Published 14 Mai 2025
In a significant ruling on May 8, 2025, the Court of Justice of the European Union (CJEU) clarified the conditions under which suppliers can lawfully restrict active sales in exclusive distribution agreements. The Beevers Kaas case (C-581/23) provides important guidance on the practical implementation of the “parallel obligation” requirement – the requirement according to which an exclusive distributor may be protected from active sales coming from other territories only if the supplier restricts such active sales from all of its other buyers in the EU – a critical element for benefiting from the block exemption in the EU.
The Dispute in Brief
The case involved Beevers Kaas BV, the exclusive distributor of Beemster cheese in Belgium and Luxembourg, and the Dutch cheese producer Cono. Beevers Kaas claimed that several Albert Heijn supermarket companies violated their exclusive distribution agreement by actively selling Beemster cheese in Belgium.
The key question before the CJEU was whether the mere fact that other buyers of Cono were not making active sales in Belgium was sufficient to prove that the supplier had satisfied the parallel obligation to protect its exclusive distributor from active sales by other distributors – one of the requirements to block exempt active sales restrictions toward exclusive territories from prohibition.
The Court’s Ruling
The CJEU made two critical determinations that significantly impact how companies should structure and document their exclusive distribution arrangements.
First, the mere absence of active sales by other buyers in an exclusive territory is not sufficient to establish the existence of an agreement between the supplier and these buyers regarding a prohibition of active sales.
Second, to benefit from the exemption under Article 4(b)(i) of the former Regulation 330/2010 (now replaced by Regulation 2022/720), a supplier must demonstrate:
- That it has invited its buyers not to engage in active sales in the exclusive territory, through specific communication or a specific clause in general terms and conditions
- That the buyers concerned have acquiesced to this invitation, either explicitly or tacitly. The Court adds that tacit acquiescence is sufficient only if the supplier has implemented a system that monitors the restriction of active sales and applies penalties if buyers violate such restrictions.
The Court emphasized that this exemption applies only for the period during which such acquiescence can be demonstrated.
Relevance for the New Vertical Block Exemption Regulation 2022/720
This ruling takes on additional significance in light of the new Vertical Block Exemption Regulation 2022/720, which came into force on June 1, 2022. The new regulation explicitly incorporates the “parallel protection obligation” concept into the very definition of exclusive distribution systems:
Under Article 1(1)(h) of Regulation 2022/720, an exclusive distribution system is defined as “a distribution system where the supplier allocates a territory or group of customers exclusively to itself or to a maximum of five buyers and restricts all its other buyers from actively selling into the exclusive territory or to the exclusive customer group.”
This codification aligns perfectly with the CJEU’s analysis in Beevers Kaas, confirming that the new definition explicitly requires that the supplier “restricts all its other buyers” – confirming the CJEU’s position that mere absence of active sales is not sufficient. Crucially, “all other buyers” means ALL other buyers of the supplier within the European Union. This is explicitly confirmed in paragraph 117 of the 2022 EU Vertical Guidelines, which states that “In an exclusive distribution system, as defined in Article 1(1), point (h) of Regulation 2022/720, the supplier allocates a territory or a group of customers exclusively to one or a limited number of buyers, while restricting all its other buyers within the Union from actively selling into the exclusive territory or to the exclusive customer group.” As was the case before, the supplier must therefore protect its exclusive distributor from active sales coming from every single one of its buyers across the EU that restricts them from making active sales into the exclusive territory.
What About Protecting Exclusive Distributors in Switzerland?
The Beevers Kaas judgment also has significant implications beyond the EU, particularly for multinational companies operating distribution networks across Europe. The Swiss Competition Commission (COMCO) updated its Vertical Communication in 2022 (check here the English version I prepared last year), borrowing the EU’s definition of exclusive distribution systems. However, the Swiss communication presents a potential compliance trap for international businesses:
- The Swiss definition mirrors the EU’s requirement of restricting “all other buyers” from active sales into exclusive territories
- Crucially, unlike the EU guidelines, the Swiss guidelines do not explicitly limit this to buyers within Switzerland or “within the Union,” as outlined in Section 4.3.2.2 of my book “Competition Law in Switzerland“
- This omission suggests that under Swiss competition law, an exclusive distribution system requires a supplier to restrict all its buyers worldwide from active sales into the Swiss exclusive territory to benefit from the safe harbor of the COMCO’s Vertical communication.
For multinational businesses, this creates a significantly more onerous compliance burden than the EU approach. A company seeking to keep its Swiss exclusive distribution system within the safe harbor of the Swiss Vertical Communication may need agreements with all its distributors globally restricting active sales into Switzerland – potentially creating conflicts with other jurisdictions’ distribution agreements or contract laws.
Practical Implications and Key Takeways for Suppliers
This ruling has significant practical implications for companies using exclusive distribution models. Here are the key takeaways:
Document your active sales restrictions explicitly. Suppliers should:
- Include explicit clauses in distribution agreements and/or general terms and conditions clearly prohibiting active sales into exclusive territories
- Issue formal communications to all buyers about territorial restrictions
- Maintain records of these communications as evidence
Secure documented acquiescence. It’s not enough to simply inform your buyers – you need evidence of their acquiescence:
- Obtain written acknowledgment from buyers regarding active sales restrictions
- Consider incorporating acceptance of these restrictions into standard terms and conditions
- Document instances where buyers follow these restrictions and have communicated that they understand the restrictions
Implement monitoring mechanisms. The Court referenced monitoring systems as an accompanying measure in cases of tacit acquiescence:
- Establish systems to track and identify active selling into exclusive territories
- Address violations promptly through a consistent enforcement process
- Document both the monitoring system’s operation and any actions taken to enforce compliance
Regular review and renewal. Given that exemption in the EU only applies during periods when acquiescence can be demonstrated:
- Periodically reconfirm active sales restrictions with all buyers
- Update documentation when onboarding new distributors
- Maintain historical records of compliance
Consider your market position carefully. Remember that block exemption in the EU and the safe harbors in Switzerland only apply when:
- Supplier’s market share does not exceed 30% in the relevant market
- Buyer’s market share does not exceed 30% in the relevant market
- What is said above only apply to active (not passive) sales
Conclusion
The Beevers Kaas case represents a clear warning that informal territorial protection arrangements are not sufficient to benefit from the block exemption in the EU. Suppliers must take proactive steps to formalize, document, and monitor compliance with active sales restrictions if they wish to benefit from the block exemption.