CJEU Judgment in Super Bock: New Insight on Resale Price Maintenance

Background

Super Bock Bebidas, a prominent Portuguese beverage manufacturer and supplier, was fined EUR 24 million by the Portuguese competition authority (Autoridade da Concorrencia – AdC) in 2019 for imposing specific fixed or minimum prices on its distributors for sales to hotels, restaurants, and bars. Despite complaints, the distributors complied with the imposed prices, as Super Bock monitored their adherence. Non-compliance could result in various penalties, such as the removal of trade discounts or altogether refusal to supply products. Distributors often sought guidance from Super Bock to avoid these retaliatory measures.

Super Bock appealed the decision, arguing that the competition authority failed to demonstrate the existence of an agreement and the harm caused. The company sought to have the fine completely annulled or reduced.

In March 2022, the Lisbon Court of Appeal referred several questions to the CJEU for a preliminary ruling. The questions sought clarification on:

a. whether a vertical agreement fixing minimum resale prices can be considered a restriction of competition by "object,"

b. how the concept of an "agreement" should be interpreted in the context of Super Bock imposing minimum resale prices on its distributors,

c.  whether a distribution agreement affecting almost the entirety of a single Member State's territory falls under the concept of "effect on trade between Member States."

Summary of the Judgment

a. Regarding the first question, the CJEU confirmed that vertical RPM agreements can, under certain conditions, be considered a restriction of competition by "object," meaning that competition authorities can view the practice as a violation of competition law without needing to prove adverse effects on the market. However, the CJEU emphasized that the concept of a "by object" restriction should be narrowly interpreted. To that end, it must be assessed whether such agreements cause a sufficient degree of harm to competition, taking into account their objectives, economic and legal context. Additionally, the CJEU clarified that while the concepts of "hardcore restrictions" under the VBER and restrictions of competition "by object" are not interchangeable, the classification of RPM as a hardcore restriction can and should be considered when analyzing the legal context of the agreement.

b. Regarding the second question, the CJEU emphasized that Super Bock imposed prices on its distributors through regular communications, either by emails or verbally, and had the ability to apply retaliatory measures in case of non-compliance. However, the CJEU stated that for an agreement to exist between Super Bock and the distributors, there must be a "concurrence of wills," regardless of the form in which it is expressed. This concurrence can be demonstrated through the terms of the distribution contract and the explicit or tacit acceptance of the minimum resale prices imposed by Super Bock. The CJEU highlighted that the distributors' compliance with the prices, despite their complaints, indicates their acquiescence. The final assessment, however, remains with the national courts referring the case, based on the specific facts. The existence of the agreement can be established through direct or indirect evidence, including "objective and consistent indicia," which suggest that Super Bock invited the distributors to apply the minimum resale prices and that the distributors complied.

c. Finally, in response to the third question, the CJEU reaffirmed that for an agreement to fall under Article 101 TFEU, it must affect trade between Member States. It recalls established case law stating that an agreement covering the territory of one or part of one Member State can still impact trade between Member States if there is a "sufficient degree of probability" that it may substantially influence trade to the detriment of the single market between Member States.

Accordingly, the Lisbon Court of Appeal, benefiting from the CJEU's guidance, will now evaluate the specific factual evidence provided by the Competition, Regulation, and Supervision Court (TCRS) to determine whether the agreements in question indeed constitute a violation of competition law. The TCRS had previously upheld the AdC's decision, confirming the existence of an infringement and the imposed fine.

Implications

The judgment mainly restates existing case law on established EU competition law principles. However, it emphasizes that there is no definitive list of practices that automatically violate EU competition law. Similar to US federal law, where RPM is not automatically considered unlawful but is analyzed under the "rule of reason," the Super Bock case confirms that EU competition authorities must demonstrate that a particular conduct is sufficiently harmful to competition, considering the economic and legal context. This applies even to practices classified as "hardcore restrictions" under the VBER, such as RPM, and should be taken into account by competition authorities in their assessments. Given the general skepticism towards vertical price fixing, the classification of RPM as a "hardcore restriction" likely contributes to its treatment as a restriction of competition "by object," which remains the prevailing norm in the EU and Member State precedents.

However, the key struggle will continue to be the determination of whether a specific practice constitutes an RPM "agreement," particularly in cases where the agreement appears to be neutral towards RPM but subsequently results from the parties' conduct. The existence of "concurrence of wills" regarding RPM may arise from a distributor's acquiescence to a supplier's coercive measures. The judgment does not provide detailed clarification on the element of "coercion." Similarly, regarding "acquiescence," the judgment missed an opportunity to provide more guidance, leaving it challenging to apply in practice due to limited court and EC guidance. Distributors may find themselves in a difficult position when a supplier requests them to follow specific prices, and the distributor, based on its own judgment, decides it is in their best interest to comply. What constitutes acquiescence and how to prove its absence remain open questions. Additionally, it is unclear how frequently a distributor would need to deviate from the imposed prices to demonstrate a lack of acquiescence.

Conclusion

The CJEU's judgment in the Super Bock case clarifies the interpretation of Article 101(1) TFEU regarding RPM practices. The CJEU suggests that “hardcore violation” classification does not mean that an RPM practice violates competition “by object”, and rule of reason principle should be adopted when determining the harm of the conduct. It emphasizes the need to demonstrate the concurrence of wills between suppliers and distributors and provides flexibility in establishing the existence of an agreement through various forms of evidence. This ruling provides important guidance for competition law enforcement agencies and courts across Europe evaluating similar cases involving RPM practices.