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 ban on RPM refers to the direct or indirect imposition of a minimal price or profit margin . Although a supplier cannot impose a retail price, it can on the other hand circulate an indicative price list, even a price range. It is sufficient that the retail price actually charged to customers remains freely fixed by distributors. The distribution of indicative prices within a selective distribution network does not constitute RPM where the distributors are not subject to pressure for their actual application  or where there are significant gaps between the recommended prices and the prices actually applied and the supplier does not monitor compliance . But the combination of recommended prices and a strengthened monitoring of the distributor's promotional capacities is often perceived as a sign of indirect RPM . Likewise, there is RPM where a body of serious, precise and concordant evidence can establish that the distributor is aware of the retail sales prices desired by the supplier, that a pricing policy has been set up and the prices have been applied to a large extent .

To prove that distributors have agreed to the supplier's pricing policy, where there is no documentary evidence , the French authorities have developed a three-part test (triple test)  based on the “body of evidence” approach . In order to identify a restrictive agreement, it must be established that the parallel behavior observed in the prices charged by distributors is the result of an agreement  between them and not simply an identical reaction to the prices recommended by their supplier. An exchange of consent exists where the supplier has referred to the public sale prices or maximum discount rates, price policing mechanisms have been put in place and the recommended prices have been followed to a significant extent.

Prices can be “mentioned” without there having been any form of negotiation or discussion with distributors. Distributing price lists stating recommended retail prices, documentation giving a specific multiplier or a maximum rebate rate or advising retailers on the price positioning of a product, fulfill the requirement.

A price monitoring policy is evidenced not only from the exerting of pressure, or threats of, or actual, retaliatory measures from suppliers, but also through lesser interference such as demands for feedback on retail prices or interference by suppliers (which can be established from distributors' statements) indicating that suppliers intervened to pressure them into correcting any deviances in prices .

The Competition Authority deems that a recommended retail price adherence level of at least 80% gives rise to a presumption of effective application of those prices. For less than 80%, adherence must be supplemented by an analysis of the effective diffusion of the prices ascertained, noting the actual incidence of prices in the vicinity of the recommended price. This threshold system carries the risk of rendering non-imposed recommended prices unlawful because the Competition Authority effectively only looks at prices taken from a few points of sale. The Paris Court of Appeal is more demanding regarding the probative force of such evidence . Thus, prices gathered by the authorities for a limited period of time do not automatically carry the same weight for a more extended period. Likewise, the prices recorded may not be sufficiently representative for a finding that distributors have adhered to imposed prices. The Court of Cassation has also emphasized that the prices surveyed constitute only one of several indications giving rise to a finding of significant adherence to prices set by a supplier .

The French case law regarding resale price maintenance does warrant criticism both in terms of method and principle. It always contents itself with limited evidence to consider that each criterion of the triple test is fulfilled. Thus, it is only necessary that certain points of sale be subjected to pressure, for a price monitoring policy to be established, even if, for the majority of network members, this is not the case . Furthermore, it appears that, in recent times, it has even abandoned the requirement for price monitoring and now relies solely on a two-part test, requiring only that prices be discussed and accepted by distributors .

More fundamentally, the generalized and per se illegality of RPM is no longer in line with current economic thinking, nor does it correspond to the positive law of countries with more advanced competition regulations. Economists have highlighted the fact that RPM can, in some circumstances, be justified, particularly in case of strong inter-brand competition or on the launching of a new product. Adopting a more up-to-date analysis, the US Supreme Court has overruled precedent, replacing the per se analysis by a “rule of reason” standard which would allow each case to be considered individually to determine whether a price-fixing agreement between manufacturers and distributors is in fact anticompetitive . Minimum resale price can stimulate inter-brand competition and offset the reduction in intra-brand competition.

It should be emphasized that independently of sanctions for recommended prices which are in reality imposed minimum prices, the courts have been very harsh with respect to the practice whereby competing undertakings horizontally adopt maximum prices  and that the Commission states in its Vertical Restraints Guidelines that in excess of the thresholds for exemption, the vertical setting of maximum or recommended prices can lead to a convergence of prices or can facilitate collusion between suppliers .

Competition Council decision No 87-D-14 of 26 May 1987, LawLex201000000527JBJ. See also along the same lines: Competition Commission decision, 27 May 1982; No 89-D-43 of 5 December 1989, LawLex200200002448JBJ.

Competition Council decision No 00-D-15 of 3 May 2000, LawLex200200002501JBJ; CA Paris, 28 November 2000, LawLex200200003279JBJ.

Cass. com., 11 June 2013, LawLex201300000942JBJ.

See especially Cass. com., 11 June 2013, LawLex201300000942JBJ, holding that the proof against a supplier of a vertical agreement does not require that all the distributors having participated inthe agreement be identified particularly when not all all the distributors of the various networks were involved but only the members of the three largest retail distributors concerned.

Competition Authority decision No 21-D-26 of 8 November 2021, LawLex202100005760JBJ; Concurrences 1/2022, p. 90, note DEBROUX: “Contrary to the undertakings' assertions, it should be recalled that the Authority is not required to compile a body of evidence structured in three branches to establish the existence of a vertical price-fixing agreement, where it possesses documentary or behavioral evidence demonstrating, on the one hand, the manufacturer's invitation, and on the other hand, the distributors’ acquiescence […] to the contested practice.”

Supreme Court of the United States, June 28 2007, Leegin Creative Leather Product Inc v. PSKS Inc, No 06-480, WL 2335892.

Competition Authority decision No 11-D-01 of 18 January 2011, LawLex201100000048JBJ.

Guidelines on Vertical Restraints No 2022/C 248/01, para. 199.

Competition Council decision No 06-D-22 of 21 July 2006, LawLex200600001829JBJ.

Competition Council decision No 91-D-03 of 15 January 1991, LawLex200200002442JBJ; CA Paris, 25 September 1991, LawLex200200002629JBJ; No 96-D-72 of 19 November 1996, LawLex200200002671JBJ; CA Paris, 9 December 1997, LawLex200200003411JBJ; Competition Council decision No 01-D-45 of 19 July 2001, LawLex200200002335JBJ.

CA Paris, 21 January 1993, LawLex200200005969JBJ (once a year); Competition Council decision No 07-D-03 of 24 January 2007, LawLex200700000167JBJ.

Competition Authority decision No 21-D-20 of 22 July 2021, LawLex202100004687JBJ, emphasizing that the Competition Authority is not required to compile a body of evidence structured in three branches when it has documentary or behavioral evidence establishing the manufacturer's invitation and the distributors’ acquiescence to the practice of fixing prices.

Competition Council decision No 06-D-04 of 13 March 2006, LawLex200600000762JBJ: communication by the supplier to authorized distributors of recommended prices where it has set up a price monitoring system, establishes the existence of vertical restrictive agreement that falls foul of Articles 101 TFEU and L. 420-1 of the Commercial Code where it is established that the recommended prices are significantly applied; CA Paris, 19 December 2018, LawLex201900002084JBJ.

Competition Council decision No 05-D-66 of 5 December 2005, LawLex200500010286JBJ.

CA Paris, 19 December 2018, LawLex201900002084JBJ, cited above., RPM is established where any departure from them is noted and denounced by the other members of the network.

CA Paris, 26 June 2007, LawLex200700000867JBJ: there is RPM where the supplier suggested the wished prices through any means in front of the distributor and exerted pressures, even if those pressures were found only towards certain points of sale, and that the prices have been effectively applied, and that finding may result in gathering prices which cannot take into account the net prices displayed in stores and must be made during periods of strong demand and renewed several times during the investigation.

180. Recommended prices.