Guess Decision

EUROPEAN COMMISSION
Competition DG
CASE AT.40428 –
GUESS
(Only the English text is authentic)
ANTITRUST PROCEDURE
Council Regulation (EC) 1/2003
Article 7 Regulation (EC) 1/2003

Date: 17.12.2018
This text is made available for information purposes only. A summary of this decision is
published in all EU languages in the Official Journal of the European Union.
Parts of this text have been edited to ensure that confidential information is not disclosed.
Those parts are replaced by a non-confidential summary in square brackets or are shown as
[…].
EUROPEAN
COMMISSION
Brussels, 17.12.2018
C(2018) 8455 final
COMMISSION DECISION
of 17.12.2018
relating to proceedings under Article 101 of the Treaty on the Functioning of the
European Union and Article 53 of the Agreement on the European Economic Area
Case AT.40428 Guess
(Text with EEA relevance)
EN EN
TABLE OF CONTENTS
1. Introduction .................................................................................................................. 6
2. The undertaking concerned .......................................................................................... 6
3. The product and geographic markets concerned .......................................................... 7
4. Procedure...................................................................................................................... 7
5. Facts ............................................................................................................................. 8
5.1. Distribution of Guess’ products in the EEA ................................................................ 8
5.1.1. Selective Distribution System ...................................................................................... 9
5.1.2. The wholesale agreements ......................................................................................... 10
5.1.3. The agreements with mono-brand retailers ................................................................ 10
5.1.4. The agreements with multi-brand retailers ................................................................ 11
5.2. The relevant conduct .................................................................................................. 11
5.2.1. General presentation of Guess’ commercial strategy................................................. 12
5.2.2. Online search advertising restrictions ........................................................................ 13
5.2.3. Online sales restrictions ............................................................................................. 14
5.2.4. Restrictions on cross-selling among members of the selective distribution network
(wholesale and retail) ................................................................................................. 18
5.2.5. Restrictions on cross-border sales to end users .......................................................... 21
5.2.6. Resale price maintenance ........................................................................................... 22
6. Legal assessment ........................................................................................................ 23
6.1. Concept of undertaking .............................................................................................. 24
6.1.1. Principles .................................................................................................................... 24
6.1.2. Application to this case .............................................................................................. 24
6.2. Agreements and concerted practices .......................................................................... 24
6.2.1. Principles .................................................................................................................... 24
6.3. Restriction of competition .......................................................................................... 26
6.3.1. Principles .................................................................................................................... 26
6.3.2.1. Selective distribution .................................................................................................. 27
6.3.2.2. Online search advertising restrictions ........................................................................ 28
6.3.2.3. Online sales restrictions ............................................................................................. 29
6.3.2.4. Restrictions on cross-selling among members of the selective distribution network
(wholesale and retail) ................................................................................................. 30
6.3.2.5. Restrictions on cross-border sales to end users .......................................................... 31
6.3.2.6. Resale price maintenance ........................................................................................... 31
EN 2 EN
6.3.2.7. Conclusion.................................................................................................................. 32
6.4. Single and continuous infringement........................................................................... 32
6.4.1. Principles .................................................................................................................... 32
6.5. Effect on trade between Member States..................................................................... 32
6.5.1. Principles .................................................................................................................... 32
6.6. Appreciable effect on competition ............................................................................. 33
6.6.1. Principles .................................................................................................................... 33
6.7. Non-applicability of Article 101(3) of the Treaty ...................................................... 34
6.7.1. Principles .................................................................................................................... 34
6.7.1.1. Article 101(3) of the Treaty ....................................................................................... 34
6.7.1.2. The Vertical Block Exemption Regulation ................................................................ 34
6.7.2.1. The non-applicability of the VBER ........................................................................... 35
6.7.2.1. No exemption under Article 101(3) ........................................................................... 36
7. Scope and duration of the infringement ..................................................................... 36
7.1. Product scope ............................................................................................................. 36
7.2. Geographic scope ....................................................................................................... 36
7.3. Duration of the infringement ...................................................................................... 37
8. Liability ...................................................................................................................... 37
8.1. Principles .................................................................................................................... 37
8.2. Application to this case .............................................................................................. 38
9. Remedies And Fines .................................................................................................. 38
9.1. Remedies under Article 7 of Regulation (EC) No 1/2003 ......................................... 38
9.2. Fines under Article 23(2) of Regulation (EC) No 1/2003 – principles ...................... 39
9.3. The intentional or negligent nature of the infringement ............................................ 40
9.4. Calculation of the fine ................................................................................................ 40
9.4.1. Value of sales ............................................................................................................. 40
9.4.2. Gravity........................................................................................................................ 40
9.4.3. Duration...................................................................................................................... 41
9.4.4. Calculation of the basic amount ................................................................................. 41
9.4.5. Aggravating or mitigating factors .............................................................................. 41
9.4.6. Application of the 10% turnover limit ....................................................................... 41
EN 3 EN
9.4.7. Reduction of the fine in view of cooperation ............................................................. 41
9.4.8. Conclusion: final amount of the fine .......................................................................... 41
EN 4 EN
COMMISSION DECISION
of 17.12.2018
relating to proceedings under Article 101 of the Treaty on the Functioning of the
European Union and Article 53 of the Agreement on the European Economic Area
Case AT.40428 Guess
(Text with EEA relevance)

THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to the Agreement on the European Economic Area,
Having regard to Council Regulation (EC) No 1/2003 of 16 December 2002 on the
implementation of the rules on competition laid down in Articles 81 and 82 of the
Treaty1, and in particular Article 7(1) and Article 23(2) thereof,
Having regard to the Commission Decision of 6 June 2017 to initiate proceedings in
this case,
Having given the parties concerned the opportunity to make known their views
pursuant to Article 27(1) of Regulation (EC) No 1/2003 and Article 12 of
Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of
proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty2,
After consulting the Advisory Committee on Restrictive Practices and Dominant
Positions,
Having regard to the final report of the Hearing Officer in this case3,
Whereas:
1
Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition
laid down in Articles 81 and 82 of the Treaty, OJ L 1, 4.1.2003, p. 1. With effect from 1 December
2009, Articles 81 and 82 of the EC Treaty have become Articles 101 and 102, respectively, of the
Treaty on the Functioning of the European Union (“the Treaty”). The two sets of provisions are, in
substance, identical. For the purposes of this decision, references to Articles 101 and 102 of the Treaty
should be understood as references to Articles 81 and 82, respectively, of the EC Treaty when where
appropriate. The Treaty also introduced certain changes in terminology, such as the replacement of
“Community” by “Union” and “common market” by “internal market”. The terminology of the Treaty
is used throughout this Decision.
2
Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by
the Commission pursuant to Articles 81 and 82 of the Treaty, OJ L 123, 27.4.2004, p. 18.
3
Final report of the Hearing Officer of 11/12/2018.
EN 5 EN
1. INTRODUCTION
(1) This Decision concerns Guess?, Inc., Guess? Europe, B.V. and Guess Europe Sagl.
The undertaking comprising those three entities is referred to in this Decision as
"Guess".
(2) Guess implemented practices aimed at restricting authorised distributors in its
selective distribution system (i) from using the Guess brand names and trademarks
for the purposes of online search advertising; (ii) from selling online without first
obtaining a specific authorisation from Guess which Guess had full discretion to
either grant or refuse and where no quality criteria had been specified for deciding
whether or not to grant an authorisation; (iii) from selling to end users located
outside the authorised distributors' allocated territory; (iv) from cross-selling among
authorised wholesalers and retailers; (v) from determining resale prices
independently.
(3) This Decision establishes that those practices constitute a single and continuous
infringement of Article 101 of the Treaty and of Article 53 of the Agreement on the
European Economic Area ("the EEA Agreement").
2. THE UNDERTAKING CONCERNED

(4) Guess specialises in the design, marketing and distribution of apparel and accessories
for men, women and children.
(5) Guess?, Inc. is a USA-based company, incorporated in Delaware and listed on the
New York Stock Exchange.
(6) Guess?, Inc. designs, markets, distributes and licenses contemporary apparel and
accessories. The product lines include full collections of clothing, including jeans,
trousers, skirts, dresses, shorts, blouses, shirts, jackets, knitwear and intimate apparel.
The apparel is marketed under numerous trademarks including "GUESS",
"GUESS?", "GUESS U.S.A.", "GUESS Jeans", Triangle Design, "MARCIANO",
Question Mark and Triangle Design, a stylised G and a stylised M, "GUESS Kids",
"Baby GUESS", "YES", "G by GUESS", and "GUESS by MARCIANO".
(7) Guess?, Inc. also grants licences to third parties to manufacture and distribute a broad
range of products that complement the apparel lines, including eyewear, watches,
handbags, footwear, kids and infants apparel, outerwear, fragrance, jewellery and
other fashion accessories.
(8) Through Guess? Bermuda Holdings L.P., acting as the holding company, Guess?,
Inc. owns Guess? Europe, B.V. (incorporated in the Netherlands in 1996). In turn,
Guess? Europe, B.V. controls Guess Europe Sagl (referred to in this Decision as
"Guess Europe"), which is incorporated in Switzerland. Guess? Europe, B.V. is the
100%4 parent company (directly or indirectly) of the Guess subsidiaries incorporated
in the European Economic Area ("EEA").
(9) Pursuant to the "master" trademark licence and distribution agreement between
Guess?, Inc. and Guess Europe, Guess Europe is entrusted with manufacturing and
distributing Guess products (clothing, including kids and infant apparel, underwear,
4
The only exceptions are Guess Canary Islands, S.L. and Guess Portugal, LDA - […].
EN 6 EN
swimwear, shoes, accessories, jewellery) in Europe.5 Handbags are exclusively
distributed by Guess Europe in the EEA (although Guess?, Inc. licenses their
manufacturing to a third party). Guess Europe manages licensing, logistics and
financial reporting for all EEA-based Guess subsidiaries. Guess Europe is the legal
entity which is the contracting party in the distribution agreements in the EEA. Guess
has subsidiaries in most of the countries that are Contracting Parties to the EEA
Agreement ("EEA countries").
(10) In the period concerned by this Decision, the EEA-wide distribution of Guess
products was managed by Guess Europe.
3. THE PRODUCT AND GEOGRAPHIC MARKETS CONCERNED

(11) The products concerned by this Decision are the apparel and accessories lines
marketed by Guess Europe at wholesale and retail level under numerous trademarks,
including "GUESS", "GUESS?", "GUESS U.S.A.", "GUESS Jeans", Triangle
Design, "MARCIANO", Question Mark and Triangle Design, a stylized G and a
stylized M, "GUESS Kids", "Baby GUESS", "YES", "G by GUESS", and "GUESS
by MARCIANO", and, in particular, apparel, denim, swimwear, underwear,
footwear, footwear kids, jewellery and accessories, each for men, women and kids.
(12) The geographic areas covered by this Decision are the following 27 EEA countries
where Guess distributes its products via a selective distribution system: Austria,
Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland,
Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania,
Luxembourg, Malta, the Netherlands, Norway, Poland, Romania, Slovakia, Slovenia,
Sweden and the United Kingdom.
4. PROCEDURE
(13) The Commission’s investigation started as a follow-up to the e-commerce sector
inquiry.6
(14) The Commission sent several requests for information pursuant to Article 18(1) of
Regulation (EC) No 1/2003 to Guess Europe.7 It also sent requests for information to
wholesalers8, to mono-brand store owners9 and to multi-brand retailers10.
(15) By decision of 6 June 201711 adopted pursuant to Article 2(1) of Regulation (EC) No
773/2004, the Commission initiated proceedings against Guess in relation to
agreements concerning the distribution of clothing, shoes and accessories in the
Union and the EEA that contain cross-border sales restrictions, cross-selling bans
among members of a selective distribution system, internet sales limitations and
resale price restrictions.
5
Fragrances, watches, eyewear and smart phone covers (neither of which is concerned by this Decision)
are produced and distributed by independent companies in the EEA - […].
6
http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html
7
[…].
8
[…].
9
[…].
10
[…].
11
Commission decision C(2017) 3909 final of 6 June 2017 […].
EN 7 EN
(16) On […], Guess submitted a formal offer to cooperate in Case AT.40428 in view of
the adoption of a decision pursuant to Article 7 and Article 23 of Regulation (EC) No
1/2003 (the formal offer is referred to in this Decision as "the Settlement
Submission").12 The Settlement Submission contained:
– an acknowledgement, in clear and unequivocal terms, of Guess?, Inc.’s, Guess?
Europe, B.V.’s and Guess Europe’s joint and several liability for the
infringement described in the Settlement Submission, as regards its object, the
main facts, the legal characterisation of the infringement and of the main facts,
including Guess’ role and the duration of Guess’ participation in the
infringement;
– an indication of the maximum fine that Guess?, Inc., Guess? Europe, B.V. and
Guess Europe would expect the Commission to impose and that they would
accept in the context of a cooperation procedure;
– confirmation that Guess?, Inc., Guess? Europe, B.V. and Guess Europe have
been sufficiently informed of the objections the Commission envisages raising
against them and that they has been given sufficient opportunity to make their
views known to the Commission;
– confirmation that Guess?, Inc., Guess? Europe, B.V. and Guess Europe do not
envisage requesting further access to the file or requesting to be heard again in
an oral hearing, unless the Commission does not reflect the Settlement
Submission in the Statement of Objections and the decision;
– agreement to receive the Statement of Objections and the final decision
adopted pursuant to Articles 7 and 23 of Regulation (EC) No 1/2003 in
English;
– a statement that the Settlement Submission is conditional upon the imposition
of a fine by the Commission which does not exceed the amount specified in the
Settlement Submission.
(17) On 12 November 2018, the Commission adopted a Statement of Objections
addressed to Guess?, Inc., Guess? Europe, B.V. and Guess Europe, in which it raised
objections on the basis of the events as described in Section 5.2 of this Decision.
(18) On 21 November 2018, Guess?, Inc., Guess? Europe, B.V. and Guess Europe
submitted their joint reply to the Statement of Objections.13 Guess?, Inc., Guess?
Europe, B.V. and Guess Europe reiterated their commitment to follow the
cooperation procedure and confirmed that the Statement of Objections reflected the
content of the Settlement Submission and that they did not wish to be heard again by
the Commission.
5. FACTS
5.1. Distribution of Guess’ products in the EEA
(19) Guess products are sold in all EEA countries except Iceland.
(20) At wholesale level Guess products are distributed via two distribution models:
12
[…].
13
[…].
EN 8 EN
(a) in 14 EEA countries, Guess Europe or its national subsidiary acts as the only
wholesaler operating a selective distribution system for all Guess product
lines;14
(b) in 16 other EEA countries, Guess’ national subsidiary acts as the wholesaler
for some product lines and one third-party wholesaler is in charge of the
distribution of one or more other product lines.15 In these EEA countries the
wholesaler operates a selective distribution system in the allocated territory
with respect to the product lines specified in the wholesale agreement. Guess
Europe has 13 wholesale distribution agreements with third parties.16
(21) At retail level Guess products are distributed in bricks-and-mortar stores under three
distribution models17:
(a) Guess and its affiliates own and operate 348 stores in 12 EEA countries.18
Guess has a strong direct offline retail presence in particular in Austria,
Finland, France, Germany, Italy, the Netherlands, Poland, Portugal and Spain;
(b) independent third parties operate mono-brand stores selling only Guess
products. In 2017 there were 11319 third party-owned mono-brand stores,
operated by more than 30 companies in the EEA;
(c) Guess products are sold by about [3000 – 5500]20 third party-owned multi-
brand retailers across the EEA.
(22) Guess also sells its products online directly through its own online shop 21 and as a
seller on online marketplaces. Guess products are also sold online by pure online
retailers.
5.1.1. Selective Distribution System
(23) Guess Europe runs a selective distribution system through agreements with its
wholesalers and mono-brand retailers, as well as through general sales terms with its
multi-brand retailers. The wholesale agreements (see recitals (24) – (28)) provide
that the “SUBDISTRIBUTOR22 acknowledges that the exclusive and prestigious
GUESS image can be safeguarded if the Products are distributed through a selective
distribution system”. The retail agreements (see recitals (29) - (31)) state that the
contract products are “fashionable high quality clothing, fashion accessories and
other products”23. Within this selective distribution network, independent mono-
14
This is the case in Belgium, Denmark, Finland, France, Ireland, Italy, Luxembourg, Malta, Norway,
Poland, Portugal, Romania, Spain and Sweden […].
15
This is the case in Austria, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Germany, Greece,
Hungary, Latvia, Liechtenstein, Lithuania, the Netherlands, Slovakia, Slovenia, and in the United
Kingdom […].
16
The data refer to the financial year 2017 (running from 31 January 2016 to 28 January 2017).
17
Idem.
18
[…].
19
[…].
20
As certain retailers have more than one retail shop, the actual number of Guess sales points belonging to
third-party multi-brand retailers is roughly [5000 – 8000] in the EEA. […].
21
www.guess.eu
22
I.e. the wholesalers.
23
Point A of the retail store sublicense agreements and see also point A and C of the wholesale
agreement.
EN 9 EN
brand retailers are selected directly by Guess Europe and multi-brand retailers are
pre-selected by the independent national wholesalers and approved by Guess Europe.
5.1.2. The wholesale agreements
(24) The wholesale agreements (called “selective subdistributorship agreements”) are
concluded between Guess Europe and national wholesalers (called
“subdistributors”). They all follow the same template24 with some modifications and
adjustments.
(25) According to the wholesale agreements, each wholesaler has the mandate to
distribute and promote the Guess product lines specified in the agreement in its
allocated territory.25
(26) The allocated territory in the agreements is typically defined as one EEA country and
in some cases two or three neighbouring EEA countries. In most cases Guess Europe
provides exclusive distribution rights for the wholesaler in a given territory, as
stipulated under point 3.1 of the wholesale agreement. The main objective of the
wholesale agreements is described as follows: “SUBDISTRIBUTOR shall exercise its
best efforts to actively promote the Products within the Territory and to sell the
Products to GUESS licensed stores, and to other retail store operators whose retail
stores otherwise meet GUESS's standards for quality, image, services and
appearance. […]”.26
(27) The wholesale agreements also stipulate that the wholesaler has to operate as part of
a selective distribution system. In particular, the wholesaler has to pre-select suitable
retailers in the territory who fulfil the criteria defined by Guess Europe.27 In practical
terms, for every pre-selected retailer, the wholesaler has to fill out a “Customer
Evaluation Form”. According to the wholesale agreements, as well as in practice,
every pre-selected retailer has to be ultimately approved by Guess Europe on the
basis of the Customer Evaluation Form.28
(28) The wholesale agreements stipulate that the wholesaler has to maintain a showroom
and has to report regularly to Guess Europe about its activities. The agreements also
set out detailed rules on advertisement and promotion activities undertaken by the
wholesalers.
5.1.3. The agreements with mono-brand retailers
(29) Independent third parties operating mono-brand stores are selected directly by Guess
Europe and sign formal retail agreements (called “retail store sublicense
agreements”) with Guess Europe. These retailers are referred to as “sublicensees” or
24
[…]. For the purposes of this Decision a reference to "wholesale agreement(s)" refers to the template
agreement, unless otherwise specified.
25
According to point F of the wholesale agreement "GUESS EUROPE desires to appoint
SUBDISTRIBUTOR as its subdistributor in the Territory for products bearing one or more of the
Trademarks subject to GUESS EUROPE's rights under the Master Agreement. SUBDISTRIBUTOR
desires to promote and distribute these products in the Territory under the terms and conditions
contained herein subject at all times to GUESS EUROPE's rights under the Master Agreement."
26
[…].
27
[…].
28
[…].
EN 10 EN
“mono-brand retailers”. The agreements all follow the same template29 with some
modifications and adjustments.30
(30) According to point C of the retail store sublicense agreements: “Pursuant to that
certain Retail Store Agreement by and among GUESS and GUESS EUROPE dated
January 1, 2008 (“Master Agreement”) as amended, GUESS appointed GUESS
EUROPE as its exclusive retail store licensee for the operation of stores for the sale
of GUESS products in Europe, whereby GUESS EUROPE has the right, upon the
prior written consent of GUESS, to appoint sublicensees for the operation of such
stores within its territory.”
(31) The agreements set out the criteria that Guess Europe's mono-brand retailers need to
fulfil in order to be authorised as a mono-brand retailer, including with respect to
store design and construction requirements, quality standards relating to the
operation of the store, as well as requirements relating to advertising. Each of the
agreements sets out the physical address of the store(s) to which it relates, the
territories to which the agreement applies and the initial term and renewal term of the
agreement. The “Territory” is defined under point 1.9 of the agreement as a whole
EEA country or in some cases as a group of neighbouring EEA countries.31
5.1.4. The agreements with multi-brand retailers
(32) The multi-brand retailers, as described in recital (27), are pre-selected by the
independent national wholesaler and approved by Guess Europe. There is no long-
term distribution agreement in place with the multi-brand retailers. Instead, by
submitting a purchase order and receiving a subsequent order confirmation, they
abide by the relevant version of Guess Europe’s general terms and conditions (called
the “General Sales Terms”). According to point 2 of the General Sales Terms:32
“With the specific written confirmation of this order from GUESS EUROPE, the
Purchaser may take on the denomination of «authorised retailer» limited to the
season for which the supply has been ordered and confirmed.”
(33) Guess Europe’s General Sales Terms are used in the entire territory of the EEA,
except for France, Spain, Portugal and Italy. Specific General Sales Terms are in
place for those particular EEA countries.
5.2. The relevant conduct
(34) Guess Europe's wholesale agreements, its retail store sublicense agreements and the
General Sales Terms used with multi-brand retailers in the EEA contain a number of
restrictive provisions, notably:
(a) online search advertising restrictions;
(b) online sales restrictions;
29
[…].
30
The retail store sublicense agreement templates comprise two different templates for the retail
distribution of Guess’ apparel products, and one separate template for the retail distribution of Guess’
accessory products. Except for certain differences that are highlighted in this Decision, the Sublicensee
Templates are identical […].
31
Some of the mono-brand retailers signed more than one agreement.
32
[…].
EN 11 EN
(c) restrictions on cross-selling among members of the selective distribution
system;
(d) restrictions on cross-border sales to end users; and
(e) resale price maintenance clauses.
5.2.1. General presentation of Guess’ commercial strategy
(35) As a reaction to the growing importance of e-commerce over the last ten years,
Guess developed a comprehensive e-commerce strategy aligning B2C activities
(direct sales to consumers via its own website, initially launched in 200933) and its
B2B activities (sales to third party wholesalers and retailers)34. This is confirmed by
Guess’ internal documents: “[e]commerce is the most important channel for a
Company, which gives first brand positioning and integrity perception to customers.
It’s the fastest growing channel. It has to be given priority in showing/selling
products, launching promotions and investing in the brand presentation […]”.35
Guess’ strategy was steadily directed at expanding this key distribution channel.36 At
the heart of this strategy was the development of an own website with an online
shop.
(36) Thus, Guess worked with third party wholesalers and retailers while trying “[t]o
avoid cannibalisation of [the] official Guess website”.37 As explained in Guess’
internal documents,”[…] the online market has to be strictly controlled in order to
avoid wholesale cannibalizing retail sales. Retail expansion potential is enormous,
but if it’s strongly limited and obstructed by online wholesale, the expansion would
be very hard to achieve”.38 According to an internal presentation, one of the strategic
objectives of the company was to: “[…] create a winning ecommerce and mobile
platform to overperform the market”.39 Another internal document states: “Our
strategy and goal is to grow our B2C channel […].40 [Internal document regarding
Guess’ business startegy] the goal is to direct traffic to our B2C site”.41 To attain
that objective, Guess Europe tried to control the competitive pressure from Guess’
independent distributors selling Guess products online.42
(37) The second factor which influenced Guess Europe’s distribution strategy (with
respect to brick-and-mortar shops) over the last years was vertical integration.
Following a global company-driven strategy implemented since (at least) 2008, a
material and growing percentage of Guess Europe’s overall retail sales in the EEA
were made by the company directly.43
33
www.guess.eu
34
[…].
35
[…].
36
See for instance […].
37
[…].
38
[…].
39
[…].
40
[…].
41
[…].
42
[…].
43
[…].
EN 12 EN
(38) That strategy lay behind the restrictive advertising policy and the restrictive
provisions contained in Guess Europe’s wholesale agreements, retail agreements and
General Sales Terms in the EEA.
(39) Those restrictions were conceived in line with Guess’ strategy to safeguard the
prestigious brand image of Guess products and to enhance the value and reputation
of its trademarks. However, the restrictive provisions in the agreements were
infrequently and inconsistently enforced.
5.2.2. Online search advertising restrictions
(40) A key instrument used by Guess Europe to implement its e-commerce strategy and to
control the expansion of online sales by its independent distributors was to restrict
the use of the Guess brand names and trademarks, in particular in Google AdWords.
(41) Google AdWords is the largest and most widely used online search advertising
service. That service allows economic operators, by reserving or bidding on one or
more keywords, to obtain the placing of an advertising link to their website whenever
an internet user enters one or more of those words as a request in the Google search
engine. The advertising links typically appear on Google’s general search results
pages next to the so-called generic/natural search results.
(42) Google selects the advertisers that will be displayed in AdWords by means of a
keywords auction which then determines the position of each advertisement and each
advertiser’s cost per click. Advertisers pay when users click on the advertisement.
Google uses two key factors to determine the ranking of an advertisement: (i)
maximum bid (the highest amount that an advertiser is willing to pay for a click); and
(ii) a quality score determined by Google using an algorithm that determines how
relevant and useful the advertisement is to users.
(43) Google has set up an automated process for the selection of keywords and the
creation of advertisement. Advertisers select and bid on the keywords, draft the
commercial message, and input the link to their website.
(44) It follows that competition in the form of multiple bids for a specific keyword, such
as “Guess”, increases the cost per click, thus the overall advertisement cost of a
company.
(45) Guess Europe systematically banned its authorised retailers, both mono-brand and
multi-brand retailers, from using or bidding on Guess brand names and trademarks as
keywords in Google AdWords in the EEA44.
(46) That online search advertising restriction was not included in the distribution
agreements, but was systematically applied whenever an authorised retailer asked for
permission to use any of the Guess brand names or trademarks as keywords in
Google AdWords in the context of seeking approval from Guess for its advertising.
Authorisations were granted only twice in the EEA since introduction of the policy.45
(47) As Guess documents explain: “[The] policy is not to let our wholesale customers46
bid on Google adwords using the Guess Trademark. […]”;47 “We’ve never
44
[…]. The only exception appears to have been the UK with respect to official resellers […].
45
[…].
46
That is to say, Guess’ retailers.
47
[…].
EN 13 EN
authorized third parties to advertise our brand keywords on Google (both wholesale
and marketplace parties) as the only one authorized to do this is the official GUESS
online seller, i.e. guess.eu”.48
(48) Although Guess Europe operated a selective distribution system in order to preserve
the brand image of its products, Guess Europe pursued different objectives when it
came to Guess’ Google AdWords policy because “[a]uthorizing third parties would
generate an important increase in our Google costs and decrease in visibility and
sales for www.guess.eu.”49
(49) In particular, it pursued the following objectives. First, Guess sought to maximise
traffic to its own website at the expense of the independent Guess distributors: “Our
strategy and goal is to grow our B2C channel and Google search is a very important
marketing channel that gives our B2C site an advantage when our ads appear first
or are the only ads using the Guess Trademark”.50 Second, given the Google
AdWords auction system, Guess sought to minimise its own advertisement costs:
“Letting our B2B customers bid on Google terms drives up our advertising costs and
puts our B2C site at a distinct disadvantage.”51
(50) One of the objectives was therefore to reduce competitive pressure from authorised
retailers on Guess’ own online retail activities by curtailing the ability of authorised
retailers to use this advertising tool effectively, and to keep down its own
advertisement costs.
(51) From Guess’ perspective, Google AdWords represents a very important advertising
tool.52 Guess invested on average […] of its total Europe “media budget” in Google
AdWords in the years 2016 to 2018 and almost [20 – 40%] of the visits to its website
(online shop) were generated by Google AdWords during this period.53
(52) Banning the use of the Guess brand names and trademarks in Google AdWords
restricted the “findability” and ultimately the viability of authorised online retailers
within Guess’ selective distribution system.
5.2.3. Online sales restrictions
(53) Another part of Guess’ e-commerce strategy which favoured its own website (online
shop) was to have a “limited number of independent operators selling Guess
products online”.54 This was achieved through a contractual term making online
sales by authorised retailers conditional on the retailer first obtaining explicit
authorisation from Guess to conduct online sales. Additionally no quality criteria
were specified for deciding whether or not to grant authorisation and Guess had full
discretion to decide whether or not to allow authorised retailers to sell online.
(54) Guess’ employees were aware of the fact that selection criteria could be used to cut
the number of distributors selling Guess products through the internet in line with
Guess’ e-commerce strategy.55 As one of the e-mails containing instructions to Guess
48
[…].
49
[…].
50
[…].
51
[…].
52
[…].
53
[…].
54
[…].
55
[…].
EN 14 EN
employees explains: “[…] E COMMERCE Team will decide on which customers we
will work with. AGAIN, LESS IS MORE. We need to set up very clear criteria which
will help us not to answer positively on every request”.56 The restrictive online sales
policy is also confirmed by Guess in its official legal statement on eBay’s website:
“GUESS does not permit third parties to sell its apparel products on the world wide
web.”57 And by an internal e-mail exchange [Internal document regarding Guess’
business strategy]58.
(55) The primary objective of this part of Guess Europe’s e-commerce strategy was to
protect its own online sales activities and to limit intra-brand competition by
authorised retailers, as opposed to ensuring compliance with a set of objective quality
criteria within a selective distribution system.
(56) The restrictive online admission strategy was achieved through the distribution
agreements. In particular, the entire wording and spirit of the retail agreements
concerned offline activities and suggested that mono-brand retailers were supposed
to carry out offline sales activities only.
(57) According to point C of the retail store sublicense agreements, the main activities of
retailers (sublicensees) was to operate stores59: “Pursuant to that certain Retail Store
Agreement by and among GUESS and GUESS EUROPE dated January 1, 2008
(“Master Agreement”) as amended, GUESS appointed GUESS EUROPE as its
exclusive retail store licensee for the operation of stores for the sale of GUESS
products in Europe, whereby GUESS EUROPE has the right, upon the prior written
consent of GUESS, to appoint sublicensees for the operation of such stores within its
territory.” According to point 1.6 of the retail store sublicense agreements: ““Retail
Sale” means a sale made in the Store at retail price to a consumer.”60 Store is
defined in point 1.8 as follows: “Store” means the retail store located at _____,
owned and operated entirely by SUBLICENSEE that (a) carries the Products
exclusively for sale to the general public, (b) bears as its store name, exclusively, the
“GUESS?” service mark, and (c) conforms to the requirements of GUESS.” 61
(58) In all the executed agreements submitted to the Commission, stores are always
defined as one or more physical locations. None of the agreements submitted refer to
a website as an acknowledged store. Point 3.1 of the retail agreements also only
refers to retail sale in stores and operation of stores62: “Rights Granted. Subject to the
terms and conditions contained herein and GUESS EUROPE’s rights under the
Master Agreement, GUESS EUROPE hereby grants to SUBLICENSEE, and
56
[…].
57
[…].
58
[…].
59
The corresponding provision in the accessory store sublicense agreements is under point D.
60
In some agreements the wording of the provision (under point 1.9) is the following: "1.9. Retail sale
means any sale made in a Store."
61
The corresponding provision in the accessory store sublicense agreement template […] is under point
1.11: “Store” means the accessory store owned and operated entirely by SUBLICENSEE located at
_____, that (a) carries the Products (accessories) exclusively for sale to the general public, (b) bears
as its store name, exclusively, the "GUESS?" or "GUESS? ACCESSORIES" service mark, and (c)
conforms to the requirements of GUESS." . The definition of "Store" is included under a point different
than point 1.8 in a number of agreements […].
62
The corresponding provision is included in all retail store sublicense agreements with the exception of
two agreements: […].
EN 15 EN
SUBLICENSEE hereby accepts a non-assignable, non-transferable non-exclusive
right to use the Trademarks and the IP Rights only in connection with the promotion
and Retail Sale of the Products in the Store and in the operation of Store in the
Territory.” Point 3.2 of the retail store sublicense agreements prohibits any sales
outside the store: “Rights Not Granted. THE RIGHTS LICENSED BY GUESS
EUROPE HEREUNDER ARE LIMITED TO THE OPERATION OF RETAIL STORE
AND DO NOT INCLUDE THE RIGHT TO MANUFACTURE OR DISTRIBUTE
THE PRODUCTS AT WHOLESALE, OR TO SELL THE PRODUCTS AT RETAIL
OTHER THAN IN THE STORE.”63
(59) Point 5.1 of the retail store sublicense agreements64 sets out the quality standards and
additional requirements that retail store owners need to fulfil in order to comply with
the requirements of Guess Europe’s selective distribution system. The long list of
standards and requirements relate to offline retail sale activities only and explicitly
exclude online sales under point 5.1(o): “(o) not to sell any Products through the
Internet or any other electronic or computer-based system, without GUESS’s prior
written consent […]”.65 Points 4.1, 4.2 and 4.7 of the agreements also define the
conditions that stores need to fulfil and the process for obtaining approval. Similarly,
the Customer Evaluation Form used for multi-brand retailers wishing to be admitted
to the Guess selective distribution network contains quality criteria for offline sales
only, for example information on the store (type, number of windows, turnover, area,
number of employees, external appearance (including street facade, windows),
internal appearance (including flooring, walls ceiling, fixtures, advertising, brand
identification), overall impression, and information on the brands sold per product
category. Wholesalers are also required to attach photos to the signed Customer
Evaluation Form showing the retail store, internally and externally, and neighbouring
stores.66
(60) The same approach is reflected in the General Sales Terms used with multi-brand
retailers.67 According to point 10: “The Purchaser undertakes to sell the garments in
the stores indicated and/or authorised in this proposal and shall not display or sell
them in any of its other stores without prior written authorisation from GUESS
EUROPE. […] The Purchaser also agrees not to sell the garments through Internet
63
The corresponding provision in the agreement of one of the retailers is included under point 3.3: […].
64
The corresponding provision in the accessory retail store sublicense agreements is under point 5.1 and
is to a large extent identical, albeit with somewhat different numbering and including the following
additional points:
“(h) to employ at each Store an individual or individuals with suitable qualifications and experience in
the high quality retail accessory industry to manage the business and operations of the Store;
(i) that GUESS EUROPE shall have the right to require SUBLICENSEE to replace any Store manager
and/or merchandiser in circumstances where GUESS or GUESS EUROPE's standards and procedures
have not been maintained;
(m) to notify GUESS EUROPE immediately of any orders or regulations directed at, or affecting, the
Store, the reasons therefor, and the responsive actions taken and/or planned to be taken by
SUBLICENSEE in connection therewith;
(r) not to sell any Products through the Internet or any other electronic or computer-based system,
without GUESS's prior written consent;”: […].
65
The corresponding provision is included in all submitted retail store sublicense agreements; in some
agreements it is included under point 5.1(r).
66
Examples of signed Customer Evaluation Forms: […].
67
Mono-brand retailers, besides their signed agreement, often receive the confirmation to their orders
accompanied with the general sales terms.
EN 16 EN
or any other computerised or electronic system, without prior written authorisation
from GUESS EUROPE”. Similar wording is used in point 8 of the Italian General
Sales Terms, which also classifies a breach of the restriction to sell online as
“fundamental” allowing Guess to terminate the agreement immediately and giving
rise to a right to penalty payments.68
(61) Thus, online sales by authorised retailers were generally not permitted and were only
allowed following written authorisation from Guess Europe.69 The practical
instruction within Guess Europe was: “[…] all sales made through the Internet must
be authorized by the E-Commerce department”70. Accordingly, the E-Commerce
department was entrusted with the authorisation process of both pure online and
hybrid retailers.
(62) However, the decision to grant authorisation was not based on a list of set quality
criteria. Guess Europe did not have any document containing a written list of quality
criteria for websites,71 as it never formally adopted any such criteria for online sales
activities.72 Neither the agreements nor any other document communicated to
retailers by Guess Europe during the period covered by this Decision specified the
criteria or conditions to be fulfilled by retailers in order to obtain authorisation to sell
online. Guess Europe also did not have a specific formal/written approval process for
online sales.73 Written approvals only existed for physical points of sale.74
68
“Il Compratore s’impegna a vendere i prodotti acquistati da Guess esclusivamente al dettaglio ed
esclusivamente nel punto vendita indicato nella presente proposta d’ordine e comunque a non esporli
e/o venderli in altri negozi e/o in altri punti vendita al pubblico e/o in altri luoghi di esposizione al
pubblico, senza previa autorizzazione scritta di Guess. Il Compratore non potrà in nessun caso vendere
i prodotti acquistati da Guess ad altro negoziante, rivenditore e/o stocchista, ovvero tramite Internet o
altro sistema informatico e/o elettronico, ovvero tramite altri sistema di vendita a distanza, nemmeno
ove si tratti di merci in giacenza o in rimanenza, senza aver all’uopo ricevuto previo consenso scritto di
Guess. Nel caso in cui il Compratore violi una qualunque delle disposizioni contenute nel presente art.
8, Guess avrà il diritto di sospendere tutte le consegne in corso e di ottenere il pagamento di una
penale da parte del Compratore pari al 50% dell’importo dell’ordine, nonché, in ogni caso, il diritto di
risolvere il contratto e gli altri ordini eventualmente formulati dal Compratore per fatto e colpa del
Compratore stesso ai termini di cui al successivo art. 19 ed ottenere conseguentemente il pagamento
della penale ivi contemplata, ferma restando in ogni caso la risarcibilità del danno ulteriore."
Translation: "The Purchaser undertakes to sell the products purchased from Guess exclusively in the
stores indicated in this proposal and shall not display and/or sell them in any other stores and/or point
of sale and/or exposition places open to public without prior written authorisation from Guess. In any
case, the Purchaser shall not sell the products purchased from Guess to another
shop/retailer/wholesaler or through Internet or any other computerised or electronic system or through
other forms of distant selling, not even in case of unsold stocks without prior written consent of Guess.
If the Purchaser is in breach of any obligations under provision 8, Guess is entitled to suspend any
further delivery and to claim a penalty payment from the Purchaser amounting to 50% of the purchase
order. In addition, any breach of the obligations under provision 8 shall be considered a fundamental
breach of contract entitling Guess to consider the contract, and eventual additional orders to be
terminated immediately by reason of the Purchaser's fault and to claim from the Purchaser penalty
payment as set out in provision 19. This is without prejudice to Guess' right to prove a greater loss and
claim corresponding damages.” : […].
69
Save for cases in which Guess’ distributors did not seek Guess’ prior authorisation before engaging in
online sales. […].
70
[…].
71
[…].
72
[…].
73
[…].
74
[…].
EN 17 EN
(63) Therefore, instead of ensuring compliance with objective criteria of a qualitative
nature, the contractual provisions described in this Section gave Guess Europe the
greatest possible discretion in deciding whether to allow authorised retailers to sell
online.
5.2.4. Restrictions on cross-selling among members of the selective distribution network
(wholesale and retail)
(64) A number of provisions in Guess Europe’s distribution agreements limited the ability
of wholesalers and authorised retailers to promote and sell Guess products to other
wholesalers or authorised retailers within the selective distribution network of Guess
Europe.
(65) The restrictions in the wholesale agreements took various forms.
(66) Points F and 3.2 limited the right to market and advertise the products to the
allocated territory for one or more Guess product lines.75 As indicated in recital
(20)(b), Guess Europe typically appoints one wholesaler for an allocated territory,
which is always defined in the agreements either as one EEA country or sometimes
as two or three neighbouring EEA countries. Points 6 and 9.2 of the wholesale
agreements restricted promotion and advertisement outside the wholesaler’s
allocated territory.76
(67) Five wholesale agreements provided in point 22.6(i) for a specific termination clause
in the event of promotion outside the allocated territory77. In any case, all wholesale
agreements had a general sanction provision in point 22.3: “[…] if
SUBDISTRIBUTOR breaches any of its obligations under this agreement, GUESS
EUROPE may terminate this agreement […]”, which also covered the obligations
75
Point F: "GUESS EUROPE desires to appoint SUBDISTRIBUTOR as its subdistributor in the Territory
for products bearing one or more of the Trademarks subject to GUESS EUROPE's rights under the
Master Agreement. SUBDISTRIBUTOR desires to promote and distribute these products in the
Territory under the terms and conditions contained herein subject at all times to GUESS EUROPE's
rights under the Master Agreement." This provision is under point G in some agreements. Point 3.2:
"The rights licensed by Guess Europe hereunder are limited to the marketing of the products and
solicitation of customers within the territory defined in section 1 above and the distribution of the
products as permitted under the master agreement and do not include the right to manufacture the
products or operate retail stores in conjunction therewith."
76
Point 6: "REQUIREMENTS OUTSIDE TERRITORY. SUBDISTRIBUTOR shall not, in relation to the
Products, seek customers outside the Territory, sell Products outside the European Economic Area, sell
Products to customers who resell the Products outside the European Economic Area, establish any
branch or showroom, or maintain any distribution depot outside the Territory. SUBDISTRIBUTOR
shall promptly refer to GUESS EUROPE any and all purchase orders or other inquiries received by
SUBDISTRIBUTOR regarding Products from customers or other persons outside the European
Economic Area." This provision is identical in all wholesale agreements, but three. Two wholesale
agreements […] also restrict any sales outside the allocated territory of the respective wholesaler.
Point 9.2: All Advertising by SUBDISTRIBUTOR hereunder shall be limited to Advertising and
marketing within the Territory and SUBDISTRIBUTOR acknowledges and agrees that it has no right to
Advertise or otherwise market the Products or solicit Customers outside the Territory and is expressly
prohibited from doing so."
77
Point 22.6(i) reads "GUESS EUROPE may terminate this Agreement immediately without any right to
cure upon the occurrence of any one or more of the following: SUBDISTRIBUTOR actively seeks
customers for any of the Products outside the Territory or SUBDISTRIBUTOR sells Products outside
the European Economic Area, or sells Products to customers who resell or ship the Products outside
the European Economic Area;" […]. The restrictions in two of these five agreements go even further by
specifically sanctioning sales outside the defined "Territory" […].
EN 18 EN
contained in points 17 and 19.6 (see recitals (68) and (70)). In addition, under point
15 “All Products must be shipped directly to the Territory, and all shipping
documents must reflect direct shipment.”78
(68) The wholesale agreements also contained a provision which provided strong
incentives for each wholesaler to purchase the products from Guess Europe only, not
from the other members of the selective distribution system. In particular, point 17
stipulated that the wholesaler was obliged to observe minimum purchase
obligations.79 Failure to respect the minimum purchase obligation was one of the
grounds giving rise to a right to terminate the wholesale agreement immediately.80
Compliance with this obligation also affected whether or not the agreement was
renewed.81 Point 1.4 of the wholesale agreement excluded any purchases of Guess
products from other authorised members of the selective distribution system from the
calculation of the minimum net purchases of the wholesaler: ““Net Purchases”
means all purchases of the Products from GUESS EUROPE or its affiliates, less
returns accepted by GUESS EUROPE. Net Purchases do not include purchases of
Products from GUESS’s manufacturing licensees or distributors.”82
(69) Furthermore, the contractual provision obliging the wholesaler to report to Guess
Europe any of its product purchases from sources other than Guess Europe (point
5.1(b)) allowed Guess Europe to monitor the restrictions imposed on wholesalers and
provided additional disincentives for wholesalers to purchase from other authorised
members of the selective distribution system.83
78
Point 15 is included in all wholesale agreements.
79
Point 17 reads: "MINIMUM NET PURCHASES. SUBDISTRIBUTOR will make the minimum Net
Purchases of [Apparel] Products, Accessory Products and Footwear Products (each, a “Product
Category”)] as set forth in Exhibit B attached hereto, all for resale to the Customers in the Territory
(the “Minimum Net Purchases”). (…) SUBDISTRIBUTOR's compliance with the provisions of this
Section shall be determined on the basis of GUESS EUROPE's net invoice prices for the Products (…)
Notwithstanding anything contained herein, for the purpose of calculating whether SUBDISTRIBUTOR
has met its Minimum Net Purchases for each Product Category for any period, a 'purchase' will be
deemed to occur when a particular Product is shipped by GUESS EUROPE, not when the Product is
ordered by SUBDISTRIBUTOR.". Point 17 is included in all wholesale agreements.
80
According to point 22.6 (e) "GUESS EUROPE may terminate this Agreement immediately without any
right to cure upon the occurrence of any one or more of the following: […] (e) SUBDISTRIBUTOR
does not make the Minimum Net Purchases of Products [for any Product Category] established for any
period specified under Section 17;". Point 22.6(e) is included in all wholesale agreements, in certain
agreements it is included as point 22.6(b)5: […], whereas the relevant wording of point 22.6(e) is
included as the last paragraph under point 17 in one agreement […].
81
According to point 2.2: "This Agreement may be renewed, at GUESS EUROPE’s sole option, for an
additional ____ (__) year term through December 31, _____ (the "Renewal Term"), if
SUBDISTRIBUTOR: (a) requests renewal in writing at least one hundred twenty (120) days but not
more than one hundred eighty (180) days before the expiration of the Initial Term; (b) at the time it
requests renewal, is in compliance with all the terms of any and all agreements between
SUBDISTRIBUTOR and GUESS EUROPE or between SUBDISTRIBUTOR and GUESS; and (c) agrees
to meet the new minimum Net Purchase and Advertising expenditure requirements requested by GUESS
EUROPE for the Renewal Term." Point 17 is included in all wholesale agreements with the exception
of two agreements […].
82
[…]. Point 1.4 is identical in all agreements except one […], where the same provision is under point
1.5.
83
Point 5.1(b) is included in all wholesale agreements with the exception of three agreements […].
EN 19 EN
(70) Finally, point 19.6 of the wholesale agreements required wholesalers to ensure at
their own expense that the products sold to their retail customers “remain” within
the “Territory”.84
(71) It follows, given that Guess Europe normally only nominates one wholesaler per
territory per product line, that a Guess wholesaler did not have the contractual right
to advertise products outside its allocated territory or to approach other Guess
wholesalers within the selective distribution network, as they were necessarily
established outside the wholesaler’s allocated territory. It also follows that the
wholesaler could only sell to authorised retailers located in its own allocated
territory.
(72) The obligations on the wholesaler in point 19.6 of the agreement to keep the products
within the territory and to monitor any diversion of the products outside the territory
were intended to ensure that the national markets remained separated.
(73) The cross-border sales restrictions in retail agreements followed the same logic and
complemented the restrictions in the wholesale agreements. Both types of Guess
retail agreement, the retail store sublicense agreements (in points 3.2, 12.6(f) and 17),
and the General Sales Terms (point 10) and Italian General Sales Terms (point 8)
applied to multi-brand retailers, expressly restricted sales to non-retail customers. In
particular, they only allowed sales to end users and restricted purchases across the
selective distribution network.
(74) Point 3.2 of Guess Europe’s retail store sublicense agreements only licenced the
rights to sell the products at the retail level.85 Point 12.6(f) provided that any sales to
non-retail customers gave rise to a right of immediate termination86.
(75) Point 17 stipulated that the store operator could only purchase products from Guess
Europe or Guess Europe’s local distributor (i.e. wholesaler) or from an authorised
Guess manufacturing licensee for its own account and for resale only in the store in
the territory.87
84
The corresponding provision in Point 19.6 is included in all wholesale agreements with the exception of
two agreements […].
85
"The rights licensed by Guess Europe hereunder are limited to the operation of retail store and do not
include the right to manufacture or distribute the products at wholesale, or to sell the products at retail
other than in the store." The corresponding provision is included in all retail store sublicense
agreements. The corresponding provision in the accessory store sublicense agreements is under point
3.2: "The rights licensed by Guess Europe hereunder are limited to the operation of accessory retail
stores only and do not include the right to manufacture or distribute the products at wholesale, or to
sell the products at retail other than in the store." […].
86
"GUESS EUROPE may terminate this Sublicense immediately without any right to cure upon the
occurrence of any one or more of the following:[…] (f) except as may be permitted under any other
agreement between GUESS EUROPE and SUBLICENSEE, SUBLICENSEE sells the Products at any
location other than its Store, or knowingly sells the Products to a purchaser who is not a retail
customer;" The wording of point 3.2 is included as point 3.3 in some agreements. The corresponding
provision in the accessory store sublicense agreements is under point 13.6 (g) […].
87
"[…] it being understood and agreed by the parties as follows: (a) that SUBLICENSEE is purchasing
products from GUESS EUROPE or GUESS EUROPE's local distributor or an authorized GUESS
manufacturing licensee for its own account and for resale only in the Store in the Territory, and not
under consignment or representation […]." The corresponding provision in the accessory store
sublicense agreements is under point 18 […].
EN 20 EN
(76) The provisions in points 3.2, 12.6(f) and 17 stipulating that retail store sublicensees
could only sell to final (retail) customers were found in 36 agreements.
(77) Point 10 of the General Sales Terms applied to multi-brand retailers prohibited
transactions among authorised retailers: “[.] The Purchaser must never sell the
garments purchased from GUESS EUROPE to another retailer.”
(78) The Italian General Sales Terms (which are somewhat different from the General
Sales Terms for the rest of the EEA) contained a similar provision in point 8, coupled
with severe sanctions: “The Purchaser undertakes to sell the products purchased
from Guess exclusively in the stores indicated in this proposal and shall not display
and/or sell them in any other stores and/or point of sale and/or exposition places
open to public without prior written authorisation from Guess. In any case, the
Purchaser shall not sell the products purchased from Guess to another
shop/retailer/wholesaler or through Internet or any other computerised or electronic
system or through other forms of distant selling, not even in case of unsold stocks
without prior written consent of Guess. If the Purchaser is in breach of any
obligations under provision 8, Guess is entitled to suspend any further delivery and
to claim a penalty payment from the Purchaser amounting to 50% of the purchase
order. In addition, any breach of the obligations under provision 8 shall be
considered a fundamental breach of contract entitling Guess to consider the
contract, and eventual additional orders to be terminated immediately by reason of
the Purchaser’s fault and to claim from the Purchaser penalty payment as set out in
provision 19. This is without prejudice to Guess’ right to prove a greater loss and
claim corresponding damages.”88
5.2.5. Restrictions on cross-border sales to end users
(79) As outlined in recital (31), the retail store sublicense agreements typically defined
“Territory” in point 1.989 as one EEA country or, in some cases, as two or three
neighbouring EEA countries.
(80) Point 3.1 confined sales (promotion and right to sell) to the allocated territory90:
“Rights Granted. Subject to the terms and conditions contained herein and GUESS
EUROPE’s rights under the Master Agreement, GUESS EUROPE hereby grants to
88
Translated text. The original provision reads as following: "Il Compratore s’impegna a vendere i
prodotti acquistati da Guess esclusivamente al dettaglio ed esclusivamente nel punto vendita indicato
nella presente proposta d’ordine e comunque a non esporli e/o venderli in altri negozi e/o in altri punti
vendita al pubblico e/o in altri luoghi di esposizione al pubblico, senza previa autorizzazione scritta di
Guess. Il Compratore non potrà in nessun caso vendere i prodotti acquistati da Guess ad altro
negoziante, rivenditore e/o stocchista, ovvero tramite Internet o altro sistema informatico e/o
elettronico, ovvero tramite altri sistema di vendita a distanza, nemmeno ove si tratti di merci in
giacenza o in rimanenza, senza aver all’uopo ricevuto previo consenso scritto di Guess. Nel caso in cui
il Compratore violi una qualunque delle disposizioni contenute nel presente art. 8, Guess avrà il diritto
di sospendere tutte le consegne in corso e di ottenere il pagamento di una penale da parte del
Compratore pari al 50% dell’importo dell’ordine, nonché, in ogni caso, il diritto di risolvere il
contratto e gli altri ordini eventualmente formulati dal Compratore per fatto e colpa del Compratore
stesso ai termini di cui al successivo art. 19 ed ottenere conseguentemente il pagamento della penale ivi
contemplata, ferma restando in ogni caso la risarcibilità del danno ulteriore.": […].
89
The Territory has been defined under points different than point 1.9 in a number of agreements […].
90
This provision can be found in the large majority of submitted retail store sublicense agreements with
the exception of two agreements concerning Italy […]. Some additional language in point 3.1 has been
added in several agreements in addition to the standard wording of the template: […].
EN 21 EN
SUBLICENSEE, and SUBLICENSEE hereby accepts a non-assignable, non-
transferable non-exclusive right to use the Trademarks and the IP Rights only in
connection with the promotion and Retail Sale of the Products in the Store and in the
operation of Store in the Territory.”91
(81) Furthermore, point 6.2 confined any advertising activity to the allocated territory.
“All Advertising by SUBLICENSEE hereunder shall be limited to Advertising and
marketing within the Territory and SUBLICENSEE acknowledges and agrees that it
has no right to Advertise or otherwise market the Products outside the Territory and
is expressly prohibited from doing so.”92
(82) Point 12.6(e) provided that selling outside the allocated territory gave rise to a right
of immediate termination.93 “GUESS EUROPE may terminate this Sublicense
immediately without any right to cure upon the occurrence of any one or more of the
following: [….] (e) SUBLICENSEE sells or ships the Products to customers outside
the Territory or to customers whom SUBLICENSEE knows or should know will
resell or ship the Products outside the Territory;”
(83) The objective of these provisions was to prevent retailers from selling Guess
products to end users outside their allocated territory. The restrictions were aimed at
both active and passive sales, in other words they allowed neither advertising nor
sales outside the allocated territory. Internal Guess documents confirm this policy:
“We also want to ensure that their use is limited to their specific territory, e.g. their
websites are not shipping guess products outside of their authorized
country/territory”94.
5.2.6. Resale price maintenance
(84) Point 11 of the General Sales Terms used for Guess’ multi-brand retailers stated as
follows: “For each sample range GUESS EUROPE shall fix a minimum price for
sale to the public of its own products, by means of a «recommended pricelist»
inclusive of VAT, for the purpose of making the product image uniform on the
market. The Purchaser undertakes to sell the goods purchased at prices that comply
with those indicated on the aforementioned pricelist. Failure to observe this
obligation by the Purchaser shall give rise to the obligation to reimburse the
damages incurred and shall entitle GUESS EUROPE to discontinue all future
supplis.”95
(85) The General Sales Terms were used throughout the EEA, with the exception of
France, Spain, Portugal and Italy.
(86) The stated objective of the provision quoted in recital (84) was to have uniform retail
prices in specific markets in order to make “the product image uniform on the
market”.96
91
In five agreements the rights granted are exclusive: […].
92
This provision can be found in most submitted retail store sublicense agreements with several
exceptions: […].
93
The corresponding provision in the accessory store sublicense agreements is under point 13.6 (f): […]
or under point 13.6 (g): […].
94
[…].
95
[…].
96
[…].
EN 22 EN
(87) Guess Europe monitored pricing of third-party retailers and tried to influence them to
correct resale prices “misaligned” with Guess Europe’s “recommended” resale
prices. E-mail exchanges show instances when one of the Guess subsidiaries signals
that a distributor is deviating from the resale prices provided and requests Guess
Europe to take action to “solve the problem”.97
(88) The resale price maintenance has to be seen in particular in the light of Guess
Europe’s pricing policy and the parallel trade restrictions that Guess Europe was
employing. More concretely, the company applied higher retail prices generally in
Eastern Europe than in Western Europe, with an average price difference of 5-10%.98
6. LEGAL ASSESSMENT
(89) Article 101(1) of the Treaty prohibits as incompatible with the internal market
agreements between undertakings, decisions by associations of undertakings and
concerted practices that (i) may affect trade between Member States and (ii) have as
their object or effect the prevention, restriction or distortion of competition within the
internal market, unless they meet the conditions for an exemption set out in Article
101(3) of the Treaty.
(90) Article 53(1) of the EEA Agreement prohibits as incompatible with the functioning
of the EEA Agreement agreements between undertakings, decisions by associations
of undertakings and concerted practices that (i) may affect trade between Contracting
Parties to the EEA and (ii) have as their object or effect the prevention, restriction or
distortion of competition within the territory covered by the EEA Agreement, unless
they meet the conditions for an exemption set out in Article 53(3) of the EEA
Agreement.
(91) The agreements and concerted practices referred to in this Decision concerned the
territory of the Union and the EEA. Insofar as the conduct affected trade between
Member States, Article 101 of the Treaty is applicable. As regards operation of those
agreements and concerted practices in Norway and Liechtenstein and its effect on
trade between the Union and those countries, it falls within Article 53 of the EEA
Agreement.
(92) In this case, the Commission is the competent authority to apply both Article 101 of
the Treaty and Article 53 of the EEA Agreement on the basis of Article 56 of the
EEA Agreement, since the conduct had an appreciable effect on trade between
Member States or EEA countries.
(93) References in the succeeding recitals of this Section to Article 101 of the Treaty, to
effect on trade between Member States or to competition within the internal market
are to be taken to include Article 53 of the EEA Agreement, effect on trade between
Contracting Parties to the EEA Agreement, and competition within the territory
covered by the EEA Agreement.
97
[…].
98
[…]. Also […].
EN 23 EN
6.1. Concept of undertaking
6.1.1. Principles
(94) Article 101(1) of the Treaty applies to undertakings and associations of
undertakings.99 The notion of an "undertaking" covers any entity engaged in an
economic activity, regardless of its legal status or the way in which it is financed.100
6.1.2. Application to this case
(95) Guess and each of the distributors referred to carry out independent economic
activities and, therefore qualify as undertakings for the purposes of Article 101(1) of
the Treaty.
6.2. Agreements and concerted practices
6.2.1. Principles
(96) For the purposes of Article 101(1) of the Treaty, in order for there to be an agreement
between undertakings, it is sufficient that at least two undertakings have expressed
their joint intention to conduct themselves on the market in a specific way.101
Although Article 101(1) draws a distinction between agreements and concerted
practices, the notions of an agreement and a concerted practice are to be interpreted
widely.102
(97) According to settled case-law, general sales terms and conditions, even if accepted
tacitly, and even if they are allegedly "imposed", amount to an agreement for the
purposes of the application of Article 101(1) of the Treaty.103
(98) Likewise, measures or practices that are adopted or imposed in an apparently
unilateral manner by a supplier, in contrast with genuinely unilateral measures, can
constitute an agreement or a concerted practice within the meaning of Article 101(1)
of the Treaty if, at the very least, tacit acquiescence of the other party is
established104 (i.e. in the context of vertical relationships the acquiescence of the
dealer to a measure adopted by the supplier).
99
Judgement of 3 March 2011, AG2R Prévoyance, C-437/09, EU:C:2011:112, paragraph 40.
100
Judgement of 28 June 2005, Dansk Rørindustri and Others v Commission, Joined cases C-189/02 P, C-
202/02 P, C-205/02 P to C-208/02 P and C-213/02 P, EU:C:2005:408, paragraph 112; Judgement of
10 January 2006, Cassa di Risparmio di Firenze and Others, C-222/04, EU:C:2006:8, paragraph 107;
and Judgement of 11 July 2006, Federación Española de Empresas de Tecnología Sanitaria (FENIN) v
Commission, C-205/03 P, EU:C:2006:453, paragraph 25.
101
Judgement of 11 January 1990, Sandoz Prodotti Farmaceutici v Commission, C-277/87, EU:C:1990:6,
paragraph 13; Judgement of 26 October 2000, Bayer v Commission, T-41/96, EU:T:2000:242,
paragraphs 67 and 173.
102
Judgement of 22 October of 2015, AC-Treuhand AG v Commission, C-194/14 P, EU:C:2015:717,
paragraph 43.
103
Judgement of 11 January 1990, Sandoz Prodotti Farmaceutici v Commission, C-277/87, EU:C:1990:6,
paragraph 2, where the Court stated that the invoices sent by Sandoz to its clients bearing the word
"export prohibited" would be an element of the agreement which has as its object the restriction of
competition and which could affect trade between Member States. Also Judgement of 9 July 2009,
Peugeot and Peugeot Nederland v Commission, T-450/05, EU:T:2009:262, paragraph 168-209.
104
Judgement of 26 October 2000, Bayer AG v Commission, case T-41/96, EU:T:2000:242, paragraphs 70
to 72 and the case-law cited; Judgement of 3 December 2003, Volkswagen AG v Commission, case T-
208/01, EU:T:2003:326, paragraphs 34 to 36.
EN 24 EN
(99) Also, in addition to cases where measures are explicitly contained in a contract, a
concurrence of wills may also be said to occur where a contract authorises the
supplier to adopt measures, even though the measures were not explicitly provided
for in the contract.105
(100) In this case, there were three different types of agreements between Guess Europe
and its distributors. Wholesale agreements were negotiated and signed by the 13
independent wholesalers individually, although most of the provisions of those
agreements were identical as they followed the template wholesale agreement.106 The
36 retail store sublicense agreements107 submitted to the Commission were
negotiated and signed individually, although their structure and most of their
provisions were identical across the EEA as they again followed the same template.
As outlined in recital (32), multi-brand retailers, by submitting a purchase order and
receiving a subsequent order confirmation, abided by Guess Europe’s General Sales
Terms applicable to the territory in question. Thus, the General Sales Terms were
used repeatedly by Guess Europe for orders by multi-brand retailers.
(101) All those three types of agreements entered into by Guess Europe amount to an
agreement within the meaning of Article 101(1) of the Treaty.
(102) The online search advertising restrictions were not explicitly contained in any of
those three types of agreements. Nevertheless, the conduct described in Section 5.2.2
constitutes an agreement or a concerted practice based on the fact that, under both the
wholesale agreements and the retail store sublicense agreements, Guess’ prior written
approval was needed for advertising campaigns and materials and for other
promotion activities carried out by authorised distributors.108 Also, in the General
Sales Terms applicable to multi-brand retailers, Guess’ prior authorisation was
required for sales through the internet and for any promotional or advertising
activities, in particular “for everything pertaining to the use of brands […]”.109 In the
event of unauthorised advertising, penalties could be imposed under both the
wholesale agreements and the retail agreements.110 The online search advertising
restrictions were linked to those provisions and formed part of that contractual
framework.
(103) The online search advertising restrictions were covered therefore by the three types
of agreements between Guess Europe and its distributors and constitute an agreement
within the meaning of Article 101(1) of the Treaty.
105
Judgement of 18 September 2003, Volkswagen AG v Commission, C-338/00 P, EU:C:2003:473,
paragraphs 64 and 65.
106
[…].
107
[…].
108
[…].
109
[…].
110
[…].
EN 25 EN
6.3. Restriction of competition
6.3.1. Principles
(104) It is settled case-law that certain types of conduct reveal a sufficient degree of harm
to competition that it may be found that there is no need to examine their effects. 111
This arises from the fact that certain types of coordination between undertakings can
be regarded, by their very nature, as being harmful to the proper functioning of
normal competition.112 Consequently, certain collusive behaviour may be considered
so likely to have negative effects on competition that it may be considered redundant,
for the purposes of applying Article 101(1) of the Treaty, to prove that this behaviour
has actual or potential effects on the market.
(105) To determine whether an agreement reveals such a sufficient degree of harm to
competition regard must be had inter alia to:
(a) the content of its provisions;
(b) the objectives it seeks to attain; and
(c) the economic and legal context of which it forms a part.113 When determining
that context, it is also necessary to take into consideration the nature of the
goods or services affected, as well as the real conditions of the functioning and
structure of the market or markets in question.114
(106) The Court of Justice has ruled that the organisation of a selective distribution
network is not prohibited by Article 101(1) of the Treaty, to the extent that resellers
are chosen on the basis of objective criteria of a qualitative nature, laid down
uniformly for all potential resellers and not applied in a discriminatory fashion, that
the characteristics of the product in question necessitate such a network in order to
preserve its quality and ensure its proper use and, finally, that the criteria laid down
do not go beyond what is necessary.115
(107) However, it is settled case-law that an agreement which might tend to restore the
divisions between national markets is liable to frustrate the Treaty's objective of
achieving the integration of those markets through the establishment of an internal
111
Judgement of 11 September 2014, CB v Commission, C-67/13 P, EU:C:2014:2204, paragraph 49;
Judgement of 19 March 2015, Dole Food and Dole Fresh Fruit Europe v Commission, C-286/13 P,
EU:C:2015:184, paragraph 113.
112
113
Judgement of 11 September 2014, CB v European Commission, C-67/13 P, EU:C:2014:2204, paragraph
53; Judgement of 4 October 2011, Football Association Premier League and Others (hereinafter
“Murphy”), Joined cases C-403/08 and C-429/08 C, EU:C:2011:631, paragraph 136; Judgement of 6
October 2009, GlaxoSmithKline Services v Commission, Joined cases C-501/06 P, C-513/06 P, C-
515/06 P and C-519/06 P, EU:C:2009:610, paragraph 58; Judgement of 8 November 1983, IAZ
International Belgium and Others v Commission, Joined cases C-96/82 to C-102/82, C-104/82, C-
105/82, C-108/82 and C-110/82, EU:C:1983:310, paragraphs 23 to 25.
114
Judgement of 14 March 2013, Allianz Hungária Biztosító Zrt and Others v Gazdasági Versenyhivatal,
C-32/11, EU:C:2013:160, paragraph 36; Judgement of 11 September 2014, CB v. Commission, Case C-
67/13 P, EU:C:2014:2204, paragraph 53, Judgement of 4 June 2009, T–Mobile Netherlands and Others,
C-8/08, EU:C:2009:343, paragraph 43.
115
Judgement of 13 October 2011, Pierre Fabre Dermo-Cosmétique, C-439/09, EU:C:2011:649,
paragraph 41.
EN 26 EN
market. Thus, agreements which are aimed at partitioning national markets according
to national borders or make the interpenetration of national markets more difficult
must be regarded, in principle, as agreements whose object is to restrict competition
within the meaning of Article 101(1) of the Treaty.116
(108) The Court of Justice has noted in several judgements that the fact that parallel trade
restrictions are not implemented does not disqualify them from being anti-
competitive.117
(109) In addition, although the parties’ intention is not a necessary factor in determining
whether an agreement is restrictive, there is nothing preventing the Commission from
taking that aspect into account.118
(110) It is also settled case-law that certain collusive behaviour, such as resale price
maintenance119, may be considered so likely to have negative effects, in particular on
the price, choice, quantity or quality of the goods and services, that it may be
considered redundant, for the purposes of applying Article 101(1) of the Treaty, to
prove that it has actual effects on the market.120
6.3.2.1. Selective distribution
(111) Article 1(1)(e) of Commission Regulation (EU) No 330/2010 (referred to in this
Decision as the Vertical Block Exemption Regulation or VBER)121 defines a
selective distribution system as “a distribution system where the supplier undertakes
to sell the contract goods or services, either directly or indirectly, only to distributors
selected on the basis of specified criteria and where these distributors undertake not
to sell such goods or services to unauthorised distributors within the territory
reserved by the supplier to operate that system”.
(112) Thus, selective distribution has two distinctive features: (a) the supplier undertakes to
sell the contract products only to distributors selected on the basis of specified
quantitative or qualitative selection criteria; and (b) the selected distributors are
prohibited from selling the contract products to other distributors not belonging to
the authorised distribution network.
116
Judgement of 4 October 2011, Football Association Premier League and Others, Joined cases C-403/08
and C-429/08 C, EU:C:2011:631, paragraph 139.
117
Judgement of 21 February 1984, Hasselblad v Commission, 86/82, EU:C:1984:65, paragraph 46 and
Judgement of 1 February 1978, Miller v Commission, 19/77, EU:C:1978:19, paragraph 7.
118
Judgement of 6 October 2009, GlaxoSmithKline Services v Commission, Joined cases C-501/06 P, C-
513/06 P, C-515/06 P and C-519/06 P, EU:C:2009:610, paragraph 58; Judgement of 8 November 1983,
IAZ International Belgium and Others v Commission, Joined cases C-96/82 to C-102/82, C-104/82, C-
105/82, C-108/82 and C-110/82, EU:C:1983:310, paragraphs 23 to 25.
119
Judgement of 3 July 1985, Binon v AMP, 243/83, EU:C:1985:284, paragraph 44; Judgement of
1 October 1987, VVR v Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten, 311/8,
EU:C:1987:418, paragraph 17; Judgement of 19 April 1988, SPRL Louis Erauw-Jacquery v La
Hesbignonne SC, 27/87, EU:C:1988:183, paragraph 15.
120
121
Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the
Treaty on the Functioning of the European Union to categories of vertical agreements and concerted
practices (OJ L 102/1, 23.4.2010, p. 1-7).
EN 27 EN
(113) Guess Europe's distribution network fulfils both those criteria to qualify as a
selective distribution system. First, Guess Europe sells the contract products only to
distributors selected on the basis of specified selection criteria122 and, second, the
selected distributors are prohibited from selling the contract products to other
distributors not belonging to the selective distribution network.123
6.3.2.2. Online search advertising restrictions
(114) In Hasselblad, the Court of Justice found that a clause in a selective distribution
agreement which prevented dealers from advertising their prices was contrary to
Article 101(1) of the Treaty. The Court of Justice rejected Hasselblad's assertion that
such a clause was justified to ensure a common advertising programme of a high
standard.124
(115) The Court of Justice held in Coty that a specific contractual clause within a selective
distribution agreement was lawful under Article 101(1) of the Treaty provided that it
had a legitimate objective, was laid down uniformly for all potential resellers,
applied in a non-discriminatory fashion, and did not go beyond what was
necessary.125
(116) Furthermore, according to settled case-law, Union trademark law entitles the
proprietor of a trademark to prohibit an advertiser from advertising goods or services
identical to those for which the trademark is registered using a keyword identical to
that trademark and selected by the advertiser without the proprietor’s consent in
connection with an internet referencing service, in circumstances where the
advertisement does not allow an average internet user, or makes it difficult for an
average internet user, to ascertain whether the goods or services originate from the
trademark proprietor or an undertaking economically connected to it or, conversely,
from a third party.126
(117) That case-law concerns potential trademark infringements through a search engine. It
cannot be relied on to justify a restriction of the ability of authorised retailers in
selective distribution systems, who sell genuine Guess products, to use or bid on
Guess’ brand names and trademarks, as in this case there is no risk of confusion as to
the origin of the products.
(118) The objective of the online search advertising restriction was to reduce competitive
pressure by authorised retailers on Guess’ own online retail activities and to keep
down its own advertising costs.
(119) Therefore, the online search advertising restrictions cannot be said to serve the
legitimate objective of Guess’ selective distribution system claimed by Guess,
namely to protect the brand image.
122
[…].
123
Point 4.2 of the wholesale agreements that allows sales by authorised retailers only to end users and
other authorised retailers and point 3.2 of the retail store sublicense agreements that bans sales at
wholesale level and also at retail level other than in the store of the authorised retailer (see also clause
1.6 defining "retail sale" as "a sale made in the Store at retail price to a consumer").
124
Judgement of 21 February 1984, Hasselblad v Commission, 86/82, EU:C:1984:65, paragraph 49 and 52.
125
Judgement of 6 December 2017, Coty Germany, C-230/16, EU:C:2017:941, paragraphs 36 and 40.
126
Judgement of 23 March 2010, Google France, Joined Cases C-236/08 to C-238/08, EU:C:2010:159,
paragraph 99.
EN 28 EN
(120) By severely curtailing the use of online search advertising by its authorised retailers,
Guess limited the “findability” and ultimately the viability of retailers selling its
products online. While Guess’ retailers were – subject to the authorisation
requirement – in principle able to sell online, they were deprived of the ability to
effectively generate traffic to their own websites by means of online search
advertising. This restricted their ability to sell the contractual products to customers,
in particular outside the contractual territory or area of activity.
(121) An exclusive right reserved for Guess Europe to use the Guess brand names and
trademarks in online search advertising provided Guess with a considerable
competitive advantage over its retailers with whom it competed online and restricted
intra-brand competition.
(122) Another aim of the policy was to reduce advertising costs. In this regard the Court of
Justice has held, in a judgement related to trademarks, that internet advertising using
a referencing service on the basis of keywords corresponding to another person’s
trademark(s) constitutes a practice inherent to competition as it offers internet users
alternatives to the trademark proprietor’s goods or services even if it leads to the
trademark proprietor having to intensify its advertising in order to maintain or
enhance its profile with consumers.127 In the light of this reasoning, it cannot be said
that the online search advertising restriction constitutes an aspect of competition that
is compatible with Article 101(1) of the Treaty.128
(123) Given that the restriction on the use of the Guess brand names and trademarks in
online search advertising did not pursue any other legitimate objectives in the context
of the operation of the selective distribution system, there is no need to assess
whether such a prohibition is appropriate or whether it goes beyond what is
necessary to achieve that objective.129
(124) It is necessary to determine, however, whether the online search advertising
restriction reveals a sufficient degree of harm to competition that it may be
considered a restriction of competition "by object" within the meaning of Article
101(1) of the Treaty or whether its effects need to be examined.130
(125) Assessed in its context, the online search advertising restriction had as its object to
reduce the ability of authorised retailers to advertise and ultimately to sell the
contract products to customers, in particular outside the contractual territory or area
of activity and to limit intra-brand competition.131
(126) Therefore, the restriction, as described in Section 5.2.2, had the object of restricting
competition within the meaning of Article 101(1) of the Treaty.
6.3.2.3. Online sales restrictions
(127) The Commission set out its position with regard to restrictions of online sales in its
Guidelines on Vertical Restraints ("Vertical Guidelines”)132: “The internet is a
127
Judgement of 22 September 2011, Interflora v Marks & Spencer, C-323/09, EU:C:2011:604,
paragraphs 54 to 59.
128
Judgement of 6 December 2017, Coty Germany, C-230/16, EU:C:2017:941.
129
Judgement of 6 December 2017, Coty Germany, C-230/16, EU:C:2017:941, paragraph 43.
130
Judgement of 11 September 2014, CB v Commission, C-67/13 P, EU:C:2014:2204, paragraphs 48 – 54.
131
paragraph 47.
132
OJ C 130, 19.5.2010, p.1.
EN 29 EN
powerful tool to reach a greater number and variety of customers than by more
traditional sales methods […]. In principle, every distributor must be allowed to use
the internet to sell products. In general, where a distributor uses a website to sell
products that is considered a form of passive selling, since it is a reasonable way to
allow customers to reach the distributor.”133
(128) This position has been confirmed by the Court of Justice in Pierre Fabre.134 In this
judgement, the Court held that a contractual provision prohibiting de facto the
internet as a method of marketing amounts to a restriction of competition by object
within the meaning of Article 101(1) of the Treaty.135 It has at the very least as its
object the restriction of passive sales to end users wishing to purchase online and
located outside the physical trading area of the relevant member of the selective
distribution system.136
(129) A supplier operating a selective distribution system may legitimately require quality
standards for the use of websites that resell its goods, just as the supplier may require
quality standards for a brick-and-mortar shop or for selling by catalogue or for
advertising and promotion in general.137
(130) In Coty, the Court of Justice held that a specific contractual clause within a selective
distribution agreement which pursues a legitimate objective is lawful under Article
101(1) of the Treaty only if the quality criteria are laid down “uniformly” and “not
applied in a discriminatory fashion”.138
(131) In this case, as set out in Section 5.2.3, the written authorisation requirement was not
linked to any specified quality criteria. In line with Guess’ e-commerce strategy,
which aimed at promoting its own website (online shop), that requirement had as its
main object to restrict sales on authorised retailers' websites. It protected Guess’ own
online sales activities from intra-brand competition by its authorised retailers and
facilitated market partitioning as it limited the authorised retailers' ability to sell the
contract products to customers, in particular outside their authorised area of activity.
Therefore, the written authorisation requirement which was not linked to any
specified quality criteria constitutes a restriction of competition by object within the
meaning of Article 101(1) of the Treaty.
6.3.2.4. Restrictions on cross-selling among members of the selective distribution network
(wholesale and retail)
(132) The contractual provisions listed in Section 5.2.4 aimed at restricting sales of Guess
products among members of the selective distribution network, albeit in different
ways. Some of the provisions prevented solicitation of customers outside the
allocated territory (active sales restrictions). Other provisions restricted unsolicited
sales to other network members and prevented or provided disincentives for
purchases from other network members (passive sales restrictions). All cross-selling
133
Vertical Guidelines, paragraph 52.
134
Judgement of 13 October 2011, Pierre Fabre Dermo-Cosmétique, C-439/09, EU:C:2011:649.
135
paragraph 47.
136
paragraph 54.
137
Vertical Guidelines, paragraph 54.
138
Coty cited above, paragraph 58.
EN 30 EN
restrictions aimed at ensuring that only Guess Europe and/or the appointed national
wholesaler could supply the retailers operating on a national market and that
wholesalers purchased only from Guess Europe and did not resell the contract
products to other wholesalers or retailers outside their allocated territory. These
restrictions mutually reinforced each other.
(133) It is settled case-law that a restriction of sales between authorised distributors within
a selective distribution network constitutes a restriction of competition by object
within the meaning of Article 101(1) of the Treaty.139
(134) Therefore, the provisions described in Section 5.2.4, which restrict cross-supplies
between members of a selective distributions system, restrict competition by object
with the meaning of Article 101(1) of the Treaty.
6.3.2.5. Restrictions on cross-border sales to end users
(135) The provisions listed in Section 5.2.6 individually and in combination restrict active
and passive sales by members of a selective distributions system to end users located
outside the allocated territory of those members and, therefore, are capable of
creating, maintaining or restoring national divisions in trade between Member States
so as to frustrate the Treaty’s objective of achieving the integration of national
markets through the establishment of an internal market. In accordance with
established case-law, those provisions restrict competition by object with the
meaning of Article 101(1) of the Treaty.140
6.3.2.6. Resale price maintenance
(136) The Court of Justice has held on several occasions that agreements that impose upon
retailers' minimum or fixed retail prices, thereby restricting the ability of those
retailers to determine their resale prices independently, restrict competition by object
within the meaning of Article 101(1) of the Treaty. 141 More specifically, with regard
to selective distribution agreements, the Court has held that in a selective distribution
system, which by its very nature inherently restricts price competition, the imposition
of fixed or minimum sales prices goes beyond the requirements of such a distribution
system.142
139
For example, Judgement of 7 July 1994, Dunlop Slazenger v Commission, T-43/92, EU:T:1994:79,
paragraph 52.
140
Judgement of 6 July 2000, Volkswagen v Commission, T-62/98, EU:T:2000:180, paragraph 179.
Judgement of 28 April 1998, Javico, cited above, paragraphs 13-14. Also, to that effect, Judgement of
21 February 1984, Hasselblad v Commission, C-86/82, EU:C:1984:65, paragraph 46 and Judgement of
24 October 1995, Bayerische Motorenwerke AG v ALD, C-70/93, EU:C:1995:344, paragraphs 19 and
21.
141
Judgement of 3 July 1985, Binon v AMP, 243/83, EU:C:1985:284, paragraph 43; Judgement of
1 October 1987, VVR v Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten, C-311/8,
EU:C:1987:418, paragraph 17; Judgement of 19 April 1988, SPRL Louis Erauw-Jacquery v La
Hesbignonne SC, C-27/87, EU:C:1988:183, paragraph 15.
142
Judgement of 25 October 1983, AEG v Commission, C-107/82, EU:C:1983:293, paragraphs 42-43. The
Court held the same with respect to franchise agreements (Judgement of the Court of 28 January 1986,
Pronuptia de Paris GmbH v Pronuptia de Paris Irmgard Schillgallis, C-161/84, EU:C:1986:41,
paragraph 25).
EN 31 EN
(137) Therefore, the provisions listed in Section 5.2.6, which restricted the ability of
Guess’ retailers to determine their resale prices, restrict competition by object with
the meaning of Article 101(1) of the Treaty.143
6.3.2.7. Conclusion
(138) By means of the contractual provisions and practices referred to in Section 5.2,
Guess Europe effectively restricted intra-brand competition and partitioned national
markets for its products contrary to Article 101(1) of the Treaty. There are no
circumstances in the economic or legal context of those provisions and practices to
support a finding that they were not liable to impair competition or did not have an
anticompetitive object within the meaning of Article 101(1) of the Treaty.
6.4. Single and continuous infringement
6.4.1. Principles
(139) An infringement of Article 101(1) of the Treaty may consist not only of an isolated
act but also of a series of acts or a course of conduct, even if one or more aspects of
that series of acts or continuous conduct could also, in themselves and taken in
isolation, constitute an infringement of that Article. Accordingly, if the different
actions form part of an “overall plan”, because their identical object distorts
competition within the internal market, the Commission is entitled to impute
responsibility for those actions on the basis of participation in the infringement
considered as a whole.144
(140) The conduct described in Section 5.2 constitutes a single and continuous
infringement of Article 101(1) of the Treaty. This is notwithstanding the fact that
each of the restrictions described in Section 5.2, taken in isolation, constitutes a
restriction of competition within the meaning of that Article.
(141) The single and continuous nature of the infringement is demonstrated by the fact that
the restrictions described in Section 5.2 formed part of the same strategy and served
the same aim, namely restricting intra-brand competition and partitioning national
markets.
6.5. Effect on trade between Member States
6.5.1. Principles
(142) Article 101(1) of the Treaty is aimed at agreements and concerted practices which
might harm the attainment of an internal market between the Member States, whether
143
Judgement of 6 July 2000, Volkswagen v Commission, T-62/98, EU:T:2000:180, paragraph 179.
Judgement of 28 April 1998, Javico, cited above, paragraphs 13-14. Also, to that effect, Judgement of
21 February 1984, Hasselblad v Commission, C-86/82, EU:C:1984:65, paragraph 46 and Judgement of
24 October 1995, Bayerische Motorenwerke AG v ALD, C-70/93, EU:C:1995:344, paragraphs 19 and
21.
144
Judgement of 7 January 2004, Aalborg and others v Commission, Joined Cases C-204/00 P, C-205/00 P,
C-211/00 P, C-217/00 P and C-219/00 P, EU:C:2004:6, paragraph 258; Judgement of 21 September
2006, Technische Unie v Commission, C-113/04 P, EU:C:2006:593, paragraph 178; Judgement of 26
January 2017, Duravit and Others v Commission, C-609/13 P, EU:C:2017:46, paragraph 117;
Judgement of 26 January 2017, Villeroy and Boch v Commission, C-644/13 P, EU:C:2017:59,
paragraph 47.
EN 32 EN
by partitioning national markets or by affecting the structure of competition within
the internal market.145
(143) The Court of Justice has also found that agreements constituting a selective
distribution system are capable of affecting competition in the internal market.146
(144) Guess’ distribution agreements covered a large part of the EEA. More specifically,
the wholesale agreements containing territorial sales restrictions covered the
following 16 EEA countries: Austria, Bulgaria, Croatia, Cyprus, the Czech Republic,
Estonia, Germany, Greece, Hungary, Latvia, Liechtenstein, Lithuania, the
Netherlands, Slovakia, Slovenia and the United Kingdom. Guess Europe also had
mono-brand store agreements containing territorial sales restrictions in the following
18 EEA countries: Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia,
France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Malta, Poland,
Romania, Slovakia and Slovenia. The same General Sales Terms were used in all
EEA countries with the exception of France, Spain, Portugal (where Guess Europe
used different General Sales Terms) and Iceland (where Guess Europe had no sales).
The Italian General Sales Terms were used in Italy.
(145) Since the agreements contained, in particular, internet sales restrictions and cross-
border sales restrictions, they were liable to affect trade between Member States. The
very purpose of these types of restrictions is to prevent trade between Member
States.
(146) Therefore, the Commission concludes that the conduct described in Section 5.2 was
capable of having an appreciable effect on trade between Member States in the EEA
within the meaning of Article 101(1) of the Treaty.
6.6. Appreciable effect on competition
6.6.1. Principles
(147) The Court of Justice held that an agreement affecting trade between Member States
and having an anticompetitive object, “by its nature” constitutes an appreciable
restriction of competition in violation of Article 101(1) of the Treaty, independently
of any concrete effect that it may have.147
(148) As set out above, the Commission concludes that the conduct described in Section
5.2 restricted competition by object. Therefore, those restrictions, by their nature,
appreciably affected competition.
145
Judgement of 15 March 2000, Cimentaries CBR and Others v Commission, T-25/95, EU:T:2000:77,
paragraph 3930; Judgement of 28 April 1998, Javico International and Javico AG v Yves Saint Laurent
Parfums SA, C-306/96, EU:C:1998:173, paragraphs 16 and 17.
146
Judgement of 25 October 1983, AEG v Commission, C-107/82, EU:C:1983:293, paragraph 33.
147
Judgement of 13 December 2012, Expedia Inc v Autorité de la concurrence, C-226/11, EU:C:2012:795
paragraph 37.
EN 33 EN
6.7. Non-applicability of Article 101(3) of the Treaty
6.7.1. Principles
6.7.1.1. Article 101(3) of the Treaty
(149) Article 101(1) of the Treaty may be declared inapplicable pursuant to Article 101(3)
of the Treaty where an agreement or concerted practice contributes to improving the
production or distribution of goods or to promoting technical or economic progress,
while allowing consumers a fair share of the resulting benefit, and which does not (a)
impose on the undertakings concerned restrictions which are not indispensable to the
attainment of these objectives; and (b) afford such undertakings the possibility of
eliminating competition in respect of a substantial part of the products in question.
(150) The Commission is empowered to apply Article 101(3) of the Treaty by regulation to
certain categories of vertical agreements falling within Article 101(1) of the
Treaty148, which can be regarded as normally satisfying all the conditions laid down
in Article 101(3) of the Treaty. The Vertical Block Exemption Regulation was
adopted under that empowerment.
(151) Even where a restriction by object pursuant to Article 101(1) of the Treaty is
established and the VBER is not applicable149, there is in principle the possibility of
an exemption from the prohibition in Article 101(1) if the parties prove that the
agreement fulfils the four conditions for exemption set out in Article 101(3) of the
Treaty.150
6.7.1.2. The Vertical Block Exemption Regulation
(152) Pursuant to Article 101(3) of the Treaty, the VBER exempts, under certain
conditions, categories of vertical agreements from the application of Article 101(1)
of the Treaty.
(153) Under Articles 2 and 3 of the VBER, in the context of a selective distribution system,
a supplier may, in principle, benefit from the block exemption where each its market
share and the buyer’s market share does not exceed 30% in the relevant markets. The
VBER excludes certain types of restrictions that have severely anticompetitive
effects (“hard-core restrictions”), irrespective of the market share of the undertakings
concerned. Article 4 of the VBER lists the types of restrictions that are excluded
irrespective of the markets shares of the supplier or the buyers.
(154) Pursuant to point (c) of Article 4 of the VBER, the exemption does not apply to
vertical agreements which directly or indirectly, in isolation or in combination with
other factors under the control of the parties, have as their object the restriction of
active or passive sales to end users by members of a selective distribution system
operating at the retail level of trade, without prejudice to the possibility of
prohibiting a member of the system from operating out of an unauthorised place of
establishment.
148
Regulation 19/65/EEC of the Council of 2 March 1965, on the application of Article 85(3) of the Treaty
to certain categories of agreements and concerted practices (OJ P 36, 6.3.1965, p. 533).
149
Article 4 of the VBER.
150
Judgement of 15 July 1994, Matra Hachette SA v Commission of the European Communities, T-17/93,
EU:T:1994:89 and Judgement of 13 October 2011, Pierre Fabre Dermo-Cosmétique SAS v Président
de l’Autorité de la concurrence and Ministre de l’Économie, de l’Industrie et de l’Emploi, C-439/09,
EN 34 EN
(155) Point (d) of Article 4 of the VBER specifically aims to ensure the freedom of
members of a selective distribution network to approach other members within the
network with the aim of exploring cross-supply opportunities. In particular, it points
out that wholesalers, just as much as retailers distributing the same products, are part
of the same selective distribution system. It follows that, whereas the supplier in a
selective distribution system may agree to appoint only one (wholesale) distributor in
a given territory, it cannot protect that (wholesale) distributor against active or
passive sales in its territory from other authorised distributors.151 Thus, cross-
network sales must not be restricted either among authorised wholesalers, or among
authorised retailers and wholesalers.
(156) Finally, pursuant to point (a) of Article 4 of the VBER, the block exemption does not
apply to vertical agreements which, directly or indirectly, in isolation or in
combination with other factors under the control of the parties, have as their object
the restriction of the buyer's ability to determine its sale price, without prejudice to
the supplier’s right to impose a maximum sale price or recommend a sale price,
provided that the maximum sale price or recommended sale price do not amount to a
fixed or minimum sale price as a result of pressure from, or incentives offered by,
any of the parties.
6.7.2.1. The non-applicability of the VBER
(157) The Commission concludes that the object of the online search advertising
restrictions was to restrict the ability of authorised retailers to advertise and
ultimately to sell the contractual products to customers, in particular outside the
contractual territory or area of activity. Their object was therefore to partition the
market since they limited the ability of the authorised retailers̕ to sell the contract
products actively or passively (depending on the targeted audience or territory).
Pursuant to point (c) of Article 4 of the VBER, those restrictions cannot therefore
benefit from the block exemption.
(158) The object of the online sales restrictions was to partition the market since they
restricted authorised retailers from actively or passively selling the contract products
to customers, in particular outside the contractual territory or area of activity, by
restricting their ability to effectively sell the products online on their website.
Pursuant to point (c) of Article 4 of the VBER, the restrictions cannot therefore
benefit from the block exemption.
(159) The same reasoning applies to the restrictions on cross-border sales to end users.
(160) As explained in Section 5.2.4, Guess Europe’s selective distributors (retailers and
wholesalers) were contractually limited from sourcing from or selling to, actively or
passively, other authorised members of the selective distribution system, including in
other EEA countries. Therefore, pursuant to point (d) of Article 4 of the VBER, the
restrictions on cross-selling among members of the selective distribution network
(wholesale and retail) cannot benefit from the block exemption.
151
Vertical Guidelines, paragraphs 57-58.
EN 35 EN
(161) The resale price maintenance by Guess Europe cannot be exempted pursuant to point
(a) of Article 4 of the VBER, because it had as its object to restrict the ability of
retailers to independently determine their sale price.
(162) In conclusion, the conduct described in Section 5.2 does not qualify for an exemption
under the VBER.
6.7.2.1. No exemption under Article 101(3)
(163) Guess’ conduct does not meet the conditions for an exemption under Article 101(3)
of the Treaty either.
(164) In particular, there are no indications that the conduct contributed to improving the
production or distribution of Guess’ products, or to promoting technical or economic
progress, while allowing consumers a fair share of the potential benefits resulting
from Guess’ restrictive practices. In addition, there are no indications either that the
conduct was indispensable, for example to address free-riding, or to protect Guess’
brand image.
7. SCOPE AND DURATION OF THE INFRINGEMENT

7.1. Product scope
(165) As Guess Europe submits,152 a range of products were reserved solely for its own
distribution in the Guess-owned stores and on its website153 and were not distributed
by any third-party retailers. As the infringement related to intra-brand competition,
the products reserved for Guess Europe's own distribution should be excluded from
the scope of the infringement. Those products (covering apparel, accessories,
footwear and Marciano products for women as well as men's apparel), distributed
only by Guess, accounted for […] of Guess’ total product mix for the period Spring-
Summer 2016 and […] for the period Fall-Winter 2016 (which corresponds to an
average of […] for 2016).154
7.2. Geographic scope
(166) In view of the geographic scope of the relevant restrictions, the Commission
considers that the infringement covered the territories of the following 27 EEA
countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic,
Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia,
Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland,
Romania, Slovakia, Slovenia, Sweden, and the United Kingdom.
(167) The relevant restrictions affected all Guess product sales in those territories
(excluding product sales for those products reserved solely for Guess’ own
distribution as explained in recital (165)) as they limited intra-brand competition
between Guess products.
152
[…].
153
These products consists mainly of a US collection named "YC" and so-called "open to buy"("OTB")
products that include capsule collections and fast-track ready-to-wear items: […].
154
[…].
EN 36 EN
7.3. Duration of the infringement
(168) The duration of the infringement is calculated from the date when all the relevant
restrictive measures that formed part of Guess’ e-commerce strategy (both
contractual and non-contractual) were first implemented in full.
(169) The full roll-out of Guess’ own website at EEA-level, which was completed on
1 January 2014155, marks the date when all the relevant restrictions aimed at
controlling the competitive pressure coming from Guess’ authorised retailers were
effectively put in place. Therefore, the start date of the infringement is 1 January
2014.
(170) On 31 July 2017, Guess Europe informed the Commission of new template
agreements that it intended to roll out in the future156 together with new General
Sales Terms that had already been deployed in July 2017. 157 As Guess Europe
demonstrated, those new agreements without the restrictive provisions were
effectively put in place in the second half of 2017158. The Commission therefore
considers that the infringement ended on 31 October 2017, which was the date when
the new agreements entered into force for the vast majority of Guess’ wholesalers
and retailers.
(171) Therefore, the infringement started on 1 January 2014 and ended on 31 October
2017.
8. LIABILITY
8.1. Principles
(172) As indicated in recital (94), Union competition law applies to the activities of
undertakings. The notion of an “undertaking” covers any entity engaged in an
economic activity, regardless of its legal status or the way in which it is financed.
(173) When an entity infringes Union competition law, it falls, according to the principle of
personal responsibility, to that entity to answer for that infringement. However, the
infringement must be imputed unequivocally to a legal person on whom fines may be
imposed, and the statement of objections must be addressed to that person. Where
several legal persons may be held liable for an infringement committed by one and
the same undertaking, they must be regarded as jointly and severally liable for the
infringement.
(174) The conduct of a subsidiary may be imputed to the parent company, even if the
parent company does not participate directly in the infringement, where the parent
company and the subsidiary form a "single economic unit" and therefore form a
single "undertaking" for the purposes of Union competition law.
(175) In particular, that may be the case where a subsidiary, despite having a separate legal
personality, does not decide independently upon its own conduct on the market, but
carries out, in all material respects, the instructions given to it by the parent
155
[…].
156
[…].
157
[…].
158
[…].
EN 37 EN
company, regard being had in particular to the economic, organisational and legal
links between those two legal entities.159
(176) In the specific case in which a parent holds all or almost all of the capital in a
subsidiary that has committed an infringement of Union competition rules, there is a
rebuttable presumption that that parent company in fact exercises a decisive
influence over its subsidiary. In such a situation, it is sufficient for the Commission
to prove that all or almost all of the capital in the subsidiary is held by the parent
company in order to take the view that that presumption applies.160
8.2. Application to this case
(177) In the period concerned by this Decision, the EEA-wide distribution of Guess
products was managed by Guess Europe, a wholly owned subsidiary of Guess?
Europe, B.V., which in turn is wholly owned by Guess?, Inc. The national
subsidiaries of Guess in the EEA are directly or indirectly held by Guess? Europe,
B.V. and ultimately by Guess? Bermuda Holdings L.P., the entity acting as the
holding company for all European subsidiaries.
(178) Having regard to the body of evidence and the facts described in Section 5.2, the
Parties’ clear and unequivocal acknowledgement of the facts and their legal
characterisation thereof and to the fact that Guess?, Inc. and Guess? Europe, B.V.
have not provided any evidence to rebut the presumption that they exercised decisive
control over Guess Europe during the relevant period, the Commission concludes
that liability for the single and continuous infringement should be imputed to the
following legal entities:
(a) to Guess Europe for its direct participation in the infringement;
(b) to Guess? Europe, B.V. as the parent company of Guess Europe; and
(c) to Guess?, Inc. as the parent company of Guess? Europe, B.V.
9. REMEDIES AND FINES

9.1. Remedies under Article 7 of Regulation (EC) No 1/2003
(179) Where the Commission finds that there is an infringement of Article 101 of the
Treaty, it may by decision require the undertaking concerned to bring such
infringement to an end in accordance with Article 7 of Regulation (EC) No 1/2003.
For this purpose, it may also impose any behavioural or structural remedies which
are proportionate to the infringement committed and necessary to bring the
infringement effectively to an end.
(180) The requirement that a remedy has to be effective161 also empowers the Commission
to require the undertaking concerned to refrain from repeating the act or conduct in
159
Judgement of 29 September 2011, Elf Aquitaine v Commission, C-521/09 P, EU:C:2011:620, paragraph
54.
160
Judgement of 10 September 2009, Akzo Nobel and others v Commission, C-97/08 P, EU:C:2009:536,
paragraph 60.
161
Judgement of 6 March 1974, Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents
Corporation v Commission, Joined cases 6 and 7/73, EU:C:1974:18, paragraph 46.
EN 38 EN
question and to refrain from any act or conduct having the same or an equivalent
object or effect.162
(181) The Commission concludes in this case that it is appropriate to require Guess to
bring the infringement to an end (if it has not already done so) and to refrain from
any future measure which has the same or an equivalent object or effect.
9.2. Fines under Article 23(2) of Regulation (EC) No 1/2003 – principles
(182) Under Article 23(2) of Regulation (EC) No 1/2003, the Commission may by decision
impose on undertakings fines where, either intentionally or negligently, they infringe
Article 101 of the Treaty.163 For each undertaking participating in the infringement,
the fine cannot exceed 10% of its total turnover in the business year preceding the
Commission decision.
(183) Pursuant to Article 23(3) of Regulation (EC) No 1/2003, the Commission must, in
fixing the amount of fine, have regard both to the gravity and to the duration of the
infringement. The Commission will also refer to the principles laid down in its
Guidelines on the Method of Setting Fines imposed pursuant to Article 23(2)(a) of
Regulation (EC) No 1/2003164 ("the Guidelines on Fines").
(184) First, the Commission must determine a basic amount. The basic amount of the fine
is to be set by reference to the value of sales to which the infringement directly or
indirectly relates in the relevant geographic area within the EEA.165 The basic
amount consists of a percentage of the value of those sales up to a maximum
percentage of 30%166, depending on the degree of gravity of the infringement,
multiplied by the number of years of the infringement.167 In assessing the gravity of
the infringement, the Commission has regard to a number of factors, such as the
nature of the infringement, the market share of the undertakings concerned, the
geographic scope of the infringement and whether or not the infringement has been
implemented.168
(185) For calculating the value of sales, the Commission normally takes the sales made by
the undertaking during the last full business year of its participation in the
infringement.169 If the turnover of the undertaking during that year is not sufficiently
representative of its annual turnover during the infringement, the Commission may
use some other year for calculating the value of sales.
162
Judgement of 6 October 1994, Tetra Pak International SA v Commission, case T-83/91, EU:T:1994:246
paragraphs 220-21; Judgement of 23 October 2003, Van den Bergh Foods, case T-65/98,
EU:T:2003:281, paragraph 205.
163
Under Article 5 of Council Regulation (EC) No 2894/94 of 28 November 1994 concerning
arrangements of implementing the Agreement on the European Economic Area “the Community rules
giving effect to the principles set out in Articles 85 and 86 [now Articles 101 and 102 of the Treaty] of
the EC Treaty […] shall apply mutatis mutandis.” (OJ L 305, 30.11.1994, p. 6).
164
OJ C 210, 1.9.2006, p. 2.
165
Point 13 of the Guidelines on fines.
166
167
168
169
EN 39 EN
(186) The Commission may also include in the basic amount an additional amount of a
sum up to 25% of the value of sales170 to deter undertakings from entering into
anticompetitive agreements.
(187) Second, the Commission may increase or decrease the basic amount to take into
account any aggravating or mitigating circumstances in accordance with points 28
and 29 of the Guidelines on Fines. It does so on the basis of an overall assessment
which takes account of all the relevant circumstances.171
(188) The Commission pays particular attention to the need to ensure that fines have a
sufficiently deterrent effect. To that end, it may increase the fine to be imposed on
undertakings which have a particularly large turnover beyond the sales of goods or
services to which the infringement relates.172
9.3. The intentional or negligent nature of the infringement
(189) The Commission concludes that, based on the facts described in Section 5, the single
and continuous infringement was committed intentionally.
9.4. Calculation of the fine
9.4.1. Value of sales
(190) The products to be taken into consideration for the purposes of calculating the value
of sales in this case are Guess apparel and accessory products in the following 27
EEA countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic,
Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia,
Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland,
Romania, Slovakia, Slovenia, Sweden and the United Kingdom. The Guess products
taken into account in calculating the value of sales should exclude those Guess
products that, as described in Section 7.1, are reserved solely for Guess’ own
distribution in the Guess-owned stores and on its website.
(191) Based on the principles outlined in Section 9.2 and on the information provided by
Guess, the value of sales relating to those products should be based on the value of
sales made by Guess in the financial year 2017 (running from 31 January 2016 to 28
January 2017), which was the last full business year of its participation in the single
and continuous infringement in those 27 EEA countries.
(192) Accordingly, the value of sales to be taken into account is EUR [250 000 000 –
300 000 000].
9.4.2. Gravity
(193) Based on the facts described in Section 5, the Commission takes into account the fact
that each of the restrictions, namely (i) online search advertising restrictions; (ii)
online sales restrictions; (iii) restrictions of cross-selling among members of a
selective distribution system; (iv) restrictions of cross-border sales to end users and
(v) resale price maintenance restrict competition within the meaning of Article
101(1) of the Treaty and Article 53 of the EEA Agreement by their very nature.
However, vertical agreements and concerted practices of the kind in issue in this case
170
171
172
EN 40 EN
are, by their nature, often less damaging to competition than horizontal
agreements.173
(194) In the light of the specific circumstances of the case, as set out in Section 5 above,
the percentage of the value of sales to be taken into account in this case should
therefore be set at 7%.
9.4.3. Duration
(195) The duration of the infringement, as set out in Section 7.3, was 1400 days. The
multiplier for calculating the fine is therefore 1400.
9.4.4. Calculation of the basic amount
(196) Applying the criteria explained in recitals (182) to (188), the basic amount of the fine
to be imposed in this case therefore amounts to EUR [75 000 000 – 85 000 000].
9.4.5. Aggravating or mitigating factors
(197) The Commission considers that there are no aggravating or mitigating circumstances
applying in this case.
9.4.6. Application of the 10% turnover limit
(198) The fine for the infringement does not exceed 10% of Guess’ total turnover relating
to the business year preceding the date of adoption of this Decision pursuant to
Article 23(2) of Regulation (EC) No 1/2003.
9.4.7. Reduction of the fine in view of cooperation
(199) In order to reflect that Guess?, Inc., Guess? Europe, B.V. and Guess Europe Sagl
have effectively cooperated with the Commission beyond their legal obligation to do
so, the fine that would otherwise have been imposed should, for the following
reasons and pursuant to point 37 of the Guidelines on fines, be reduced by 50%.
(200) Guess?, Inc., Guess? Europe, B.V. and Guess Europe have cooperated with the
Commission beyond their legal obligation to do so by, first, revealing a restriction of
competition which was not known to the Commission until then, second, providing
additional evidence representing significant added value compared with the evidence
already in the Commission's possession and strengthening the Commission's ability
to prove the infringement as a result, third, acknowledging the infringement of
Article 101 of the Treaty and Article 53 of the EEA Agreement arising from the
conduct, and, fourth, waiving certain procedural rights, resulting in administrative
efficiencies.
9.4.8. Conclusion: final amount of the fine
(201) In conclusion, the final amount of the fine to be imposed pursuant to Article 23(2)(a)
of Regulation (EC) No 1/2003 for the infringement amounts to EUR 39 821 000,
HAS ADOPTED THIS DECISION:
173
Judgement of 14 March 2013, Allianz Hungária Biztosító and Others, C-32/11, EU:C:2013:160,
paragraph 43.
EN 41 EN
Article 1
Guess?, Inc., Guess? Europe, B.V. and Guess Europe Sagl infringed Article 101 of the Treaty
and Article 53 of the Agreement on the European Economic Area by participating in a single and
continuous infringement consisting of practices restricting authorised distributors in a selective
distribution system from doing the following:
(a) using the Guess brand names and trademarks for the purposes of online search
advertising;
(b) selling online without first obtaining from Guess a specific authorisation which
Guess had full discretion to either grant or refuse and where no quality criteria had
been specified for deciding whether or not to grant an authorisation;
(c) selling to end users located outside the authorised distributors’ allocated territory;
(d) cross-selling among authorised wholesalers and retailers;
(e) determining their resale prices independently.
The infringement lasted from 1 January 2014 until 31 October 2017.
Article 2
For the single and continuous infringement referred to in Article 1, a fine of EUR 39 821 000 is
imposed on Guess?, Inc., Guess? Europe, B.V. and Guess Europe Sagl, jointly and severally.
The fine shall be credited, in euro, within a period of three months from the date of notification
of this Decision, to the following bank account held in the name of the European Commission:
BANQUE ET CAISSE D'EPARGNE DE L'ETAT
1-2, Place de Metz
L-1930 Luxembourg
IBAN: LU02 0019 3155 9887 1000

BIC: BCEELULL
Ref.: European Commission – BUFI/AT.40428
After expiry of that period, interest shall automatically be payable at the interest rate applied by
the European Central Bank to its main refinancing operations on the first day of the month in
which this Decision is adopted, plus 3.5 percentage points.
Where Guess?, Inc., Guess? Europe, B.V. or Guess Europe Sagl lodges an appeal, that entity
shall cover the fine by the due date, either by providing an acceptable financial guarantee or by
making a provisional payment of the fine in accordance with Article 108 of Regulation (EU,
Euratom) 2018/1046 of the European Parliament and of the Council174.
174
Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on
the financial rules applicable to the general budget of the Union, amending Regulations (EU) No
1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU)
No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing
Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1-222).
EN 42 EN
Article 3
Guess?, Inc., Guess? Europe, B.V. and Guess Europe Sagl shall immediately bring to an end
the infringement referred to in Article 1 insofar as they have not already done so.
They shall refrain from repeating any act or conduct described in Article 1, and from any act or
conduct having the same or equivalent object or effect.
Article 4
This Decision is addressed to:
Guess?, Inc., 1444 South Alameda Street, Los Angeles, California, 90021, United States
of America
Guess Europe Sagl, Strada Regina 44, 6934 Bioggio, Switzerland
Guess? Europe, B.V., Barbara Strozzilaan 101, 1083 H.N. Amsterdam, The Netherlands
This Decision shall be enforceable pursuant to Article 299 of the Treaty and Article 110 of the
Agreement on the European Economic Area.
Done at Brussels, 17.12.2018
For the Commission
Margrethe VESTAGER
Member of the Commission
EN 43 EN

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EUROPEAN COMMISSION

(Only the English text is authentic)

Article 7 Regulation (EC) 1/2003

Case AT.40428 Guess

(Text with EEA relevance)

(Only the English text is authentic)

Case AT.40428 Guess

(Text with EEA relevance)

(Only the English text is authentic)

2. THE UNDERTAKING CONCERNED

3. THE PRODUCT AND GEOGRAPHIC MARKETS CONCERNED

7. SCOPE AND DURATION OF THE INFRINGEMENT

9. REMEDIES AND FINES

IBAN: LU02 0019 3155 9887 1000

For the Commission

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