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

Undertakings wishing to control the distribution of their products due to their specificity or technical nature can set up selective or exclusive resale systems. For branded goods, competitors may be tempted to circumvent the supplier's system, not only to get out of network obligations but also to obtain the products in question at a better price. Absolute territorial protection is prohibited und …

Scope and limits of lawfulness of selling outside the network.

Undertakings wishing to control the distribution of their products due to their specificity or technical nature can set up selective or exclusive resale systems. For branded goods, competitors may be tempted to circumvent the supplier's system, not only to get out of network obligations but also to obtain the products in question at a better price. Absolute territorial protection is prohibited under the rules of competition: exclusive distributors must be able to answer any unsolicited order from a customer even if it comes from outside the contract territory; on the other hand, they may not carry out active selling outside of that territory. Parallel imports are therefore lawful.

Parallel sales constitute a factor for the opening up of the market and due to that are favorably regarded by the competition authorities and the courts. They are not looked upon with favor, however, where they constitute free riding by non-network resellers taking advantage of investments made by the brand without having to bear the costs or provide a service to consumers. As they do not bear the same burden as members of the network, such resellers may sell the contract products at a lower price, which, in the long term, may lead to the elimination of the network. Thus, Article 1240 (former Article 1382) of the Civil Code will apply where a fault severable from the sale is established against the third-party reseller.

According to established case law, the non-network sale of products covered by exclusivity is not in itself a breach  but the resale must concern regularly purchased products : selling outside the network must not be made possible through collusion with a third party with the intention of breaching the exclusivity obligation or by any unfair practice.

The battle by networks against unauthorized reselling can sometimes in practice be a veritable obstacle course even when a number of safeguards have been put in place to prohibit it such as recourse to both exclusive and selective systems of distribution which expressly prohibit outside network resales.

The head of the network must first demonstrate that the network is lawful . The vertical restraints regulation would appear to facilitate that task insofar as where both the supplier and the distributor have a market share of below 30%, the network automatically benefits from exemption.

In practice, the task is often not quite so simple as the courts require the supplier to prove that the market shares are below the thresholds set in the regulation  which is not always easy to prove, and if they are not, to demonstrate that the selection criteria are justified. Everything in fact happens “as if there was a presumption of illegality of the network”. If the supplier is able to clear this first hurdle in establishing the lawfulness of the network, the issue of unlawfully supplying a third-party reseller then comes up. Unauthorized resellers in effect will strive to create more and more evidentiary obstacles and proof of the irregularity of supply may in practice be quite difficult to bring and constitutes a lengthy process. After such an uphill struggle, suppliers may eventually realize that the reseller has closed shop and re-emerged under a new form, requiring them, like Sisyphus, to begin all over again.

Cass. com., 20 september 2011, LawLex201100001527JBJ; Cass. com., 30 January 2001, LawLex200200000667JBJ; 9 October 2001, LawLex200200000613JBJ; 1 March 1994, LawLex200200001595JBJ: The fact that a third party meets orders with products acquired regularly, in spite of the exclusive rights enjoyed by an exclusive distributor and of which it has knowledge, does not constitute in itself an act of unfair competition; 9 July 1996, LawLex200200001343JBJ; 13 January 1998, LawLex200200001195JBJ; 6 May 2003, LawLex200300002237JBJ; CA Paris, 15 January 2014, LawLex201400000068JBJ; CA Paris 15 November 2017, LawLex201700001867JBJ; 29 January 2020, LawLex202000000201JBJ.

For examples of legitimate sourcing, see Cass. com., 9 October 2001, LawLex200200000613JBJ: an independent importer meeting his orders with products regularly obtained from a dealer in spite of the contractual obligation of the latter, is not in itself an unfair act; CA Toulouse, 12 February 2020, LawLex202000000242JBJ, holding that the incumbent distributor of a product, which has become a non-network third party following the creation of the latter and the decision not to integrate it, does not commit an act of unfair competition towards the exclusive distributor by purchasing lawfully from foreign resellers and reselling the products under conditions that do not alter its image.

Cass. com., 13 December 1988, No 87-15521; Cass. com., 21 March 1989, No 87-13909; Cass. com., 10 May 1989, No 87-19977; Cass. com., 2 February 1993, No 91-10111; Cass. com., 21 June 2011, No 09-70304. See also CA Paris 18 September 2023.

CA Paris, 27 March 2014, LawLex201400001770; CA Paris, 18 September 2013, LawLex201300001365JBJ.

French Distribution Law

58. Scope and limits of lawfulness of selling outside the network.

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

58. Scope and limits of lawfulness of selling outside the network.

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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