Is a manufacturer allowed to refuse supplies?

Consumers who need to replace their ink cartridges prefer to have choice between different brands. And when repairing a car, it is nice to be able to choose between original or non-original parts which may be much cheaper. Manufacturers on the other hand often have good reasons to tie buyers to their brand. Sometimes this is purely commercial, but it may also be to prevent damage to their products or even injury. It may not always be easy for them to keep their brand reputation or sales volumes at an appropriate level without tying.ankelijke producten of diensten verkopen is dit vaak niet makkelijk.

In our practice we regularly receive questions from manufacturers who want to prevent their products from being repaired by non-authorized repair companies, or from using non-original parts. But also from independent service companies or traders who are at a loss as to what to do because they have difficulty obtaining original parts. Sometimes we are also asked whether a warranty claim can be refused after repair by a third party. The iPhone is a well-known example of this.

What is our answer, where does the solution lie?
In principle, a manufacturer cannot be forced to do business with a customer. This is freedom of contract. But if there are no or too few alternatives, this freedom of contract may have to give way to the interests of proper market functioning. More concretely, a manufacturer who has a dominant position in a market may be guilty of abuse of this position if he refuses to supply or applies unfavourable conditions.

Manufacturers may have various reasons to restrict competition. For example, to recoup investments in innovation, or to reduce price pressure at the wholesale or retail level so that their buyers are willing to resell his product. Sometimes the manufacturer itself also operates as a distributor and charges higher prices to competing distributors to give itself a competitive advantage.

Again, this is allowed except when the manufacturer abuses its dominant position. Then the behaviour is prohibited and parties who suffer from it can act upon it. In addition, the manufacturer runs the risk of fines being imposed by the competition authorities.

there are exceptions where the conduct is justified. A manufacturer would do well to investigate when this is the case. If he thinks he has a justification, the burden of proof lies with him. But even if supply is not technically possible or poses a danger to users, it is advisable to examine whether an outright refusal to supply is disproportionate and whether milder measures would be appropriate.

Manufacturers who are dominant in a market may be required to supply on reasonable and non-discriminatory conditions. It is also possible that it is unlawful to terminate supplies. If supply was previously made, abuse is more likely to be assumed.

Obligation to supply
In the past, supply obligations were imposed on Swatch in Switzerland: Swatch was dominant in the spare parts market and was therefore required to supply mechanical watches to independent repairers. For printer manufacturers, the decision fell the other way: the European courts assumed that buyers would factor in the future cost of ink cartridges when purchasing a printer. This meant that there was neither dominance nor abuse if they were required to use original cartridges.

It is not always easy to say whether a refusal to supply is unlawful. It often requires specialist knowledge and an examination of the market and market positions. Sometimes also specific rules apply, such as in the automotive sector and regulated markets. For parties who want (better) access to a market, an exploration of the possibilities may be of strategic importance. For manufacturers who suspect that they have an overly strong position in a certain market, an assessment of their market behaviour should be part of their compliance policy, since a violation can lead to substantial fines. If you have any questions about this, please do not hesitate to contact us.