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Commission launches antitrust investigation into licensing practices of Nike, Sanrio and Universal Studios

The European Commission has launched three separate investigations into whether the licensing and distribution practices of Nike, Sanrio and Universal Studios illegally restrict traders from selling merchandise cross-border and online within the EU single market.14 Jun 2017

All three companies produce 'merchandised' products with images or text applied during the manufacturing process, the Commission said. Among other brands, Nike is the licensor of rights for Fútbol Club Barcelona's merchandise, Sanrio for Hello Kitty products, and Universal Studios for merchandise relating to the films Minions and Despicable Me.

The Commission is concerned that the companies may have breached EU competition rules by restricting licensees' ability to sell products cross border and online.

Commissioner Margrethe Vestager, in charge of competition policy said: "The Commission is investigating whether Nike, Sanrio and Universal Studios are restricting cross border and online sales of merchandising products. We are going to examine whether the licensing and distribution practices of these three companies may be denying consumers access to wider choice and better deals in the single market."

Competition expert Angelique Bret of Pinsent Masons, the law firm behind Out-Law.com said: "These cases could be used by the Commission to clarify the appropriate analysis of merchandising agreements under the competition law rules. Are they are considered to be straightforward distribution agreements under which passive sales, including online sales, cannot be restricted and active sales can be restricted only to protect exclusive territories or customer groups? Or does the copyright licensing aspect to these agreements mean that wider restrictions on active or passive sales can legitimately be imposed?"

"We know that the e-commerce sector enquiry revealed that these were more widespread than the Commission expected, given that the rules are for the most part relatively straightforward. The Commission is sending the message that it is prepared to take enforcement action in relation to these types of distribution arrangements. Companies would be well advised to revisit any risk assessment of their licencing and distribution arrangements."

The Commission began investigations into consumer electronics manufacturers, video games companies and hotels in February, and another into the distribution practices of clothing company Guess this month.