Smith & Nephew Ltd / Beiersdorf UK Ltd [2001] IECA 589 (25 June 2001)

Smith & Nephew Ltd / Beiersdorf UK Ltd [2001] IECA 589 (25 June 2001)

The Authority found that while the agreement contains restrictive clauses, including resale price maintenance, the highly unusual historical circumstances regarding the Nivea trademark and the pro-competitive effects of unifying trademark ownership and distribution justified granting a licence under Section 4(2) of the Competition Act, 1991. The agreement was found to improve distribution, benefit consumers, not eliminate competition, and the restrictions were deemed indispensable in the specific context.

Citation
[2001] IECA 589
Parties
Applicant: Smith & Nephew Ltd; Respondent: Beiersdorf UK Ltd
Jurisdiction
Ireland
Judgment Date
25 June 2001
Procedural Posture
Competition Authority Notification/decision / Final Decision on Licence Application
Outcome
Licence granted for five years, subject to monitoring and reporting conditions.
Legal Topics
Exclusive Distribution Agreements, Resale Price Maintenance, Market Definition, Trademark Rights, Section 4 Competition Act 1991, Licence Under Section 4(2)
Competition Law Exclusive Distribution Agreements Resale Price Maintenance Market Definition Trademark Rights Section 4 Competition Act 1991 Licence Under Section 4(2)

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Parties

Smith & Nephew Ltd

Applicant

Beiersdorf UK Ltd

Respondent

Procedural Posture

Competition Authority Notification/decision / Final Decision on Licence Application

Legal Issues

  1. 1 Whether the exclusive distribution agreement between Smith & Nephew Ltd and Beiersdorf UK Ltd contravenes Section 4(1) of the Competition Act, 1991
  2. 2 Whether the agreement qualifies for a licence under Section 4(2) of the Competition Act, 1991

Ratio Decidendi

The Authority found that while the agreement contains restrictive clauses, including resale price maintenance, the highly unusual historical circumstances regarding the Nivea trademark and the pro-competitive effects of unifying trademark ownership and distribution justified granting a licence under Section 4(2) of the Competition Act, 1991. The agreement was found to improve distribution, benefit consumers, not eliminate competition, and the restrictions were deemed indispensable in the specific context.

Court Disposition

Licence granted for five years, subject to monitoring and reporting conditions.

Orders

  • Licence granted to the agreement dated 1 December 1992 between Smith & Nephew Ltd and Beiersdorf UK Ltd for five years from 25 June 2001.
  • Parties must submit annual sales and pricing reports for regime products referenced in Clause 5.2, starting 25 June 2002.