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The German competition authority (German Federal Cartel Office) issued a prohibition decision on 3 March 2015 regarding radius clauses imposed by an operator of a Factory Outlet Center (FOC). The FCO stated that a radius clause that exceeds a geographic scope of 50 km and a duration of 5 years infringes competition law. In the current case the operator of a FOC had imposed a radius clause with a radius of 150 km on its retailers (manufacturer and supplier of branded goods). The retailers were prevented from opening another outlet store as an individual store or in a FOC which is located within the radius of 150 km around the FOC. The German authority takes the view that radius clauses of such extent restrict competition between FOCs and they make it very difficult for new FOCs to enter the market. According to the investigations of the authority, most of the customers of the FOC in question are located within a radius of 100 km. The non-compete obligation (radius clause) related to a radius of 150 km which goes beyond the customer radius of 100 km. In addition, the nearest FOC was located 147 km away from the FOC. Therefore, it was challenging for the nearest competitor to attract any retailers (manufacturer of branded goods). According to the German authority such excessive radius clause is not necessary to protect the interests of the operator of the FOC. The non-compete obligation has as object to restrict the competition between actual and potential competitors of the FOC (by restricting the freedom of the retailers to open several outlet shops within a specific radius). The decision has not been published yet. The FOC has now one month to decide whether they want to appeal the decision.


Sarwenaz Kiani is an associate in Baker & McKenzie's antitrust practice group in London. She joined the firm in 2010 and worked in the Frankfurt am Main office until March 2015.

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