The NMa imposed a fine of EUR 18 million on four industrial laundries operating a franchise under the brand name Rentex.1 Surprisingly, the NMa ruled that the franchise in fact constituted a system of horizontal market-sharing arrangements between the franchise members and thus did not fall within the scope of the EU Block Exemption on vertical agreements.2
The market-sharing arrangement was part of a wider cooperation between the laundries on joint purchasing and innovation, which they qualified as a "soft franchise". The laundries set up "Rentex Nederland", a jointly controlled subsidiary, to conclude franchise agreements with each of them. The NMa, however, did not regard these franchise agreements as vertical agreements entered into between undertakings at different levels of the production or distribution chain.3 The NMa considered the agreements to be inextricably linked to the cooperation between the laundries as shareholders of Rentex Nederland. As shareholders, the laundries decided on the admission of new laundries to the Rentex franchise as well as on Rentex Nederland's policy towards the franchisees. In addition, the Rentex franchise agreements focused on joint purchasing and innovation under a single brand name, instead of on the use of a particular business method like – in the NMa's opinion- - "normal" franchise agreements do. As a result, the NMa concluded that the Rentex formula did not constitute an actual franchise but a horizontal agreement. The NMa subsequently qualified the market-sharing arrangement – part of the franchise agreements – as a horizontal agreement with the object to restrict competition which could not be independently justified by efficiencies. The NMa therefore imposed a fine of EUR 18 million in total on the four laundries.
It remains to be seen whether this controversial decision will be upheld in appeal. However, meanwhile franchisees should be aware that, according to the NMa, their influence on the franchisor may imply that the franchise agreement has a horizontal nature. It is not by definition problematic for franchisees to jointly hold shares in an undertaking acting as franchisor. However, being a (franchisee) shareholder carries the risk of "meddling" too much with the franchisor's daily policy-making, which – in the view of the NMa - could be regarded as cooperating too closely with their "competitor" franchisees.
Footnotes
1. See the NMa press release of 13 December 2012.
2. Regulation 330/210 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices; OJ 2010, L102/1.
3. See the definition of a "vertical agreement" laid down in article 1(1)(a) of Regulation 330/210 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices; OJ 2010, L102/1.
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