Article De Nationale Franchisegids: “Distribution of (potential) customers prohibited?” – September 17, 2019 – mr. AW Dolphin

Within many franchise organizations, agreements are made about the recruitment of (potential) customers in a certain area. The competition watchdog, ACM, has imposed various fines on a number of companies and their directors for such agreements.

The companies concerned were active in the field of distribution, rental and sale of reading folders to customers in the Netherlands. They had made mutual agreements that meant that they would not recruit customers from each other’s (potential) customers. The  agreements consisted of area agreements about customers, about taking over  customers and about information exchange about prices. These agreements were  supported by agreed penalty clauses.

Not every one  non-compete obligation is prohibited. Area agreements are also in  franchise relationships are in principle permitted. However, ACM ruled that in the present case the purpose of these agreements must have been to weaken mutual competition. After all, the agreements were intended to bring about calm in the market and thus to maintain market shares in a shrinking market. According to the entrepreneurs involved, the agreements were necessary to prevent excesses, because the usual non-competition prohibition in the contracts alone would not be sufficient. However, it is considered that a customer allocation agreement as made by the parties was not necessary in the present case to counteract the excesses referred to. 

The Trade and Industry Appeals Tribunal confirmed on 20 August 2019 that the cartel prohibition had been violated, but will further adjust the amount of the fines imposed and their distribution.  On. On October 23, 2018, the Trade and Industry Appeals Tribunal also had a decision Franchisees of health care laundries imposed hefty fines in a similar case. Then it was also ruled that there there was a horizontal cooperation between competitors, whereby districts were divided and mutual agreements were made not to engage in acquisitions in each other’s district and to respect each other’s existing relationships.

Franchisors and franchisees must, when making agreements and coordinating behavior for the division of (potential) customers, division of territory and (retention of market shares), ascertain whether this is in conflict with the cartel prohibition, with all possible far-reaching consequences. . Timely thorough research is an absolute must.

Click here for the published article 

mr. AW Dolphin  – franchise lawyer Ludwig & Van Dam Advocaten, franchise legal advice.

Do you want to respond? Go to dolphijn@ludwigvandam.nl