Table of Contents
- ECJ Confirms Allowable Scope of Protection of an Exclusive Distributor
- UK CMA Accepts Commitments to End Disparagement Investigation
- UK Continues Enforcement of Foreign Direct Investment Regime With Novel Conditions
- ECJ Advocate General Confirms No-Poach Agreements Can Be Automatic Infringements
ECJ Confirms Allowable Scope of Protection of an Exclusive Distributor
On 8 May 2025, the European Court of Justice (ECJ), the EU’s highest court, ruled on the conditions under which an active sales ban imposed on distributors in the EU may qualify for the exemption from EU competition law contained in the vertical agreements block exemption regulation (VABER). The court found that the restriction, imposed to protect an exclusive distributor in another territory, can only qualify if the supplier obtains the acceptance, express or implicit, of the ban by all its other distributors in the European Economic Area. This is an important practical issue relevant to many distribution agreements in the EU.
A block exemption provides for an automatic exemption from EU competition law if an agreement satisfies the requirements. The judgment concerned the previous VABER, but the new version, in force since June 2022, applies in the same manner.
The case concerned Beevers Kaas, the exclusive distributor in Belgium of Beemster cheese, which it purchases from the Dutch producer Cono. Since 1993, Cono and Beevers Kaas had an exclusive distribution agreement for the distribution of Beemster cheese in Belgium and Luxembourg. The Albert Heijn supermarket chain buys Beemster cheese produced by Cono for markets outside Belgium and Luxembourg.
Beevers Kaas accused Albert Heijn of infringing honest market practices by engaging in activities that had the direct or indirect effect of infringing Beevers Kaas’ exclusive rights in Belgium. Albert Heijn denied this allegation and argued that Beevers Kaas and Cono were attempting to impose a ban on active sales in to Belgium, which is prohibited under EU competition law except in some cases allowed by the VABER. Albert Heijn argued that the exclusive distribution agreement did not require Cono to protect Beevers Kaas from active sales by other buyers (i.e., other distributors). “Active sales” means approaching individual customers through advertisements, direct mail, visits and other means.
If its other requirements are met, the VABER permits a supplier to ban a distributor from making active sales into another territory or customer group that is exclusively allocated to another distributor (in the case of the new VABER, a maximum of five exclusive distributors). The related guidelines provide that the exclusive distributor in the other territory must be protected from active sales by all the supplier’s other buyers in the EU. This is the “parallel imposition requirement.”
The Belgian court referred to the ECJ the question of when an agreement between a supplier and its other distributors in relation to active sales into an exclusive territory is adequately established for the purposes of the VABER. This required the court to consider the validity of the parallel imposition requirement, which is the first time the issue has been raised before the EU courts.
The ECJ recognised that the VABER includes the parallel imposition requirement, despite the fact that that the VABER does not explicitly refer to such a requirement, and it only appears in the related guidelines.
As to the issue of when a suitable agreement is reached, the court found that the other buyers must show acquiescence through action or inaction. This requires the supplier to have explicitly or implicitly invited those other buyers to behave in a certain clearly defined manner on the market — i.e., not to engage in active sales in the exclusive territory — and for the buyers to have at least tacitly expressed their willingness to acquiesce to that ban, established on the basis of consistent coincidences or indicia.
In practice, a course of conduct will not provide sufficient certainty, so parties should make sure active sales bans are expressly set out in relevant distribution agreements. Distributors that have been allocated an exclusive territory or customer group likely will insist their suppliers include an active sales ban in all their other distribution agreements covering the EU.
The court also noted an important practical point on timing. The parallel imposition requirement is only met from the point that the other buyers have acquiesced or an express provision is in place. The supplier must be able to show that that condition is satisfied with respect to all its other buyers during the period for which it is claiming the benefit of the VABER.
UK CMA Accepts Commitments to End Disparagement Investigation
The UK Competition and Markets Authority’s (CMA’s) first investigation into alleged disparagement as an abuse of a dominant position in breach of competition law ended on 23 May 2025 with its acceptance of commitments.
The case concerned Vifor Pharma, a global pharmaceutical company that manufactures Ferinject, a leading IV iron deficiency treatment in the UK. The CMA investigated whether Vifor had restricted competition in breach of UK competition law by making misleading claims to healthcare professionals about the safety and effectiveness of Monofer, a rival high-dose IV iron deficiency treatment supplied by Pharmacosmos.
To address the CMA’s competition concerns, Vifor Pharma agreed to several commitments.
- Make a voluntary payment of £23 million to the UK National Health Service.
- Correct potentially misleading communications Vifor Pharma disseminated regarding the safety of Monofer and Ferinject via a multichannel communications campaign to healthcare professionals.
- Introduce several compliance measures to prevent future dissemination of potentially misleading communications regarding the safety of Monofer and Ferinject to healthcare professionals.
Although no finding of infringement was made, the CMA analysed the legal position in its decision to accept commitments. It stated that in its view the dissemination of misleading claims by dominant undertakings could fall outside of “competition on the merits” and, therefore, constitute an abuse of a dominant position in certain circumstances. This can include instances in which the misleading claims relate to a relevant parameter of competition or otherwise artificially raise barriers to other companies seeking to compete on the merits.
The assessment of whether a claim is misleading, and therefore potentially abusive, must also account for the circumstances of a case, including the applicable regulatory framework. Advertising medicines in the UK is governed by regulations that help inform what might constitute a misleading claim. The Medicines and Healthcare products Regulatory Agency (MHRA) provides in guidance that “[a]ll advertising and promotion of medicines, both for self medication and to healthcare professionals where medical prescription is required, must be responsible and of the highest standard.” In general, the advertising rules reflect the need for suppliers to compete on the basis of clear, accurate, verifiable and nonmisleading information and to ensure that comparisons with competing products do not mislead, distort or exaggerate. According to the CMA, this was important background in determing whether the statements amount to an abuse of a dominant position.
The case shows the wide scope of activities by a dominant company that can potentially be caught by the competition rules in the EU, UK and other jurisdictions that ban abuse of dominance. Competitors and other third parties can use this precedent to their benefit by making complaints or by bringing private claims in court.
UK Continues Enforcement of Foreign Direct Investment Regime With Novel Conditions
The UK’s regime controlling foreign direct investment on national security grounds is contained in the National Security and Investment Act 2021 (NSI Act). The NSI Act has a wide scope, catching investments into entities and assets made by UK and non-UK businesses with no turnover or asset thresholds. In some situations when an entity is acquired, the NSI Act requires mandatory notification and clearance prior to closing.
A recent case illustrates that the government can carefully tailor conditions imposed on an acquisition to reflect the type of buyer and the target business being acquired.
Maple Armor Group, owned by Chinese fire safety group Jade Bird Fire, obtained approval on 22 May 2025 to purchase 75% of Fireblitz, a fire safety equipment manufacturer.
The government identified risks to national security relating to the potential for the Chinese company to collect and access data about individuals and entities in the UK by controlling the supply chain and/or the operation of internet of things (IoT)-networked devices that Fireblitz could produce or market in the future.
In order to deal with these concerns, as a condition of approval, the companies are required to ensure that Fireblitz not develop, market or manufacture its own proprietary IoT-networked device technology. This includes a prohibition on Fireblitz developing, manufacturing or marketing networked IoT devices in partnership with entities incorporated in (or owned by entities incorporated in) jurisdictions outside of a pre-approved list.
Fireblitz’s supply chain is also controlled. Fireblitz may not source or procure certain components key to the functioning of IoT-capable devices from countries outside of a pre-approved list.
This case appears to be the first time pre-approved lists have been used as part of NSI Act conditions. The restrictions on development of future products also seem novel.
The government also required specific data conditions, the detail of which were not provided to the public. Fireblitz may only have access to permitted data generated from IoT-networked devices that it may market, sell or otherwise distribute in the future. In addition, certain unidentified entities and affiliated entities shall not access, control or own any data generated from IoT-networked devices that Fireblitz may market, sell or otherwise distribute in the future.
The transaction closed on April 2024 and does not appear to have been subject to a mandatory notification under the NSI Act and was likely subject to a “call-in” when the government identified the transaction. It is notable that Fireblitz is a small, standard manufacturer of fire safety equipment, with UK net assets of around £3 million.
This is not the first time that an acquisition in this sector has been reviewed and only cleared subject to conditions. On 16 May 2024, Intelligent Safety Electronics’ acquisition of FireAngel Safety Technology was cleared. FireSafety is a distributor of products including smoke alarms and heat sensors and has a portfolio of software applications that support its internet-enabled products. The government conditioned clearance on requirements relating to corporate goverance, the appointment of a chief information security officer with UK security vetting clearance, the implementation of visitor protocols at FireAngel sites and the design of networked products. It may be that the government’s experience with this acquisition led it to impose more onerous conditions on the Fireblitz transaction.
ECJ Advocate General Confirms No-Poach Agreements Can Be Automatic Infringements
On 15 May 2025, an advocate general (AG) at the ECJ provided his opinion on the analysis of “no-poach” agreements under EU competition law. An AG’s opinion is not binding on the ECJ, but the ECJ will usually follow it.
In no-poach agreements, employers, who compete for staff, agree not to “steal” employees from each other. There are various types of no-poach agreements. In “no-hire” agreements, employers agree not to actively or passively hire employees of other parties to the agreement. In “nonsolicit” (also called “no-cold-calling”) agreements, employers only agree not to actively approach another employer’s employees with a job opportunity. Such agreements may be sectorwide or only involve a few parties. They may be bilateral or multilateral, and bind only one party or be reciprocal.
The case concerned football (soccer) clubs playing in the Portuguese first and second divisions. They concluded an agreement with the national football association during the COVID-19 pandemic, which caused an interruption in the season. The clubs agreed to abstain from signing players who had unilaterally terminated their contracts due to pandemic-related issues.
The AG stated that no-poach agreements have — at least when entered into between actual and potential competitors (for the employment or hiring of staff), and unless they are ancillary to a legitimate transaction that is itself not anticompetitive — all the characteristics to be considered prima facie restrictive of competition “by object” (i.e., in effect, automatic infringements of EU competition law).
He justified this analysis on the basis that no-poach agreements negatively affect an input market (labour), for example, through lower wages. As a consequence, the output market (products or services offered by the companies in question) may also often be affected. In his view, the economic rationale of most no-poach agreements between competitors is anticompetitive.
However, case law established that finding that a given agreement belongs to a category of agreements that is typically restrictive of competition is not the end of the analysis. The content, the legal and economic context, and the objectives of the specific agreement at issue need to be be taken into consideration.
The AG concluded that, although no-poach agreements are usually anticompetitive, in this situation there are elements that appear to exclude the inherently anticompetitive nature of the agreement. The clubs concluded the agreement, with the support of the national football association, during the COVID‑19 pandemic, with the objective of ensuring that the 2019-2020 season could, despite the interruption and delays, be completed without compromising the integrity and fairness of the tournament.
The clubs’ desire to keep their squads in the last 10 matches as similar as possible to those in the first part of the season before the interruption was a measure consistent with the objective of ensuring the integrity and fairness of the competition, in which results are based on merit, not expediency. Although the agreement at issue did introduce some restrictions on the clubs’ ability to compete with regard to one essential activity (the signing of players), the AG’s view was that, under the exceptional circumstances of the case, and considering its limited scope, that agreement was not inherently anticompetitive and therefore not a “by object” infringement.”
On this basis, the agreement needed to be considered under an “effects” analysis in order to determine whether in practice it gave rise to anticompetitive effects and, if so, whether it could be justified on the basis of efficiencies. Alternatively, it could fall outside EU competition law completely on the basis it genuinely sought to ensure the integrity and fairness of the sports competition and was necessary and proportionate to that objective. Those issues would be for the national court that had referred the issue to the ECJ to determine.
McGuireWoods publishes bulletins on U.S. antitrust developments, as well as regular publications on numerous other topics.