Competition Authority - Cahill May Roberts Ltd/ Guerlain Ltd

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COMPETITION AUTHORITY

Decision No: 538

Competition Authority Decision of 22 February 1999 relating to a proceeding under Section 4 of the Competition Act, 1991.

Notification No. CA/24/95 - Cahill May Roberts Ltd/ Guerlain Ltd.

Abstract:

Abstract to follow

Introduction

1 Cahill May Roberts Limited (CMR) notified an agreement under which Guerlain Limited (Guerlain) appoint CMR as a distributor in the State for Guerlain cosmetics on 20 June 1995, under Section 7 of the Competition Act, 1991 with a request for a certificate under Section 4(4) or, in the event of refusal by the Authority to issue a certificate, a licence under Section 4(2).

1. (a) Subject of the Notification

   2. The arrangements notified relate to the stockholding, physical distribution, invoicing and account collection by CMR of Guerlain cosmetics. The agreement sets out the terms and conditions governing the relationship between CMR and Guerlain.

2. (b) The Parties Involved

   3. Guerlain is a UK based company engaged in the distribution of luxury perfumes, cosmetics and toiletries. CMR is an Irish company engaged in the distribution of pharmaceutical, healthcare and allied products. The ultimate parent of CMR is Gehe AG, a German based company engaged in the selling and distribution of healthcare products, pharmaceutical products, and the provision of environmental and distribution services throughout Europe.

3. (c) The Product and the Market

   4. The products the subject of this notification are skin care and cosmetic products. The parties argue that the products compete in the luxury end of the market against such brands as Lancome, Clinique, Chanel, Christian Dior, Clams, Vichy, RoC and L’Oreal. The products are sold to the ultimate consumers in retail outlets such as department stores and retail pharmacies.

   5. The parties estimate the size of the market in the State for skin care and cosmetic products to be £100 million. The value of the products subject to the arrangements notified here would constitute only a small share of the overall market, less than 1%. CMR also distribute products for skin care and cosmetics on behalf of a number of companies other than Guerlain. The total market share of CMR (including Guerlain) in this market is less than5%.

   6. There are no barriers to entry into the skin care and cosmetics products market in Ireland and a variety of distribution channels exist.

4. (d) The Notified Arrangement

   7. Under the contract notified, Guerlain appoints CMR as its exclusive agent for cosmetic products in Ireland. Under the agreement all title to the products remain with Guerlain until sold to customers. CMR is compensated for its services by a commission paid by Guerlain.

   8. CMR performs stockholding, physical distribution, invoicing and account collection services under the agreement. CMR can only supply products to Guerlain approved stockists and will not actively seek sales outside the State.

5. (e) Submissions of the Parties

   9. The notifying party only submitted arguments in support of a request for the granting of a licence. As the Authority deems the agreement to be eligible for the grant of a certificate, the arguments are not relevant and are not repeated here.

6. (f) EU Position Regarding Commercial Agents

   10. Agency agreements are not subject to a block exemption. The EU Commission issued a notice on Exclusive Dealings with Commercial Agents in 1962 but this notice is now regarded as legally obsolete. The EU Commission has indicated its intention to prepare a revised Notice on this...