Our team: Alex Haffner
On 21 January 2020, the Court of Appeal handed down a decision upholding a 2017 decision by the UK Competition and Markets Authority (CMA) that Ping had infringed competition law in preventing its authorised resellers from offering golf clubs for sale over the internet. In so doing, the Court of Appeal has re-affirmed the basic principal that bans on online sales are to be regarded as “object” restrictions, meaning they will almost always liable to be found to infringe the competition rules.
Ping had imposed the online sales ban as part of its “custom fitting” sales process whereby would be purchasers of gold equipment were able to go to an authorised reseller and have their specific measurements and swing taken into account in determining which clubs to buy. Resellers in turn were encouraged only to sell clubs once the consumer had undergone such a custom fitting. This methodology was formalised in Ping’s terms and conditions for resellers which made clear that sales were prohibited via a reseller’s website or any third party reseller site (eg Amazon).
Restrictions on online sales have consistently been found unlawful by competition authorities and the courts. In the Pierre Fabre case, the European Court of Justice ruled that a ban on sales via distributors’ websites (there on sales of cosmetic and personal care products other than with a qualified pharmacist present) was anti-competitive, other than in those limited circumstances where such a ban was objectively justified having regard to the specific characteristics of the product(s) affected.
In its appeal, Ping emphasised that the sales ban was entered into based on its (genuine) belief that custom fitting was the best way for customers to experience Ping products. Although the Court of Appeal had some sympathy for this approach, it nevertheless emphasised that, to comply with the competition law rules, it should be left to resellers and consumers to decide how to sell and purchase Ping golf equipment. By imposing an outright internet ban, Ping was unlawfully taking the decision by itself.
The judges of the appeal court also noted (as the CMA had done in its original decision) that there were other means for Ping to achieve its aims other than through an Internet sales ban, for example by asking resellers to advise customers to seek a custom fitting or incorporating custom fitting into the online sales experience. Only if no such alternatives were available which (a) gave customers the choice of online versus bricks and mortar sales, whilst (b) ensuring those customers who wanted to could chose the latter, would an outright ban be justified.
Ping’s fine of £1.45 million issued by the CMA was reduced through the appeal process to £1.25 million. Otherwise, the case has endorsed the prevailing view that online competition (and the benefits this brings to consumers) is to be safeguarded above all else, and any exceptions to this policy will be few and far between.
Partner, Competition Law