1. Introduction

Online sales restrictions are contractual, commercial, or platform-related restrictions that limit the ability of a distributor, retailer, dealer, or reseller to sell products or services through the internet.

They may take several forms:

• complete prohibition of internet sales;
• prohibition on selling through marketplaces such as Amazon or eBay;
• requirement of prior approval before commencing online sales;
• prohibition on using price-comparison websites;
• restrictions on online advertising or search-engine advertising;
• restrictions on using a manufacturer's trademarks as online advertising keywords;
• restrictions on cross-border online sales;
• territorial restrictions applied to internet sales;
• restrictions that favour the manufacturer's own online store;
• requirements concerning website design or quality standards.

Competition law does not treat every online restriction as automatically unlawful. The central question is whether the restriction unnecessarily eliminates an important distribution channel or restricts competition, while legitimate quality-control or brand-protection requirements may sometimes be permissible.

The European case law is particularly important because it has developed a distinction between absolute bans on online sales and more limited restrictions, especially in selective distribution systems.

2. Why Online Sales Restrictions Matter in Competition Law

The internet has substantially changed retail competition.

An online channel can allow consumers to:

1. compare prices;
2. search for alternative sellers;
3. purchase from geographically distant retailers;
4. compare product specifications;
5. switch between competing brands;
6. locate smaller retailers;
7. purchase outside ordinary store hours.

Consequently, preventing authorised retailers from selling online can reduce the competitive pressure between distributors.

The German Bundeskartellamt has specifically observed that excessive online restrictions can prevent smaller and medium-sized retailers from reaching consumers and can concentrate online sales in manufacturers' own stores, large retailers, or major marketplaces.

3. Legal Framework

A. Article 101 TFEU / Vertical Agreements

Under EU competition law, Article 101(1) TFEU prohibits agreements between undertakings that have as their object or effect the prevention, restriction, or distortion of competition and which may affect trade between Member States.

Online sales restrictions are generally examined as vertical restraints, because they commonly arise between:

Manufacturer → Distributor → Retailer → Consumer

The analysis may involve:

• restriction by object;
• restriction by effect;
• selective distribution;
• territorial restrictions;
• passive-sales restrictions;
• active-sales restrictions;
• vertical block exemption rules;
• individual exemption based upon efficiencies.

The current EU Vertical Block Exemption Regulation is Regulation (EU) 2022/720, accompanied by the Vertical Guidelines.

4. Main Types of Online Sales Restrictions

A. Absolute Online Sales Ban

This occurs when a manufacturer simply prohibits an authorised distributor from selling products through the internet.

Example:

"The distributor shall not sell any products through its website."

This is the most serious form because it removes an entire method of distribution.

The leading authority is Pierre Fabre.

B. Marketplace Ban

A manufacturer may permit retailers to operate their own websites but prohibit sales through third-party marketplaces.

Example:

Retailer may sell on its own website but cannot sell through Amazon Marketplace or eBay.

The legality of such restrictions depends heavily upon the circumstances.

The leading authority is Coty.

C. Price-Comparison Website Restrictions

A supplier may prohibit retailers from displaying products on price-comparison websites.

This can substantially reduce consumer discovery of smaller retailers and make price comparison more difficult.

The ASICS proceedings are particularly important.

D. Online Advertising Restrictions

Restrictions may prevent retailers from:

• using search engines;
• bidding on brand keywords;
• using the manufacturer's trademark;
• placing advertisements online;
• directing consumers to the retailer's website.

The Guess case illustrates the competition concerns associated with such restrictions.

E. Prior Authorisation Requirements

A manufacturer may require a retailer to obtain approval before selling online.

Such a requirement becomes problematic where:

• there are no objective criteria;
• approval is discretionary;
• approval is systematically withheld;
• it disproportionately excludes online retailers;
• the manufacturer uses approval to restrict the number of online sellers.

F. Quality Requirements

Not all online requirements are prohibited.

A supplier may legitimately impose conditions concerning:

• customer service;
• product presentation;
• technical support;
• delivery standards;
• warranty handling;
• secure payment;
• professional advice;
• website quality.

The important question is whether the requirement is objective, proportionate, uniformly applied and genuinely connected with legitimate distribution objectives.

5. Important Case Laws

1. Pierre Fabre Dermo-Cosmétique SAS v Président de l'Autorité de la concurrence

C-439/09 — CJEU, 2011

This is the foundational case on absolute online-sales prohibitions.

Facts

Pierre Fabre operated a selective distribution system for cosmetics and personal-care products.

Its distributors were effectively required to sell the products through physical premises where a qualified pharmacist was present.

This resulted in a de facto prohibition on internet sales.

Issue

Whether such a restriction was compatible with Article 101 TFEU and the EU vertical block exemption.

Decision

The CJEU held that the clause constituted a restriction by object where, following examination of the clause and its legal and economic context, it was not objectively justified by the properties of the products.

The Court rejected the argument that maintaining the prestigious image of the products, by itself, justified the prohibition.

Principle

A supplier cannot ordinarily eliminate internet sales merely because it wants to preserve a particular brand image.

Importance

Pierre Fabre established the crucial distinction between:

legitimate regulation of online distribution

and

elimination of internet distribution altogether.

6. Coty Germany GmbH v Parfümerie Akzente GmbH

C-230/16 — CJEU, 2017

Coty significantly qualified the implications of Pierre Fabre.

Facts

Coty operated a selective distribution system for luxury cosmetics.

Its distributors were prohibited from selling Coty products through third-party internet platforms in a manner that made the platform visible to consumers.

However, retailers remained able to sell through their own websites.

Issue

Whether the prohibition on discernible third-party marketplace sales was contrary to Article 101 TFEU.

Decision

The CJEU held that, under the circumstances of the case, the restriction did not constitute a prohibited restriction of customers or passive sales under the relevant block-exemption provisions.

The Court accepted that a selective distribution system designed to preserve the luxury image of products could be compatible with competition law where the requirements were appropriate and proportionate.

Principle

A ban on a particular third-party marketplace is not equivalent to an absolute prohibition of internet sales.

Importance

Coty therefore created an important distinction:

7. ASICS Deutschland — Bundeskartellamt, 2015

The ASICS case concerned restrictions imposed upon authorised retailers selling running shoes.

Restrictions

ASICS restricted retailers' ability to:

• use price-comparison engines;
• use ASICS trademarks on third-party websites for search advertising;
• use online marketplaces such as eBay and Amazon.

Competition Concerns

The Bundeskartellamt considered that these restrictions could make smaller retailers substantially less visible online.

It found that the restrictions prevented authorised retailers from fully exploiting internet distribution and could reduce the benefits of online price competition.

The authority also considered the marketplace restrictions particularly significant, although its formal finding rested on other online restrictions.

Principle

A selective distribution system cannot simply be used to eliminate important online tools that enable smaller retailers to compete.

Significance

ASICS is particularly relevant to:

• marketplace restrictions;
• price-comparison restrictions;
• search advertising;
• small-retailer access to online consumers.

8. adidas — Bundeskartellamt, 2014

The adidas case involved restrictions on the online distribution of sporting goods.

Facts

adidas operated a selective distribution system.

Its conditions had prohibited authorised retailers from selling through major online marketplaces, including:

• eBay;
• Amazon Marketplace;
• other online platforms.

Proceedings

The Bundeskartellamt raised competition concerns.

adidas subsequently changed its distribution conditions and abandoned the marketplace prohibition.

It also clarified that authorised retailers could use adidas-related terms for search-engine advertising.

Principle

A manufacturer may establish quality requirements for authorised retailers, but it cannot use selective distribution requirements to eliminate a principal internet distribution channel.

Importance

The case demonstrates that marketplace access can be an important competitive parameter for smaller retailers.

9. Guess — European Commission, 2018

The Guess case concerned several restrictions imposed within Guess's distribution system.

Relevant restrictions

The Commission examined restrictions including:

• online sales without prior authorisation;
• territorial restrictions;
• restrictions on cross-border sales;
• restrictions on online search advertising;
• restrictions concerning the use of Guess trademarks in Google advertising;
• measures favouring Guess's own online sales channel.

The Commission found several of these restrictions to be restrictions by object. The investigation indicated that authorised retailers generally required specific approval before selling online, without sufficiently defined objective quality criteria.

Principle

A supplier cannot disguise an effective restriction of online competition as a discretionary authorisation system where the approval process lacks objective and transparent criteria.

Importance

Guess demonstrates that online competition can be restricted even without an express clause stating:

"Online sales are prohibited."

A combination of approval requirements, advertising restrictions and territorial limitations may produce a similar competitive effect.

10. Ping Europe Ltd — CMA / Competition Appeal Tribunal

Facts

Ping manufactured golf clubs and prohibited two UK retailers from selling its clubs online.

Ping argued that the restriction promoted in-store custom fitting, which helped consumers select appropriate golf clubs.

CMA Decision

The UK Competition and Markets Authority found that the online-sales prohibition infringed competition law and imposed a penalty of £1.45 million.

The CMA accepted that Ping had a genuine commercial objective but concluded that the objective could have been achieved through less restrictive means.

Appeal

The Competition Appeal Tribunal upheld the infringement.

The penalty was subsequently reduced to £1.25 million.

The Tribunal considered the effects on consumers and retailers, including reduced ability to compare prices and compete through the internet.

Principle

A legitimate commercial objective does not automatically justify an absolute online-sales prohibition.

The supplier must consider whether the objective can be achieved through a less restrictive alternative.

11. Deutscher Apothekerverband v 0800 DocMorris

Facts

This case concerned the online sale of medicines and restrictions affecting internet distribution.

The dispute involved German rules that substantially restricted certain forms of distance selling of medicinal products.

Importance

The case illustrates that online-sales restrictions can involve sector-specific regulatory considerations.

The CJEU recognised that restrictions concerning medicinal products may require consideration of consumer protection and public-health objectives.

Principle

Online-sales restrictions must sometimes be analysed alongside legitimate regulatory objectives rather than through ordinary commercial considerations alone.

This is important because the legality of an internet restriction may depend upon the nature of the product and the risks associated with its sale.

12. Ker-Optika

Facts

Ker-Optika concerned restrictions affecting the online sale of contact lenses.

The dispute involved national rules that effectively prevented certain internet sales.

Principle

The CJEU examined whether the restriction could be justified by consumer and health protection objectives.

The case is significant because it illustrates that consumer-protection justifications must still be assessed for proportionality.

A government or business cannot necessarily prohibit an online distribution method merely by invoking consumer protection.

13. Comparative Principles Emerging from the Cases

The case law can be organised as follows:

14. The Key Legal Test

A useful analytical framework is:

Step 1 — Identify the restriction

Ask exactly what the distributor is prevented from doing.

Is it:

• selling online;
• selling through Amazon;
• advertising online;
• using price-comparison websites;
• using search engines;
• selling outside a territory?

Step 2 — Determine whether internet sales remain genuinely possible

This distinction is critical.

A restriction that leaves retailers free to operate their own websites is different from an absolute online-sales prohibition.

Pierre Fabre represents the latter situation, while Coty demonstrates that a narrower marketplace restriction may receive different treatment.

Step 3 — Examine the distribution system

Determine whether the supplier operates:

• exclusive distribution;
• selective distribution;
• franchise distribution;
• agency arrangements;
• ordinary independent distribution.

The legal analysis can differ significantly depending upon the structure.

Step 4 — Identify the supplier's objective

Possible objectives include:

• product safety;
• technical assistance;
• professional advice;
• preventing counterfeiting;
• maintaining product quality;
• luxury-image protection;
• preventing free-riding;
• encouraging physical-store services.

The existence of an objective is not by itself sufficient.

Step 5 — Apply proportionality

Ask:

Can the legitimate objective be achieved through a less restrictive method?

This was particularly important in Ping.

For example, instead of prohibiting online sales completely, a manufacturer might require:

• pre-sale fitting;
• specified technical information;
• customer-service facilities;
• return procedures;
• trained personnel;
• quality standards.

Step 6 — Examine discrimination

Requirements should generally be applied consistently to comparable authorised retailers.

A manufacturer should not establish apparently neutral online requirements that selectively disadvantage particular distributors.

Step 7 — Examine market power

Market power matters particularly where the restriction is imposed by a dominant undertaking.

A restriction imposed by a dominant manufacturer or platform may additionally raise issues under Article 102 TFEU or equivalent national provisions.

15. Online Sales Restrictions and Selective Distribution

Selective distribution deserves special attention.

A supplier can generally establish a network of authorised distributors based upon specified qualitative or quantitative criteria.

However:

Selective distribution is not a licence to eliminate internet competition.

The supplier may regulate how authorised retailers present products online, but the restrictions must be assessed under competition law.

The contrast between ASICS/adidas and Coty is particularly useful.

ASICS involved extensive restrictions affecting price-comparison tools, advertising and marketplaces, whereas Coty involved a narrower prohibition on discernible third-party platforms within a luxury selective-distribution system.

16. Online Marketplaces

One of the most important contemporary issues is whether manufacturers can prevent retailers from selling through marketplaces.

Example

A manufacturer permits:

Retailer's own website — YES

but prohibits:

Amazon Marketplace — NO
eBay — NO

The answer is not automatically the same as for an absolute online-sales ban.

Coty shows that a narrowly formulated marketplace restriction may be compatible with EU competition law under particular circumstances, particularly in a properly functioning selective distribution system protecting a luxury image.

By contrast, the German adidas and ASICS proceedings demonstrate the competition concerns that arise when marketplace restrictions substantially impair retailers' ability to reach consumers.

17. Online Sales Restrictions and Consumer Welfare

Online restrictions can affect consumers through:

Higher prices

Fewer retailers may mean less price competition.

Reduced choice

Consumers may lose access to smaller or geographically distant sellers.

Reduced price transparency

Restrictions on comparison engines can make price comparison more difficult.

Reduced innovation

Retailers may have fewer incentives to develop better online services.

Reduced market access

Small retailers can lose access to consumers who primarily shop online.

The Ping Tribunal expressly recognised the importance of consumers' ability to compare prices and retailers' ability to compete online.

18. Free-Riding Argument

Manufacturers sometimes argue that online restrictions prevent free-riding.

For example:

1. Consumer visits a physical store.
2. Sales staff provides advice or product demonstration.
3. Consumer learns about the product.
4. Consumer subsequently purchases the product online at a lower price.

The physical retailer has supplied the service, while another retailer obtains the sale.

This is commonly called free-riding.

Competition law does not necessarily reject the concern, but the proposed restriction must still be assessed for necessity and proportionality.

19. Difference Between Permissible and Problematic Restrictions

Potentially permissible

"Authorised retailers must provide adequate customer-service facilities."

Potentially legitimate.

Potentially problematic

"Authorised retailers cannot sell through the internet."

This raises the serious concerns identified in Pierre Fabre and Ping.

Intermediate example

"Retailers may sell online through their own websites but may not use discernible third-party marketplaces."

This requires a more nuanced analysis and is the type of restriction considered in Coty.

20. Six Core Cases at a Glance

21. Key Doctrinal Distinction

The most important distinction can be expressed as:

Absolute Online Ban

→ Internet sales effectively eliminated
→ Strong competition concerns
→ Pierre Fabre / Ping

Partial Online Restriction

→ Internet sales remain possible
→ Examine nature, objective, scope and proportionality
→ Coty / ASICS / adidas

Thus, the mere fact that a supplier imposes an online restriction does not automatically determine its legality.

22. Conclusion

Online sales restrictions occupy an important position in modern competition law because internet distribution is now a major competitive channel.

The principal lessons from the case law are:

1. Absolute online-sales bans are particularly problematic.
2. A manufacturer cannot ordinarily eliminate internet distribution merely to preserve a preferred commercial or brand image.
3. Selective distribution does not automatically justify restrictions on online sales.
4. Marketplace restrictions require a more nuanced analysis than absolute internet bans.
5. Coty demonstrates that certain third-party marketplace restrictions can be compatible with competition law.
6. ASICS and adidas demonstrate the risks of excessive restrictions on marketplaces, price-comparison tools and online advertising.
7. Guess shows that online competition can be restricted indirectly through approval, advertising and territorial arrangements.
8. Ping establishes the importance of considering less restrictive alternatives.
9. Legitimate quality, safety, service or luxury-image objectives may be relevant, but restrictions should be appropriately connected with those objectives.
10. The ultimate analysis depends upon the nature of the restriction, market structure, distribution system, objective, proportionality and competitive effects.

Accordingly, the modern approach is not simply "online restrictions are illegal". The more accurate proposition is:

Competition law generally protects the ability of distributors to use the internet while permitting appropriately designed and proportionate restrictions that serve legitimate distribution objectives.