This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

The most significant disputes have called into question the network head's freedom to organize the network and select distributors. Despite some hesitation, the courts have laid down the principle of the supplier's freedom to organize the network and select distributors; the supplier may deal with the contractor of his choosing without having to justify that choice.
EU competition law has provided …

A balanced regime.

The most significant disputes have called into question the network head's freedom to organize the network and select distributors. Despite some hesitation, the courts have laid down the principle of the supplier's freedom to organize the network and select distributors; the supplier may deal with the contractor of his choosing without having to justify that choice.

EU competition law has provided a regulatory environment for exclusive distribution which gives most agreements the benefit of a block exemption. Even if progress remains possible in the perception of relations between the head of the network and network members, the current exclusive distribution regime appears fairly balanced in bringing the law closer in line with the necessities imposed in practice, in particular by putting an end to the per se prohibition of resale price maintenance.

The Macron law of 6 August 2015  added a new Title IV entitled “Commercial distribution networks” to Book III of the Commercial Code. The new provision is applicable to relations between distribution networks and retail stores within the network and is intended to harmonize the duration of all the contracts concluded between the parties, to make contracts indivisible and to revise the system of rules governing post-contract non-compete clauses. 

New Article L. 341-1 of the Commercial Code provides that “all contracts concluded, on the one hand, between a natural person or a legal person governed by private law grouping traders together, other than those referred to in Chapters V and VI of Title II of Book I of the present code , or providing those services referred to in the first paragraph of Article L. 330-3, and on the other hand, any person operating, on its own behalf or on behalf of a third party, a retail store, having as their common purpose the exploitation of this store and containing clauses likely to limit the operator's freedom to carry out its commercial activity provide for a common end date”. The provision harmonizes the duration of contracts and makes those contracts legally indivisible: the termination of one of the contracts in question results in the termination of all of them. 

Further, Article L. 341-2, lays down the principle that “any clause having as its effect, after the expiration or termination of one of the agreements binding the trader to the distribution network, the restriction of the trader's freedom to carry on his commercial activity, shall be deemed unenforceable”. It does however contain a derogation for clauses which fulfill four cumulative conditions based on EU Regulation No 330/2010. Those clauses must relate to goods or services which compete with the contract goods or services; be limited to the premises and land from which the trader has operated during the contract period; be indispensable to protect the know-how, which is secret, substantial and identified, transferred by the supplier to the trader in the context of the contract; be of a duration not exceeding a period of one year after expiry termination of one of the agreement referred to in Article L. 341-1. 

The poor drafting of the provisions gives rise to a number of questions of interpretation especially with regard to their applicability to exclusive distribution networks. The amendment at the origin of the new section  purported to remedy the issues revealed in Opinion No 10-A-26 of the Competition Authority relative to contracts with independent  traders affiliated to food retail distribution groups  and to “strengthen competition in the large-scale distribution sector by facilitating the switch by independent stores to other chains” . The legislation which was eventually adopted is not limited to the food retail distribution sector . However there are several arguments against its application to exclusive distribution. First of all, contracts must be concluded with a “person operating, on its own behalf or on behalf of a third party, a retail store”, whereas exclusive distribution agreements nowadays mainly concern B2B trade. In addition, the common purpose of the contracts in question must be “the exploitation of [a] store”, which is rarely the case for exclusive distribution agreements. Finally, the contracts must include “clauses likely to limit the operator's freedom to carry out its commercial activity”. This is not the case for exclusive distribution contracts, in which the exclusivity obligation falls to the supplier and not necessarily the distributor, and which may not, or risk falling foul of the competition rules, limit the commercial freedom of distributors.  

If the courts nevertheless find that the reform does apply to exclusive distribution agreements, what would the effect of the new provisions be on ongoing contracts? Does the common deadline necessarily mean mandatory recourse to fixed-term contracts? The Conseil constitutionnel does not seem to think so  since it has declared the provisions in question to be constitutional provided that they “allow the contracting parties the freedom to fix the common duration and maturity of all the contracts binding them and to provide for their tacit renewal”. Presumably then there is nothing to prevent the conclusion of open-ended contracts. The principle according to which all contracts are tied to each other is an undeniable source of uncertainty. In cases of networks containing several brands and/or several activities, such as sales and after-sales, will the reorganization of one of them, terminate the entire network?  Does a termination for fault justify the termination of all the contracts concluded between the parties even if they still wish to pursue the others? Unfortunately Article L. 341-2 has extended the scope of the rule governing post-contractual non-compete clauses to cover those “having as [their] effect, after the expiration or termination of one of the agreements binding the trader to the distribution network, the restriction of the trader's freedom to carry on his commercial activity”. Preemption and priority clauses, criticized in Opinion No 10-A-26, would appear to be directly affected. And what about confidentiality or non-solicitation clauses? The lack of clarity here is all the more regrettable in that the derogation provided for in section II will not apply to contracts that do not transfer specific know-how.

The last question relates to whether Articles L. 341-1 and L. 341-2 are in line with EU competition law. Currently, virtually all vertical agreements are consistent with European competition law and, where they are not, they are covered by BER No 2022/720 due to having a market share of below 30% or are able to benefit from an individual exemption. Can the Macron Law, the stated objective of which is the strengthening of competition in the distribution sector , add further conditions to those required under the vertical restraints regulation without violating the principle of the precedence of European Union law?

Law No 2015-990 of 6 August 2015 for the promotion of growth, activity and equality of economic opportunities, OJ of 7 August 2015, 13537.

The provision refers to collective stores of independent traders and mutual guarantee companies. It also excludes lease agreements the duration of which are governed by Article L. 145-4 of the Commercial code, partnership agreements and civil law, commercial or cooperative partnership agreements.

Amendment No 1681 tabled by François Brottes.

Competition Authority Opinion No 10-A-26 of 7 December 2010.

Explanatory Statement (exposé des motifs) of Amendment No 1681.

See in this sense, Cass. com., 5 June 2024, LawLex202400004058JBJ, considering that the concept of retail trade cannot be understood solely as the sale of goods to consumers, but may also cover service activities provided to individuals.

Constitutional Council decision No 2015-715 DC of 5 August 2015.

See Explanatory Statement of Amendment No 1681, above, and the observations of the government presented to the Constitutional Council according to which “the legislator is pursuing a general interest objective by favoring competitive economic public policies”.

French Distribution Law

38. A balanced regime.

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Sous parties

Les notions juridiques connexes

38. A balanced regime.

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Sous parties

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise