ADDICTED and GUNDERWEAR: brand conditions and fair competition

After more than five years of working together, ADDICTED stopped supplying GUNDERWEAR after I refused to meet a condition requiring me to remove a competing brand from my range. This prompted me to submit the situation to the Spanish competition authority, the CNMC.

I think it is important to distinguish between what factually happened and the legal assessment of it. The fact that I consider the conduct problematic does not automatically mean that it has also been legally established that ADDICTED breached competition law. That assessment belongs to a competent authority or court.

What happened between ADDICTED and GUNDERWEAR?

ADDICTED is a Spanish brand of men's underwear, swimwear and clubwear and is part of the same company as ES Collection. GUNDERWEAR sold the brand as a reseller for more than five years.

The relationship changed when I was asked to stop selling another brand founded by a former employee of the company behind ADDICTED. I did not want to accept a supplier deciding which other brand I could or could not sell in my store.

After I refused that condition, supply to GUNDERWEAR was stopped and an outstanding order was also cancelled. The practical choice presented to me was clear: remove the competing brand from the range in order to continue buying ADDICTED, or no longer be supplied with ADDICTED.

Why did this raise questions for me?

A brand is of course entitled to make its own distribution choices, and not every commercial disagreement automatically becomes a competition-law matter. At the same time, the European Union has rules governing agreements between suppliers and distributors that may restrict competition.

The European rules on vertical agreements make a relevant distinction here. In a selective distribution system, a general non-compete restriction may under certain conditions fall within the block exemption. But an obligation that prevents authorised distributors from selling the brands of specific competing suppliers is expressly excluded from that automatic block exemption under Article 5 of Regulation (EU) 2022/720.

The European Commission's Guidelines on Vertical Restraints explain that this is intended, among other things, to prevent specific competing suppliers from being excluded from distribution channels.

Outside the block exemption does not automatically mean prohibited

That distinction is important. A restriction that does not benefit from the block exemption is not therefore automatically contrary to Article 101 TFEU. The precise agreements, the form of the distribution system, the market position of the businesses involved and the economic and legal context may all be relevant.

That is why I do not want this page to suggest that the legal outcome has already been determined. My objection is that the condition directly concerned one competing brand that, according to ADDICTED, I was no longer allowed to sell. Precisely because the European rules pay specific attention to such restrictions, I considered it reasonable to have the situation assessed by a competition authority.

Why did I report the matter to the CNMC?

ADDICTED is based in Spain. I therefore submitted the situation and the information available to me to the Comisión Nacional de los Mercados y la Competencia (CNMC), the Spanish competition authority.

The CNMC allows both businesses and individuals to report conduct that may restrict competition. With my report, I asked the authority to look at the situation and decide for itself whether further assessment or investigation was necessary.

I never received a response to my report from the CNMC or any other Spanish authority. I therefore do not know whether, or how, the report was assessed on its merits.

Why do I think this matters apart from the legal question?

For me, this ultimately concerns the independence of a retailer. I want to be able to select brands based on what I think is interesting for customers, not based on whether an existing supplier considers another brand to be a competitor.

Suppliers are entitled to set conditions for a commercial relationship, and I am then entitled to decide whether I accept those conditions. But when the condition is that a specific competing brand must disappear from my range, that touches on something bigger for me than an ordinary commercial agreement.

If I accept such a demand, a supplier indirectly determines which alternatives customers can compare in my store. That is exactly why I chose not to accept the condition.

What does this mean for ADDICTED at GUNDERWEAR?

I would have preferred to keep ADDICTED in the range under normal commercial conditions. The brand was part of GUNDERWEAR for years, and allowing the relationship to end was not my first choice.

But the freedom to decide my own range matters more to me. Unless the current situation changes, I therefore consider the partnership to have ended.

Transparency about this blog

This blog describes my experience as the owner of GUNDERWEAR and my reason for reporting the situation to the CNMC. Where I discuss European competition law, I deliberately do so cautiously: I am not establishing that ADDICTED broke the law. The final legal classification depends on the facts and is a matter for the competent authorities and, if it reaches that stage, the courts.

Dave from GUNDERWEAR