## Facts

- Yves Saint Laurent Parfums SA (YSLP) supplied luxury cosmetic products and operated a selective distribution system for sales within the European Union that had received an individual exemption under EU competition law.
- YSLP concluded distribution agreements with Javico International and Javico AG appointing Javico to distribute YSLP products solely in specified non-EU territories (Russia/Ukraine and Slovenia (then outside the EU)).
- The agreements required Javico to export and sell only in the designated non-EU territories and prohibited the products from leaving those territories, including a prohibition on re-importation into and marketing within the EU.
- YSLP discovered that products supplied under the non-EU agreements were being marketed in EU Member States (including Belgium, the United Kingdom, and the Netherlands).
- YSLP terminated the agreements and sued Javico in France for damages; the French commercial court upheld the termination.
- On appeal, Javico argued that the export-only and anti–re-import clauses infringed Article 85(1) EC (now Article 101(1) TFEU).
- The French appellate court referred questions for a preliminary ruling on whether, and under what conditions, Article 85(1) applies to such clauses in agreements aimed at non-EU territories.

## Issues

1. Whether a clause in a distribution agreement aimed at non-EU territories, requiring export and prohibiting re-importation into and marketing within the EU, is restrictive of competition “by object” under Article 85(1) EC.
2. Whether such a clause is capable of affecting trade between EU Member States in an appreciable manner, as required for Article 85(1) EC to apply.
3. Whether the existence of an individually exempted selective distribution network within the EU determines, or materially affects, the Article 85(1) assessment of separate non-EU distribution contracts containing re-import bans.

## Decision

- The Court held that export obligations and prohibitions on re-importation in distribution agreements intended to operate outside the EU are not automatically restrictions of competition “by object” under Article 85(1) EC.
- The Court ruled that application of Article 85(1) requires a concrete assessment of whether the agreement is capable of producing restrictive effects within the EU, including an appreciable effect on trade between Member States.
- The Court stated that appreciability depends on the economic and legal context, particularly the parties’ position on the relevant product market.
- The Court held that an individual exemption for YSLP’s intra-EU selective distribution system does not, by itself, determine whether the separate non-EU agreements fall within Article 85(1).
- Because the proceeding was a preliminary reference, the Court did not decide the parties’ contractual dispute; it left application of these criteria to the referring national court.

## Legal Principles

- Territorial restraints in distribution agreements operating within the EU that exclude parallel trade are typically treated as restrictions of competition “by object” under Article 101(1) TFEU.
- Comparable restraints in agreements intended to operate outside the EU (including obligations to export to third countries and bans on re-importation into the EU) are not “by nature” restrictions under Article 101(1); they require an effects-based analysis.
- Article 101(1) applies only where an agreement is capable of affecting trade between Member States and restricting competition to a more-than-insignificant degree, assessed in light of the agreement’s economic and legal context.
- The existence of an exemption decision for one agreement (such as an intra-EU selective distribution system) does not automatically extend to, validate, or condemn separate agreements covering non-EU territories; each agreement must be assessed on its own effects within the EU.

## Conclusion

The Court required an effects-based inquiry for export-only distribution agreements aimed at non-EU territories: re-import bans are not automatically unlawful under Article 101(1), and liability depends on whether the clauses appreciably affect trade between Member States and competition within the EU, assessed by the national court in context.


Javico Int’l v. Yves Saint Laurent Parfums SA, Case C-306/96, 1998 E.C.R. I-1983 (C.J.E.U. 1998)