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Guess Investigated for Breach of EU Distribution Agreements

The European Commission has opened a formal antitrust investigation into whether U.S.-based denim brand, Guess, illegally restricts retailers from selling cross-border to consumers within the EU Single Market.

According to a press release from the European Commission, information indicates that Guess’ distribution agreements may restrict authorized retailers from selling online to consumers or to retailers in other Member States. The company may also restrict wholesalers from selling to retailers in other Member States.

“The Commission has information indicating that Guess, in its distribution agreements, may ban cross-border sales to consumers,” stated Commissioner Margrethe Vestager. “One of the key benefits of the EU’s Single Market is that consumers can shop around for a better deal. We are going to investigate Guess’ practices further to ensure that it’s playing by the rules and not preventing consumers from buying products across borders.”

Companies are generally free to set up the distribution system that best serves them. However, these systems must comply with EU competition rules. Consumers must be free to purchase from any retailer authorized by a manufacturer, including across national borders.

In its recent report on the e-commerce sector, the Commission found that more than one in 10 surveyed retailers experienced cross-border sales restrictions in their distribution agreements that limit their ability to sell online to consumers in other Member States.