On July 9, 2019, the Commission fined Sanrio, a Japanese company that designs, produces and sells “Hello Kitty” products, €6.2 million for breaching Article 101 TFEU by imposing territorial restrictions on cross-border and online sales of merchandising products featuring Hello Kitty and other Sanrio-owned characters. The Commission granted Sanrio a 40% fine reduction in return for its cooperation.[1]

Direct restrictions in Sanrio’s agreements included express prohibitions on licensees from selling outside of their assigned territory within the EEA. Indirect restrictions were aimed at encouraging compliance with territorial restrictions, and included the refusal to renew licensees’ contracts if they sold out-of-territory, and audits to check compliance. The Commission found that the restrictions prevented licensees in Europe from selling products cross-border—one of the main benefits of the EU Single Market—resulting in less choice and inflated prices for merchandising products to the detriment of European consumers. The restrictions were in place between 2008 and 2018.

The case is part of the Commission’s recent enforcement efforts against vertical restraints, and in particular, restrictions against cross-border and online sales contained in distribution/licensing agreements, stemming from the Commission’s e-commerce sector inquiry.[2] So far, this has led to fines against Guess (€40 million)[3] and Nike (€12.5 million),[4] and a pending investigation against Universal Studios.[5]

The decision also reinforces the Commission’s willingness to reduce fines in return for cooperation in non-cartel cases, following similar precedents in Nike (40%), Guess (50%), Consumer Electronics (Asus, Denon & Marantz, and Philips 40%, and Pioneer 50%),[6] and ARA (30%),[7] and the issuance of a road map for cooperation in non- cartel cases.[8]

[1]      Character merchandise (Case COMP/AT.40432), decision not yet published.

[2]      See Final Report on the E-commerce Sector Inquiry, COM/2017/0229, of May 10, 2017; and Commission Sector Inquiry into E-commerce, available at: http://ec.europa.eu/competition/antitrust/sector_inquiries_e_commerce.html.

[3]      Guess (Case COMP/AT.40428), Commission decision of December 17, 2018.

[4]      Ancillary sports merchandise (Case COMP/AT.40436), Commission decision of March 25, 2019.

[5]      Licensed merchandise – Universal Studios (Case COMP/AT.40433), decision not yet published.

[6]      See Asus (Case COMP/AT.40465); Denon & Marantz (Case COMP/AT.40469); Philips (Case COMP/AT.40181); and Pioneer (Case COMP/AT.40182), Commission decisions of July 24, 2018.

[7]      ARA Foreclosure (Case COMP/AT.39759), Commission decision of September 20, 2016.

[8]      See http://ec.europa.eu/competition/publications/data/factsheet_ guess.pdf.