Selective distribution is one of the most common types of distribution within the car industry. This both applies for the sales of cars and for repair and maintenance. Typically, the manufacturer chooses his dealers and repairers based on qualitative criteria, for example minimum requirements to the arrangement of the workshop and premises, requirements for the service level or the education of the staff.
The criteria must be used objectively and non-discriminatorily. Consequently, a dealer or a repairer who meets the criteria shall as a starting point be admitted.
The selective distribution system is not violating the competition rules, when these conditions are met.
The dispute about selective distribution between Nissan and Daugaard Biler
The dispute between Nissan Nordic Europe OY (Nissan) and Daugaard Biler A/S (Daugaard Biler) concerned the question as to whether Daugaard Biler's breach of the distribution agreement in a combined distribution and repairer agreement entitled Nissan to terminate the repairer agreement and reject an application from Daugaard Biler about re-admittance as an authorised Nissan repairer.
Nissan terminated the agreement as Daugaard Biler had ceased to sell Nissan's cars from the distribution site that was specified in the agreement. Instead, Daugaard Biler sold Nissan's cars from an address in another area. The court agreed with Nissan that this matter was of such severe character that Nissan was entitled to terminate the distribution part of the agreement with immediate effect.
The court: Rejection of authorised repairer was a violation of the competition rules
However, the court did not agree that Daugaard Biler's breach of the distribution agreement was of such character that it affected Daugaard Biler's status as an authorised Nissan repairer. The court did not find that the conduct gave reason for disregarding the competition law principles that governs the regulation of distribution systems within the car industry.
The court especially emphasised the fact that Nissan had not demonstrated that Daugaard Biler could not meet Nissan's qualitative criteria for authorised repairers. Thus, Nissan's rejection of readmitting Daugaard Biler as an authorised repairer was a violation of section 6 of the Danish Competition Act and with article 101 of the treaty despite fundamental breach of the distribution agreement.