Brands always want to keep control of how their brand is presented to consumers. After all, any damage to consumers' perception of a brand can have serious long-term impact. A key part of controlling your brand is knowing who is selling your products and how. And the higher-end a brand thinks it is the more it care about who sells its product.
It's therefore not surprising that many retail distribution contracts contain restrictions on how a brand is presented, priced, discounted and resold. Now these restrictive terms have caught the attention of the EU competition chief, who thinks they may be damaging to consumers and is considering opening an investigation.
I have to say I agree. Technology has overtaken many of these clauses, and the key to operating a modern retail operation is agility and flexibility. Many anti-competitive practices are really defensive plays, as brands look to protect well established positions. If an established brand is restricting a distributor's ability to sell through online marketplaces that just creates space for new entrants to gain traction and ultimately disrupt the incumbent.
The report should be a reason for companies to review their current distribution contracts and bring them in line with EU competition rules if they are not. All these types of contractual sales restrictions may, under certain circumstances, make cross-border shopping or online shopping in general more difficult and ultimately harm consumers.