Intersport, the world’s largest association of medium-sized retailers of sport products, switched its online sales platform operated by the Intersport subsidiary Intersport Digital GmbH (“IDG”) to a so-called “drop shipment business model”. Although the Federal Cartel Office (“FCO”) found that the new business model would affect competition between the individual retailers to a certain extent, the FCO, nonetheless, approved the business model due to it overweighing positive competitive effects.
IDG operates an online sales platform for the approx. 900 associated retailers of Intersport who can use the platform to sell their products without an own operated online-shop. Intersport now changed its business model related to IDG’s operated platform by switching to a “drop shipment business model”. “Drop shipment business model” means that neither the sale of the products to end customers nor the pricing is carried out by the individual associate retailers anymore. Rather, both are carried out by the IDG platform itself. The contractual relationship therefore exists between the end customers and the IDG platform. The Intersport retailers, now, determine the price at which they want to sell the product to IDG. IDG then forwards the customer’s orders to one or more retailers who are selected on the basis of their delivery capacities and geographical proximity to the respective customer. The individual purchase contract between IDG and the associated retailer is, thereby, only concluded when a customer places an order via the online shop.
The FCO has examined the new sales model of the Intersport online platform and has not objected to it under cartel law. “On the basis of the information provided, the FCO refrains from an in-depth examination”, the authority announced.
The FCO found that distribution via the platform only concerns a small part of the retail market and therefore competition between retailers is hardly affected by the Intersport platform. The FCO held that the Intersport associated retailers are mainly active on a stationary basis and are, furthermore, fully free to conduct their own online business activities via third-party platforms or via their own online-shops at prices they set themselves, besides selling on the Intersport platform.
In the FCO’s view, the joint platform offers retailers the opportunity to participate in online trading enabling them to compete effectively with the big online-players active on the market. Especially for the small traders, the operation of their own online shop would hardly be realisable. In this respect, the Intersport platform strengthens competition in the sport products retail sector.
Nevertheless, the FCO made it clear to IDG that access to the platform must be open to all Intersport retailers on a non-discriminatory basis as long as they meet IDG’s set requirements. These requirements must, therefore, be visible to all retailers and must not discriminate against smaller and lower turnover dealers.
For more information please contact Marcio da Silva Lima.