Cycling UK Forum

531colin wrote:That might work, depending if a wholesaler was prepared to supply somebody outside their area.
You see, the general public have the trades descriptions legislation to protect them from the evil retailer.
The retailer doesn't have time to fight with the evil wholesaler, and has no legislation to support him.
.....it all works with reference to who has the biggest stick.....
the UK is a relatively small market, if for example the German wholesaler agreed to supply a UK bike shop, the UK wholesaler is liable to complain to the manufacturer......theres a fair chance the manufacturer would side with the bigger account.

The guiding principle in the EU here is article 101(1) of the EU treaty: http://eur-lex.europa.eu/LexUriServ/Lex ... 101:en:NOT

...so there is legislation there. It must be said, however, that the EU generally treats horizontal agreements (i.e. between competitiors) as potentially more damaging to competition than vertical agreements. But there are many situations where vertical restraints damage 'intra-brand competition' between distributors, and are 'barriers to cross-border trade' (see para 2.1: http://www.slaughterandmay.com/media/64 ... ements.pdf)

For the supplier to attempt to fix prices is almost always forbidden (see appendix 5A of the Slaughter & May link), which includes direct and indirect attempts to fix prices including 'threatening to delay or withhold supplies' and 'taking measures to identify price-cutting dealers'. Appendix 8.2 has examples of exclusive distribution agreements, together with the potential harm each may do to competition.

...so not a dead cert, and of course Shimano spends a heck of a lot on lawyers, but to assume that they will win is premature.

Well I don't know the specifics but I strongly suspect Madison's agreement with shimano is exclusive for the UK and so shimano can stop its other distributors from supplying UK retailers, and Madison can make sure that happens (by requiring shimano to enforce it against other distributors), all of which is very likely to be legal under competition law.

Steveo2020 wrote:Well I don't know the specifics but I strongly suspect Madison's agreement with shimano is exclusive for the UK and so shimano can stop its other distributors from supplying UK retailers, and Madison can make sure that happens (by requiring shimano to enforce it against other distributors), all of which is very likely to be legal under competition law.

I'm not sure Madison or Shimano can. http://www.nortonrosefulbright.com/know ... r-business

'Examples of hardcore restrictions [...] Restricting a distributor so as to grant other distributors absolute territorial protection: i.e. restricting the territories into which, or the customers to whom, a distributor may sell the contract goods or services. In this context, the rules do not permit restrictions on a distributor making “passive” sales to another territory - i.e., the rules do not permit prohibiting a distributor/retailer from selling to a customer outside its allocated territory if the customer has made the initial approach to the seller'

...so there's nothing to stop a retailer (not an end-user) making an offer to a foreign distributor. Whether Shimano's other distributors will agree is another matter, but if they all don't, then there is another argument that the distributors are in 'horizontal collusion' - i.e. a cartel. Here's an example of where distributors were found to be in a cartel which prevented 'parallel trade' in what was then the EEA: http://ec.europa.eu/competition/publica ... 3_1_50.pdf

edocaster wrote:The guiding principle in the EU here is article 101(1) of the EU treaty: http://eur-lex.europa.eu/LexUriServ/Lex ... 101:en:NOT

...so there is legislation there. It must be said, however, that the EU generally treats horizontal agreements (i.e. between competitiors) as potentially more damaging to competition than vertical agreements. But there are many situations where vertical restraints damage 'intra-brand competition' between distributors, and are 'barriers to cross-border trade' (see para 2.1: http://www.slaughterandmay.com/media/64 ... ements.pdf)

For the supplier to attempt to fix prices is almost always forbidden (see appendix 5A of the Slaughter & May link), which includes direct and indirect attempts to fix prices including 'threatening to delay or withhold supplies' and 'taking measures to identify price-cutting dealers'. Appendix 8.2 has examples of exclusive distribution agreements, together with the potential harm each may do to competition.

...so not a dead cert, and of course Shimano spends a heck of a lot on lawyers, but to assume that they will win is premature.

Well if the mighty VW group, revenues 192 billion Euros in 2012, couldn't win then it certainly isn't a dead cert for Shimano, revenues 2.5 billion dollars in 2012.

That is interesting.

Cheers