French Competition Law provides a comprehensive review of the French rules relating to competition: restrictive agreements, commercial negotiation, abuses of a dominant position, procedure and merger control.

French Competition Law

Before Regulation No 2790/1999, exclusive supply agreements came under the Block Exemption Regulation No 1984/83 of 22 June 1983 governing agreements “to which only two undertakings are party and whereby one party, the reseller, agrees with the other, the supplier, to purchase certain goods specified in the agreement for resale only from the supplier or from a connected undertaking or from another …

Exclusive supply and vertical restraints regulation

An exclusive purchasing agreement obliges the buyer to only get supplies from a given supplier. There are two contracting parties to such an agreement, one pledging to buy specific products for resale only from the other, or from any subsidiary or third-party undertaking it designates that distributes its products. Exclusive purchase agreements are capable of producing a restrictive effect on competition insofar as they limit the market access of the supplier's competitors. Thus for contracts linking filling stations to petrol companies, the Competition Authority has held that contract clauses requiring that tanks be returned have no technical justification and are not for consideration, while being likely to increase the costs of changing suppliers in case of contract termination. They therefore limit the distribution market flow and freeze the different suppliers' positions. It also prevents a distributor who has not been renewed from pursuing operations. These clauses thus constitute a prohibited agreement within the meaning of Article L. 420-1 , even where termination is brought on by the distributor . The same is true of clauses that make the exclusive purchase in a given brand product a condition for contract warranty . Generally, imposing an unnecessary exclusivity clause is anticompetitive . Exclusivity can only be justified by technical or commercial requirements . To be lawful, exclusive supply also must not significantly contribute to a cumulative effect, via the interplay of similar contracts that leads to market foreclosure . A collection of loans requiring brand exclusivity doesn't have this kind of a blocking effect where the undertakings involved hold a relatively low share of the market .

Competition Council decision No 87-D-34 of 29 September 1987, LawLex200200002564JBJ; CA Paris, 5 May 1988, LawLex200200002601JBJ; Cass. com., 18 February 1992, LawLex200200003140JBJ.

Cass. com., 26 May 1992, LawLex200200002582JBJ.

Competition Council decision No 90-D-34 of 2 October 1990, LawLex200200003281JBJ.

CA Paris, 20 October 1993, LawLex200200002645JBJ.

Respectively, Competition Council decision No 94-D-11 of 1st February 1994, LawLex200200002492JBJ; Competition Council decision No 97-D-86 of 3 December 1997, LawLex200200003065JBJ: protecting the network and brand image. See however Competition Council No 98-D-76 of 9 December 1998, LawLex200200002472JBJ, a clause imposing exclusive supply in order to ensure that returned unsold items are only those of the supplier is not essential to protecting the network or its brand image.

Cass. com., 18 November 1997, LawLex200200003735JBJ.

For a market share of less than 47%, Competition Council decision No 00-D-82 of 26 February 2001, LawLex200200002680JBJ, or equal to 66%, CA Paris, 7 May 2002, LawLex200200002185JBJ.

Conditions for prohibition

Before Regulation No 2790/1999, exclusive supply agreements came under the Block Exemption Regulation No 1984/83 of 22 June 1983 governing agreements “to which only two undertakings are party and whereby one party, the reseller, agrees with the other, the supplier, to purchase certain goods specified in the agreement for resale only from the supplier or from a connected undertaking or from another undertaking which the supplier has entrusted with the sale of his goods...”. Exclusive supply was only exempt on condition that it be limited to 5 years. The regulation also contained specific provisions on filling stations and beer contracts - for beer supply, exclusivity varied based on the supplied products (10 years for some beer contracts, 5 if beer was combined with other beverages), while exclusive supply in filling station contracts was not to exceed 10 years.

Regulation No 2790/1999, replaced by Regulation No 330/2010, and its Guidelines brought these specificities to an end (see Appendix p. 429 for these texts). The Regulation concerns all vertical agreements, i.e. between undertakings situated at different levels of the production and distribution chain and whose object is the purchase, sale, or resale of certain goods or services. The Regulation grants a presumption of validity to agreements made between undertakings that have limited market power (less than 30% market share), and allows them an exemption under Article 101(3) TFEU on condition that they do not contain any specifically anticompetitive clauses (hardcore restrictions) and that they observe certain parameters.

Exclusive supply is not expressly provided for. It comes under the category of non-compete obligations, defined by Article 1 as “any direct or indirect obligation causing the buyer not to manufacture, purchase, sell or resell goods or services which compete with the contract goods or services, or any direct or indirect obligation on the buyer to purchase from the supplier or from another undertaking designated by the supplier more than 80% of the buyer's total purchases of the contract goods or services and their substitutes on the relevant market, calculated on the basis of the value of its purchases in the preceding calendar year”.

Non-compete obligations may be direct or indirect. They may therefore involve bans on distributors getting supplied in competing products, or exclusive purchasing, or on the contrary, a ban on suppliers dealing with the distributor's competitors. They are limited to 5 years. Open-ended obligations, or those of more than 5 years are not covered by the block exemption. An obligation that is automatically renewed after 5 years must be treated as an open-ended obligation. The limit on duration does not apply however where the supplier is the owner or tenant of the premises from which the purchaser resells goods or services, as long as the length of the clause does not exceed the time period the premises are occupied. This is how beer supply contracts operate in practice.

EU competition regulations are directly applicable by national competition authorities and by the courts. The scope of the block exemption is in theory limited to behavior that restricts intra-Union trade. However, competition authorities also apply these rules under the heading of the “rule of reason”, as an interpretative guide in evaluating agreements that only have an impact within national boundaries .

Competition Council decision No 00-D-82 of 26 February 2001, LawLex200200002680JBJ.

In EU law, exclusivity must not last longer than 5 years. In French law, Article L. 330-1 of the Commercial Code limits the validity of “any exclusivity clause by which the purchaser, transferee or lessee of chattels undertakes with regard to the seller, assignor or lessor not to use similar or additional items originating from another supplier” to 10 years. Case-law has given this statute a broad interpretation. Its scope is generally limited to movable property; however, the Court of Cassation has extended it to include 9-year renewable clauses contained in leases for premises intended for use as a bar .

The Court of Cassation has also specified the scope of French and EU rules respectively as to how long exclusivity may last. It has said that EU rules limiting beer contracts to 5 years are inapplicable to agreements in which only undertakings of a single Member State participate and which only concern the sale of products within that territory, without any effect on Member State trade . An exclusive supply contract does not affect intra-Union trade where it does not bar the distributor from directly or indirectly obtaining supplies from other Member States . Accordingly, an agreement that breaches EU regulations by lasting 6 years is not necessarily prohibited. It may only be voided where it has been established that the prevention, restriction, or distortion of the play of competition within the common market is the object or effect of the contract .

Cass. com., 14 December 1999, LawLex200200005263JBJ.

Cass. com., 4 June 1996, LawLex200200003793JBJ.

CA Montpellier, 7 November 1996, LawLex200200003779JBJ.

Cass. com., 11 February 2003, LawLex200300000827JBJ.

French Competition Law

316. Exclusive supply and vertical restraints regulation

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316. Exclusive supply and vertical restraints regulation

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise