The European Commission opens formal investigations into Guess, Nike, Sanrio and Universal Studios regarding its licensing an…

The European Commission has opened formal investigations against the companies Guess, Nike, Sanrio and Universal Studios.

Guess’ activity focuses on designing, distributing and licensing of clothes and accessories. The Commission’s investigation will assess whether Guess’ distribution agreements prevent authorised retailers from engaging in online sales to consumers or retailers located in other Member States. Restrictions on wholesale to retailers in other Member States will also be part of the investigation.

For its part, Nike, Sanrio and Universal Studios are active in the licensing and distribution of merchandising products such as customized clothes, shoes, phone accessories, bags and toys. These three companies license the rights for some of the most popular brands. More precisely, Nike, Sanrio and Universal Studios license Fútbol Club Barcelona’s, Hello Kitty’s and Minions’ merchandise, respectively. The Commission will assess whether these companies have violated EU Competition Law by limiting licensees’ freedom to sell licensed products across borders and via internet.

Although companies can freely set up their distribution systems to a certain extent, they have to align to EU Competition Law, which guarantees the right of consumers to buy from any authorised retailer, even if located in another Member State. In the view of the European Commission, the agreements under scrutiny may be in breach of Article 101 TFEU, which contains a prohibition on agreements that prevent, restrict or distort competition within the Single Market.

The opening of these investigations follows the recent report on the e-commerce sector enquiry published by the Commission in May 2017, which found that more than one in ten retailers were subject to cross-border sales restrictions established in their distribution agreements. Despite being separate investigations, the four cases follow up one of the problematic issues identified in the said report, i.e. the existence of barriers to online and offline cross-border trade resulting from licensing practices.