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Different approaches to internet commerce and antitrust in the EU and the US

Louis A. Schapiro, Mlex Magazine, July-September 2012.

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Louis A. Schapiro [1] examines how the differences between US and European law respecting vertical distribution have become more pronounced with the advent of e-commerce

I Introduction

As a lawyer for an American company with a long history supplying luxury products for distribution in Europe, I cannot help but note the striking differences between US and European law respecting vertical distribution. These differences have become more starkly pronounced with the advent of e-commerce and the recent adoption by the European Commission of a policy to promote the Digital Agenda in Europe.

As the European Commission states in the opening sentence of its e-commerce Action Plan, “[t]he Internet has revolutionised the everyday lives of Europeans in a way comparable to the industrial revolutions of the previous centuries.” [2] Indeed, the Internet and in particular the development of mobile broadband have provided an unprecedented means of communicating and interacting. All this has made the Internet a burgeoning avenue for commerce.

In fact, global e-commerce sales have seen an exponential growth and are expected to reach nearly one trillion dollars by 2013. [3] The European Union, however, lags behind the United States in e-commerce; in 2010, for instance, merely 57 percent of the European Internet users made online purchases compared to 66 percent of US Internet users. [4]

E-commerce has also brought about the empowerment of consumers. Comparing offerings or checking or writing product reviews has never been easier. Moreover, thanks to multimodal access (especially mobile) consumers can now better inform themselves about offline and online offerings before the purchase or explore previously unknown product dimensions by availing themselves of the “augmented reality”.

At the same time, e-commerce is fraught with issues of its own, some of them of a sui generis nature. The availability and ease of access to potentially unsafe products (e.g., prescription drugs), and other illegal transactions are the most notorious examples, although they may be just a small part of the vast underbelly of the Internet. Other practices relating to counterfeit goods or tampered goods, misleading advertisements, or fraud involving payment methods have unfortunately become commonplace online and are inhibiting the development of consumer trust. Consumers are sometimes disappointed by the lack of transparency regarding their purchases, the accumulation of random taxes and delivery fees or the inability of comparison sites to deliver trustworthy results. Indeed, the lack of consumer trust has been identified as one of the chief reasons for the EU market’s lack of progress in developing a single EU Digital Market. [5]

II The European Approach

Europe has decided to tackle these problems for the most part via regulation. Thus, the European Commission has been July-September 2012 mlex MAGAZINE 3 Limited reprint for Estée Lauder hard at work to eradicate many different perceived barriers to cross-border e-commerce in a holistic approach under the umbrella of its Digital Agenda. [6] In this respect, initiatives like the e-Commerce Action Plan, [7] the Single Market Act, [8] the revision of the Vertical Block Exemption Regulation (“VBER”) [9] and the Vertical Guidelines [10] and the IP Enforcement Directive [11] or the Retail Action Plan [12] have all attempted to address the different issues hindering the development of e-commerce in Europe. However, the full potential of e-commerce in Europe is arguably still to be unleashed by finding the appropriate balance between the Single Market imperative, the challenging economic climate, and business needs. The Commission points to the fact that in 2010, while 40 percent of consumers in the EU/EEA purchased online, only nine percent purchased across borders within the EU/EEA; the Commission sees that it has a long way to achieve a single digital market. [13]

Furthermore, in its quest for an ideal e-commerce framework, the European Commission has also sought the input of Internet stakeholders, including search engines, online marketplaces, content providers, ISPs, retailers and online consumers. As expected, the opinions of these players are varied and often divergent. For example, in relation to the liability of intermediaries for infringement of certain intellectual property rights or consumer protection laws, search engines and online marketplaces consider that a more limited liability is required, [14] while manufacturers and suppliers of branded goods and services believe that some degree of liability should be inseparable from the business of online intermediation. Moreover, manufacturers’ and suppliers’ views differ according to their chosen mode of distribution. For many luxury brands, selective distribution is at the heart of their business model and they want to ensure the brand image and consumer experience are adequately enhanced and safeguarded (both offline and online).

Finally, from the consumers’ standpoint, what is called for is a higher degree of certainty which would boost their trust and confidence in the safety and legitimacy of e-commerce transactions. [15] Moreover, a more clear division between sponsored results and natural search results is also required in order to avoid confusing consumers. [16]

Similarly, very different economic imperative drive the different stakeholders’ views. Search operators want to maximise traffic and online advertising; online marketplace operators want to increase volume of transactions; and, mass-market manufacturers want to increase sales volume using all channels. In this respect, in order for manufacturers and suppliers of luxury brands to preserve and enhance brand equity, it is essential to provide the consumer with a unique sensory and emotional experience online, comparable in some ways to the consumer experience in a high street boutique in the real world. In order to achieve this environment they require adequate legal protection for their investments and for those of their authorised retailers.

Despite the divergent economic interests and goals represented by the various stakeholders with an interest in e-commerce, the Commission sets as the basic bedrock of e-commerce regulation in the Vertical Guidelines the proposition: “[I]n principle, every distributor must be allowed to use the Internet to sell products.” [17]

To accommodate the needs of luxury sellers for a high-end environment online to display their brands, the European Commission developed the legal notion of the “overall equivalent criteria” in its Vertical Guidelines. [18] With this concept, the Commission attempts to give the luxury industry and others an option to preserve their efficient brick-and-mortar networks and ensure that similar quality standards and personal advice to the client are available both off- and online. Other provisions in the VBER, which go in the same direction, include the possibility of determining an absolute amount [19] (quantified in terms of either value or volume) to be sold offline (though it is not possible to determine a proportion of sales for the online/offline channel) or a fixed fee to support the online/offline sales efforts. [20] Moreover, the Commission also recognises that it is essential to preserve the incentives for authorised retailers to invest in both online and offline outlets and thus permits restrictions on the amounts to be sold to end-consumers [21] (as a prevention of grey market sales). In short, the regulations in the VBER as applied to selective distribution are complicated and sometimes vague and ambiguous.

Furthermore, ambiguity in other regulations besides the VBER, such as those governing the liability of intermediaries (e.g., online trading platforms or search engine operators) or consumer protection laws also has an impact on e-commerce. In this respect, the variety of administrative burdens across the EU Member States does not contribute to fostering a genuine pan-European e-commerce market. Regulating e-commerce is an extremely complex task; [22] sometimes with the unintended consequences, and the risk is that inadequate, ambiguous, or overly constraining regulation might potentially lead to a paralysis in the continued evolution of distribution systems online. [23]

The ambiguity of the rules and regulations in the EU governing the interplay between e-commerce and traditional retailers has led to a number of legal issues with which the courts have wrestled in the recent years.

In the Copad case, [24] the European Court of Justice (“ECJ”) held that in particular circumstances a ban on selling on luxury products to discounters could be lawful insofar as a discount sale could alter the “allure and prestigious image which bestows on those goods an aura of luxury.” This is in line with the Strawberrynet case, [25] where the Paris Court of First Instance described selective distribution (for perfumes) as legitimate for manufacturers willing to build or maintain an image of luxury and prestige for their trademarks and products. The Paris Court of Appeal further considered that if a supplier did not impose any general prohibition of online sales, it could decide that only its distributors with brick-and-mortar points of sale could act as online distributors. [26]

More recently, the ECJ ruled in Pierre Fabre [27] that a general ban on Internet sales as a method of marketing – in the form of a contractual clause stating that all sales must be made exclusively in a brick-and-mortar point of sale and in the presence of a pharmacist – constitutes a restriction by “object” under EU antitrust law. The Court added that the justifications of the need to provide individual advice to customers or to ensure the proper use of a product could not be admissible as legitimate reasons for restricting competition. The ban may be individually exempted, nevertheless, under Article 101(3) of the Treaty on the Functioning of the European Union.

Another controversial issue for the EU courts relates to the liability of intermediaries. As other international organisations have concluded, [28] the liability of intermediaries and the way to address it remains far from clear. The definition of intermediary, the notion of the “expeditious take-down” or the “ex-ante/ex-post filtering” requirement have all been addressed by the EU Courts in different ways.

For example, in Google v. LVMH, [29] the ECJ held that the use by Google of “LV” in its AdWords service did not infringe on the LVMH trademark because Google did not use the trademark “in its own commercial communication” and, consequently, not in the course of trade. At the same time, the Court indicated that individual advertisers can be held liable if their advertisements are found to mislead consumers.

Conversely, in L’Oréal v. eBay, [30] the Court decided that an infringement, for the marketplace, can only arise if the “intermediary” had played an active role – giving it knowledge of, or control over the offers of sale on its platform – and where such use of a keyword for advertisement purposes prevents “reasonably well-informed and reasonably observant internet users” from identifying the origin of a product. The Court also held that the trademark owner was able to prevent resale of its products when unboxed because of the trademark’s reputational concerns, and that it could prevent the distribution of products in the EU market when these products are not yet marketed with permission of the trademark owner in the EU.

Finally, the French Supreme Court recently decided [31] that eBay should be held liable whenever its users sell counterfeit products using its platform. As such, eBay was held not to be a mere facilitator of transactions but an active contributor to the infringement. However, the Court only partially confirmed the earlier Court of Appeal judgment dated September 3, 2010 and decided that: (i) the French courts’ jurisdiction should not extend to the US-based eBay website as there was no proof that the French eBay users were being targeted by it (as opposed to the UK-based eBay website); (ii) the Court of Appeal should have examined eBay’s argument that LVMH’s Selective Distribution agreements should not benefit from the VBER as the object of those agreements was resale price maintenance (“RPM”); and (iii) the sale by private individuals did not amount to a breach of the resale ban outside the Selective Distribution network.

It is difficult to discern a clear trend in all the foregoing cases. Until there is a direction from the courts, manufacturers/suppliers will be cautious and perhaps overly conservative. That creates a negative atmosphere for increased investment in new and untried innovation on the Internet by brand owners.

III The US Approach

The US, on the other hand, follows a different approach. In the absence of Single Market considerations in a unitary coast-to-coast market, vertical restraints in Internet distribution have been dealt with under general antitrust law and are subject to the rule of reason under Section 1 of the Sherman Act. [32]

In the US generally, the law allows the manufacturer/supplier broad economic liberty; it permits manufacturers or suppliers to limit the number of retailers authorised to sell their products in particular territories or to certain classes of customers; to control the appearance of stores, the nature of displays, the size of inventories and the use of their trademarks. They ordinarily may prohibit certain sales practices such as mail order, catalogues, telephone orders and Internet.

An outright ban on the Internet sales or the imposition of quality requirements generally will be permitted under US competition law when the manufacturer/supplier seeks to address free-riding issues, protect brand equity, or otherwise to improve the way its products compete with other brands. Similar concerns seem to justify the ability to permit Internet sales only by selected distributors. Moreover, unlike in the EU, the manufacturer/supplier may also reserve the online channel for itself (in case of dual distribution). [33]

Also, in the US, the liability of intermediaries has been a subject of much debate in the courts. For example, in Tiffany v. eBay, [34] the District Court of N.Y. held that it is for the trademark owner, and not for the intermediary, to police its brands insofar as a “generalised knowledge that trademark infringement might be occurring on their websites” is not enough to prove an infringement on the side of the intermediary. [35] Accordingly, intermediaries are allowed the use of the brand owner’s trademarks, while the obligation to monitor the lawfulness of the products falls primarily on the manufacturer or its authorised distributor.

However, a recent ruling the Court of Appeals for the Fourth Circuit may cast doubt on this rule by remanding a case concerning Google’s use of the Rosetta Stone trademark as a keyword. [36] Rosetta Stone alleged that the Google AdWords program aided advertisers to mislead consumers by suggesting to them to use the Rosetta Stone trademarks. In its ruling, the Court did not exclude that Google had knowledge that confusion was very likely to result from its use of the marks.

Another development with relevance for the US online commerce is the fact that resale price maintenance (RPM) was considered per se illegal under federal antitrust law until 2007, when the Supreme Court in Leegin [37] held that it was not necessarily illegal for a manufacturer to enter agreements with its retailers about minimum resale price. This decision has removed RPM from the domain of per se automatic antitrust violations under federal law and requires the application of a rule of reason analysis to determine the legitimacy of a particular RPM practice. [38] Perhaps, more significant to the development of the antitrust law in the US relative to online commerce is the acknowledgment by the Court that a manufacturer’s choice of a distribution model should not be artificially shaped by a rigid rule of law. Since a manufacturer could accomplish all the economic objectives of RPM by simply integrating its downstream distribution, why induce the manufacturer to adopt “inefficient integration that would not otherwise take place” ? [39]

IV Quo Vadis?

In general, antitrust law as applied to e-commerce in the US and the EU seems to have started off from opposite poles. The US approach, on balance, favours the Chicago-school/supply-side economics line of thought by allowing the market forces decide who will be the winners and losers in this highly disruptive economic environment. All this is played against a backdrop of a homogenous and vibrant coast-to-coast market (and indeed arguably spanning across the Northern border to Canada) with established (and affordable) shipping and payment solutions. Even though certain differences across States remain (e.g., with regard to RPM assessment and local taxes) they do not seem to significantly restrict interstate mobility in e-commerce.

The EU/EEA, on the other hand, remains by and large a patchwork of 27+ distinct markets that the Commission is committed to transforming into a unitary one. This will not be (and never has been) a simple task: different languages, rifts in the level of consumer and business “e-consciousness” (from the tech savvy Scandinavian and Anglo-Saxon countries to the more tradition bound southern Member States); differing regulations (in particular with regard to contract rules and privacy); and, lack of affordable and reliable pan-European shipping or payment systems. The Commission is busy at work dismantling the remaining cross-border barriers to trade and indeed implementing new platforms (such as the European ID, or European Contract Law).

Clearly, the EU authorities have adopted a policy that would make the Digital Agenda the glue with which to bind the Single European Market. Achieving the goals of the Digital Agenda then becomes an overriding political objective. But where is the empirical support for interpreting the objective as requiring the EU’s rules and regulations to favour the commercial exploitation of the Internet by intermediaries or retailers over the commercial activities on the Internet of manufacturers and suppliers of branded goods and services?

Doubtless, the Commission would deny there is a bias in its rules and regulations favouring the intermediaries and retailers online. But it acknowledges that the new VBER is a compromise. [40] Compromise by its very nature must be somewhat ambiguous in its result. My contention is that ambiguity in the VBER works against the manufacturer or supplier which is trying to plan and rationalise a distribution model for its branded products, especially luxury products. Ambiguous rules will be subject to costly challenges in the courts. Indeed, if there is no clear “safe harbour” for the manufacturer or supplier in the rules and regulations of a block exemption, such as the VBER, a key benefit of the block exemption, legal certainty, is undermined.

Less than two years after adoption of the new VBER, we see the existing and workable models of distribution, including selective distribution under increasing challenge by forces that would abrogate the compromise. [41]

This tenuous situation for manufacturers/suppliers might, in some instances, prompt them to consider moving to more constraining forms of doing business, such as exclusive distribution, agency arrangements, or indeed, a full vertical integration with retailers. Thus, in a move intended to liberalise the Internal Market and unleash the entrepreneurial potential of Europe, the authorities may in fact be contributing to its further fragmentation and foreclosure.

There are benefits and shortcomings to either approach: neither the US nor the EU has found the ideal balance among the competing commercial, legal and technological forces at play in the Internet world – and probably never will. The Internet in all its forms is Heraclitus’ river. The Harvard Business School professor and author, Theodore Levitt, once put it succinctly: “Change is the order of the day. Choose it or chase it. Adapt or die.” Indeed, change and “disruptive innovation” lie at the very nature of the Internet and the law should follow suit, allowing one to conduct its business online and be free to adopt a business model of its choosing, as long as that business model does not impinge the rights of other businesses or consumers.

Perhaps, the law in this context should operate more as a referee, to police bad behavior, rather than trying to regulate (and sometimes interfere with) the underlying economic considerations that drive the different stakeholders on the Internet. Perhaps, the EU Commission should focus on boosting consumer trust online. Lack of trust is arguably the true bottleneck preventing European e-commerce from creating a unified market. European and national authorities have a significant contribution to make in ensuring a more reliable way of accessing information about products, services and offerings, and guaranteeing their legitimacy (such as Trustmarks signifying reliable retailers or secure identification and payment systems). Another angle is the protection of IP on the Internet which sometimes comes in conflict with the overarching and pervasive nature of the Internet. Here, too, the European authorities can contribute by devising a single Internal Market which balances the ex-ante incentives to invest while safeguarding an adequate ex-post level of allocative efficiency.

Finally, I would urge that Europe begins to take notice of the potential that brands, in particular, luxury brands, hold for the European economy. [42] What is in Europe’s economic interest? Is it the effort to commoditise the Internet? Does Europe believe that it can compete in a global economy head to head with low cost manufacturers of products in Asia? Does Europe believe it can beat the cost effectiveness of online marketplaces originating in the US and China? Why not harvest the benefits of luxury brands which are rooted in Europe, which create jobs and manufacture in Europe and sell around the globe the products, services and experiences that consumers everywhere want, including the European consumer? Europe yet may decide to reset the legal equilibrium for selective distribution in both the online and offline worlds. But the EU legal framework should nourish and reflect the significance of these valuable assets and their unique cultural heritage in the online world.

Footnotes

[1Senior Vice-President and Deputy General Counsel, The Estée Lauder Companies, Inc.

[2European Commission, Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - A coherent framework to boost confidence in the Digital Single Market of e-commerce and other online services, COM (2011) 942 (“e-commerce Action Plan”).

[3According to J.P. Morgan, Nothing but Net. 2011 Internet Investment Guide (January 3, 2011), global e-commerce is expected to reach 963,028 million dollars in 2013.

[4European Commission, Staff Working Paper on online services, including e-commerce, in the single market accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – A coherent framework to boost confidence in the Digital Single Market of e-commerce and other online services, SEC (2011) 1641.

[5E.g., Section 4.1, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A Digital Agenda for Europe, COM (2010) 0245, (“Digital Agenda”).

[6Ibid. In addition, certain stakeholder initiatives have received the Commission’s support, e.g., the Memorandum of Understanding on the sale of counterfeit goods (May 4, 2011), available at:http://ec.europa.eu/internal_market/iprenforcement/stakeholders_dialogues_en.htm.

[7Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A coherent framework for building trust in the Digital Single Market for e-commerce and online services, COM (2011) 942, available at:http://ec.europa.eu/internal_market/e-commerce/communication_2012_en.htm.

[8Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Single Market Act Twelve levers to boost growth and strengthen confidence “Working together to create new growth”, COM (2011) 206.

[9Commission Regulation 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, April 23, 2010, pp.1-7 (“VBER”).

[10European Commission, Commission Notice - Guidelines on Vertical Restraints, OJ C 130, May 19, 2010, p. 1 (“Vertical Guidelines”).

[11Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the Enforcement of Intellectual Property Rights, OJ L 195, June 2, 2004, pp. 16-25.

[12Follow-up initiative to the Commission’s “Retail Market Monitoring Report”, European Commission, Towards more efficient and fairer retail services in the internal market for 2020, COM (2010) 355.

[13European Commission, Fifth Consumer Scoreboard, Consumers at home in the Single Market, 5th Edition – March 2011 (“Fifth Consumer Scoreboard”), available at:http://ec.europa.eu/consumers/consumer_research/editions/docs/5th_edition_scoreboard_en.pdf.

[14See, e.g., eBay, “Towards Commerce 3.0: Roadmap for Building Sustainable Growth into Commerce” (March 2012). Available at:http://www.ebaymainstreet.com/sites/default/files/eBay_Towards-Commerce-3.0-Policy-Roadmap.pdf.

[15Fifth Consumer Scoreboard, op cit n. 13.

[16See, e.g., Article 6 of the Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, July 19, 2000, pp. 1-16, (“E-Commerce Directive”) which states that “the commercial communication shall be clearly identifiable as such”.

[17Vertical Guidelines, ¶ 51.

[18Ibid, ¶ 56.

[19Ibid, ¶ 52.

[20Ibid.

[21Ibid.

[22Richard M. Steuer, Retailing on the Internet, 12 Antitrust No. 3, 1998.

[23In addition, as the Commission recognizes in its Digital Agenda and e-Commerce Action Plan, a host of tangential issues add uncertainty in the online marketplace. For instance, in Section 3 of the Staff Working Paper, the Commission states that “[m]ore administrative cooperation, improved enforcement and greater clarification in the liability regime of internet intermediaries are required to increase [the impact of the E-Commerce Directive].” Op cit n. 5.

[24Case C-59/08, Copad SA v. Christian Dior couture SA, Société industrielle lingerie, [2009] ECR I-3421. Moreover, in Case T-19/92, Groupement d’achat Édouard Leclerc v. Commission, [1996] ECR II-1851, the Court of First Instance (now, the General Court) stated that certain categories of products such as prestige fragrances and cosmetics may necessitate the use of selective distribution.

[25Strawberrynet, Paris Court of First Instance, January 11, 2006, Ref. No 04-09989.

[26SARL PMC Distribution v. SAS Pacific Création, Paris Court of Appeal, April 18, 2008, Ref. No 07-04360; See also Vertical Guidelines, ¶ 54.

[27Case C-439/09, Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorité de la Concurrence and Others [2011], not yet reported.

[28OECD, The Role of Internet Intermediaries in Advancing Public Policy Objectives, OECD Publishing (September 14, 2011), available at: http://dx.doi.org/10.1787/9789264115644-en.

[29Joined Cases C-236/08, C-237/08 & C-238/08, Google France SARL v. Louis Vuitton Malletier SA, [2010] ECR I-2417.

[30Case C-324/09, L’Oréal SA and others v. eBay International AG, [2011] ECR I-1000.

[31Louis Vuitton Malletier v. eBay Inc. and eBay international AG, French Supreme Court, May 3, 2012, Ref. No 11-10505; Christian Dior couture v. eBay Inc. and eBay international AG, French Supreme Court, May 3, 2012, Ref. No 11-10507; and Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy et Guerlain v. eBay Inc. and eBay AG, French Supreme Court, May 3, 2012, Ref. No 11-10508.

[32The SOPA (Stop Online Piracy Act) and PIPA (PROTECT IP Act) bills which aimed to achieve a more specific approach raised tensions between regulators and Internet-related industries. In response, another bill, OPEN (Open Protection and Enforcement of Digital Trade Act) has been introduced. None has been adopted at the time of writing.

[33Under the U.S. antitrust law, a ban on online sales will likely be upheld when a manufacturer independently adopts a purely unilateral policy and enforces it evenly (under the Colgate doctrine, United States v. Colgate Co., 250 U.S. 300 (1919), or, where an agreement is deemed to exist, the manufacturer and/or the individual dealer involved does not have market power (under the rule of reason analysis, Continental Television v. GTE Sylvania, 433 U.S. 36 (1977). Thus, restrictions on online sales follow the general principle that a manufacturer can reserve or control a channel of trade (e.g., bans on retailers’ use of sales catalogs: Computer Place v. HP (1984). In MD Products, Inc. v. Callaway Golf Sales Co., 459 F.Supp.2d 434 (2006), the manufacturer (Callaway) banned some of its retailers from selling its products through their own or third-party websites (in particularly, eBay.com). The U.S. District Court for W.D. North Carolina held that such a ban did not restrict trade and that Callaway had selectively permitted certain retailers with substantial logistic capabilities to distribute certain products over the Internet. In Jacobs v. Tempur-Pedic Int’l, Inc., 626 F.3d 1327 (2010), the ability for manufacturer to reserve online sales for itself was disputed. The plaintiff argued, inter alia, that the dual distribution system employed, where the manufacturer sold mattresses though both its (brick-and-mortar only) authorized distributors and its own website, constituted a horizontal price-fixing conspiracy. The Court of Appeals for the 11th Circuit held that the manufacturer was entitled to keep online distribution for itself, and that, in principle, such dual distribution system did not lead to a horizontal relationship between independent retailers and the manufacturer acting as an e-tailer.

[34Tiffany (NJ) Inc. v. eBay, U.S. District Court of NY, SD NY, No 04 Civ.4607(RJS). Affirmed by the U.S. Court of Appeals, Second Cir.: Tiffany (NJ) Inc. v. eBay Inc., 08-3947-cv, April 1, 2010.

[35Ibid, at ¶¶ 516-518.

[36Rosetta Stone Ltd. v. Google, Inc., No. 10-2007 (4th Cir., April 9, 2012).

[37PSKS, Inc. v. Leegin Creative Leather Products, Inc., 551 U.S. 877 (2007) (“Leegin”).

[38These include (but are not limited to) California and New York. However, under state law, RPM can still be deemed illegal. Therefore, U.S.-wide manufacturers and retailers considering RPM tend to proceed with caution in this area.

[39Leegin, at p. 24.

[40“I believe that on «verticals», we can achieve a good compromise between, on the one hand, the need to preserve efficient distribution models, and, on the other hand, the necessity to ensure cross-border trade in the internal market, notably through the development of on-line sales”, Vice President of the European Commission Joaquín Almunia, EU Antitrust policy: the road ahead International Forum on EU Competition Law, March 9, 2010, SPEECH/10/81.

[41Committee on the Internal Market and Consumer Protection, Rapporteur Pablo Arias Echeverría, Report on Completing the Internal Market for E-Commerce, September 8, 2010 (2010/2012(INI), at ¶ 39: “[The European Parliament c]alls on the Commission to begin formulating European standards to facilitate cross-border e-commerce, to bridge variations between the laws in force within the various Member States and to remove the obligation within a selective distribution network of having an off-line shop prior to selling online, where it is shown that such an obligation is in contradiction with competition law, or is not justified by the nature of the contract for goods and services sold”.

[42European Commission, Green Paper – Unlocking the potential of cultural and creative industries, COM (2010) 183.

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