräte Vertriebs- und Service GmbH. The company has a particularly important market position in the sector of freezers and refrigerated wine cabinets. Most products are sold through authorised retailers in a so-called selective distribution system. In early 2021 Liebherr introduced a new sales contract including a new rebate scheme, referred to as the “Liebherr-Performance-Rabatt”. In response to complaints from market participants the Bundeskartellamt examined the performance criteria retailers have to fulfil in order to obtain rebates: According to the authority’s investigations the criteria applicable to online sales are significantly stricter than those for offline sales. For instance, online shops must ensure that staff can be contacted between 9am and 8pm on Sundays and holidays, guarantee a specific delivery period for products that customers have ordered but that are not in stock at the retailer, and offer certain modes of payment. According to the Bundeskartellamt’s preliminary assessment these rules not only disadvantage retailers that only sell online, but also hybrid retailers that operate both a brick-and-mortar shop and an online shop. These retailers must fulfil all of the criteria to obtain a rebate, i.e. those applicable to offline and online shops.

All in all the requirements seemed likely to make the more price-active online sales appear unattractive from an economic perspective. This would have weakened the intra-brand competition between the retailers selling Liebherr appliances. Liebherr undertook to adjust these performance criteria to those applicable to brick-and-mortar outlets and to make availability times more flexible on a weekly basis. This dispelled the competition concerns.

The Bundeskartellamt had no objections under competition law to the criteria for authorising retailers which were part of the new sales contract. Further complaints regarding Liebherr’s reduction of the number of German retail outlets by at least approx. 5% since 2021, which were examined under competition law aspects, did not provide any indications of a discriminatory or disproportionate selection of retailers either. Liebherr also undertook to inform the retailers it refuses to authorise in writing of the reasons for this selection.

Within the scope of its discretion the Bundeskartellamt decided to terminate the proceeding. However, the authority will continue to closely observe selective distribution systems for branded products and in particular the requirements for online sales. The issue of how to assess restrictions of online sales in selective distribution systems under competition law is currently also the subject of intensive discussions at the European level within the context of the EU Commission’s review of the European legal framework for such types of agreements.