Franchise Argument In Laundry Cartel Won't Wash With The NMa

 
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The NMa imposed a fine of EUR 18 million on four industrial laundries operating a franchise under the brand name Rentex.1 Surprisingly, the NMa ruled that the franchise in fact constituted a system of horizontal market-sharing arrangements between the franchise members and thus did not fall within the scope of the EU Block Exemption on vertical agreements.2

The market-sharing arrangement was part of a wider cooperation between the laundries on joint purchasing and innovation, which they qualified as a "soft franchise". The laundries set up "Rentex Nederland", a jointly controlled subsidiary, to conclude franchise agreements with each of them. The NMa, however, did not regard these franchise agreements as vertical agreements entered into between undertakings at different levels of the production or distribution chain.3 The NMa considered the agreements to be inextricably linked to the cooperation between the laundries as shareholders of Rentex Nederland. As shareholders, the laundries decided on the admission of new laundries to the Rentex franchise as well as on Rentex Nederland's policy towards the franchisees. In addition, the Rentex franchise agreements focused on joint purchasing and innovation under a single brand name, instead of on the use of a particular business method like – in the NMa's opinion- - "normal" franchise agreements do. As a result, the NMa concluded that the Rentex formula did not constitute an actual franchise but a horizontal agreement. The NMa subsequently qualified the market-sharing arrangement – part of the franchise agreements – as a horizontal agreement with the object to restrict competition which could not be independently justified...

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