On 28 November 2024, the European Commission (EC) fined French fashion house Pierre Cardin and one of its licensees – Ahlers Group – EUR 5.7 million for restricting cross-border sales of branded clothing as well as sales of such products to certain customers.  This case illustrates the EC’s broader initiative to tackle restrictions of parallel trade arising via licensing arrangements. Because such arrangements can cause significant disruption to the free movement of goods around the EU internal market, the EC considers these types of infringements as being amongst the most serious restrictions of competition. Other recent decisions of a similar nature include a EUR 14.3 million fine on NBC Universal in 2020 as well as a EUR 6.2 million fine on Sanrio in 2019 for prohibiting traders from selling licensed merchandise into other EU countries. 

By way of background, Pierre Cardin is a well-known  fashion label that licenses its trademark to allow third parties to manufacture and distribute itsbranded clothing. Ahlers is the largest licensee of Pierre Cardin clothing in the EU. On 22 June 2021, the EC dawn raided Ahlers' premises and opened formal proceedings into potentially anticompetitive conduct by Pierre Cardin and Ahlers on 31 January 2022. In July 2023, the EC issued a Statement of Objections to both companies and held an oral hearing in February of this year.

The EC found that agreements between Pierre Cardin and Ahlers were anticompetitive because they were designed to shield Ahlers from competition in EEA countries where Ahlers held a license for Pierre Cardin branded clothing, in breach of the EU competition rules. The specific anti-competitive restrictions in this case were aimed at preventing other Pierre Cardin licensees and their customers from selling Pierre Cardin branded clothing, both on and off-line, outside of their licensed territories and / or to low-price retailers, such as discounters, that offered the clothing to consumers at lower prices. These restrictions were intended to guarantee Ahlers’ territorial protection in the countries covered by its licensing agreement, which is a practice that clearly runs counter to the objectives of the EU internal market. 

This decision serves as a reminder that retailers and distributors must in general be free to sell where and to whom they choose within the EU. The EC considers territorial restrictions that aim to partition the EU internal market as serious infringements. Companies therefore need to be very diligent when assessing their contractual arrangements or, in case they are dominant, their unilateral conduct, to avoid inadvertently infringing competition law.