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 French and EU competition authorities both consider that the selection criterion relating to the compatibility of a business name with the image of the product restricts competition insofar as its application results in an automatic exclusion of the distribution of the products in hypermarkets when their luxury image would not be harmed by being sold there . On that basis, the criterion relati …

Business name.

Selection concerns both the distributor and its sales outlet. Therefore, the network developer may demand that the contract good be sold in a specific space likely to preserve its high quality image. The requirement of a space suitable for the sale of the contract goods must however not go beyond the needs of appropriate distribution. Where a closed and isolated space is an excessive requirement , the manufacturer may demand, for cosmetics and para-pharmaceutical products, an immediate setting for its goods which does not undermine their brand image and, inter alia, a dedicated space which corresponds to the standing of the brand . In other words, luxury goods may be sold in hypermarkets provided that they are not displayed near foodstuff or cleaning products etc. Thus, luxury watches usually sold within a selective distribution network may be offered for sale within a hypermarket without undermining the reputation of the brand where the hypermarket has a separate space dedicated exclusively to jewelry, adopts a display in line with the nature of the goods and has a specific cash desk . Luxury pianos cannot be sold in a piano store selling all brands, qualities and prices, both new and second-hand goods, in a large impersonal space .

By contrast, the network head cannot oblige the distributor to reserve a minimum surface corresponding to the minimum proportion to be observed between the space intended for the sale of the contract goods and the space reserved for the other products where that requirement is expressed in absolute value and not in relative value . The surface dedicated to products may, however, in certain cases, be essential to preserve the brand image of the products. This is the case where a store whose owner complains about the refused authorization, is less spacious than the store of other distributors and does not have the luxury feel required for the appropriate distribution of the product .

Competition Council decision No 96-D-57 of 1 October 1996, LawLex200200002855JBJ.

CA Paris, 24 November 2000, LawLex200200005327JBJ: the selection criterion which imposes on the distributor to have a separate or distinct location does not entail any discrimination in relation to hypermarket distribution; CA Paris, 28 May 2002, LawLex200300001938JBJ: the refusal to authorize in a luxury piano selective distribution network a candidate who sells pianos of all brands, qualities and prices, both new and second-hand goods, in a large impersonal space, is lawful. See, also, under EU law: Commission Decision No 92/33/EC of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ; Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ and Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

T. com. Bobigny, 12 September 2002, LawLex200300000816JBJ. By contrast, "the mere fact that perfumery constitutes less than 50% of a shop's activities has no inherent connection with the legitimate requirement of preserving the luxury image of products in question". Excluding a distributor on this ground is discriminatory because that criterion unduly favors specialized perfumeries at the expenses of hypermarkets. See, under EU law, Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ and Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

CA Paris, 28 May 2002, LawLex200300001938JBJ.

In this case, authorized distributors only offered for sale watches bearing well-known and prestigious brands at a certain price, where the candidate to the selection displayed watches of less well-known brands in a show window, and inside the shop, offered ordinary watches: T. com. Paris, 13 June 2000, LawLex200200004651JBJ.

Dedicated space and surface.

The network leader may consider that the external aspect of the sales outlet and its geographic location should contribute to maintaining the image of the product . As a result, in order to attract consumers, to enhance the presentation of products or to promote them, a manufacturer frequently requires its distributors to have an external shop window display . Authorization was thus refused to a distributor who ran a store located on the second floor of a building without a shop window, while the standard agreement provided that the quality of the facilities depended, in particular, on the existence of one . This solution has been transposed to online sales and the network developer may demand the existence of a virtual shop window .

The competition authorities consider that requiring an external shop window is not justified “where it is not established that an internal shop window could not, as part of certain big shops, play a role in attracting consumers similar to that played, in other forms of trade, by external shop windows” . The courts are more accommodating: they believe that although the requirement of an external display window can have the effect of excluding sales by large retail outlets, it is not disproportionate to the necessary protection of the prestigious image of perfume products . In addition clauses relating to windows or the external aspect of the sales outlet are however not unlawful per se: it suffices that the criteria retained are not applied in a discriminatory or disproportionate manner .

The network developer can insist only on premises whose standing and setting correspond to the prestige of its brand. The sale in a shopping arcade next to a large mall , proximity to a “prefab” type commercial center in a non-central location, the sale of “cheap” goods, and the banal, impersonal, cold and unattractive aspect of the sales outlet  depreciate the luxury aspect of perfumes usually sold within a network.

CA Paris, 29 June 2000, LawLex200200005313JBJ: a luxury cosmetics manufacturer may legitimately refuse entrance to its selective distribution network to a trader who does not fulfill the conditions relating to location, setting-out of the sales outlet and fitting-out of its shop windows, which are authorization criteria essential to the maintenance of the brand image of the products.

CA Paris, 9 December 1992, LawLex200200003459JBJ; CA Paris, 29 June 2000, LawLex200200005313JBJ.

CA Paris, 9 December 1992, LawLex200200003459JBJ. 

CA Versailles, 2 December 1999, LawLex200200005259JBJ.

Competition Council decision No 96-D-57 of 1 October 1996, LawLex200200002855JBJ. 

CA Paris, 25 May 2016, LawLex201600001002JBJ.

CA Versailles, 17 November 1994, LawLex200200005422JBJ: the termination without notice of a selective distribution contract due to the use by a luxury perfumery of the shop window of a neighboring window, where customers were clearly invited to go to the perfumery, is abusive where there is no previous summons to stop those acts. See, also, Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ.

CA Paris, 23 October 1995, LawLex200200005502JBJ.

Cass. com., 13 November 2003, LawLex200300004447JBJ. See, also, Cass. com., 23 March 2010, 4 judgments, LawLex201000000375JBJ, LawLex201000000376JBJ, LawLex201000000379JBJ, LawLex201000000380JBJ, for the sale of cosmetics and perfumery products within a sales outlet fitted out in a sheet metal hangar located in a commercial area.

Shop window and location of sales outlet.

In addition to a distinct space and a presentation that is attractive to consumers, a network developer may request a setting that is appropriate for the image of its products. It may thus demand that they be displayed in the best positions  or require that the premises provide a sufficient level of luxury . It can refuse to authorize distributors whose sales outlet is commonplace, impersonal, cold and unattractive  or too obstructed and down-market .

CA Paris, 15 September 1995, LawLex200200002665JBJ.

T. com. Paris, 13 June 2000, LawLex200200004651JBJ: such is not the case for the store of a distributor who offers, next to luxury clocks and watches, cheaper goods, displayed in bulk and in a less spacious premise than that of authorized resellers.

Cass. com., 13 November 2003, LawLex200300004447JBJ.

CA Toulouse, 22 November 2001, LawLex200300004602JBJ.

Interior layout.

The French and EU competition authorities both consider that the selection criterion relating to the compatibility of a business name with the image of the product restricts competition insofar as its application results in an automatic exclusion of the distribution of the products in hypermarkets when their luxury image would not be harmed by being sold there . On that basis, the criterion relating to the business name is legitimate where it concerns products for which the maintenance of the image is an essential factor of competition. In this case, the requirement is designed to ensure that the business name is compatible with the principles governing the distribution of the products in question and thus to exclude any name whose image would be associated with restriction in customer service, an absence in standing and with a lack of attention to decoration . The clause must be precise and objective in order not to be restrictive .

First, the criterion relating to the business name may refer only to the current perception of the sign by consumers. The exclusion of hypermarkets is therefore not justified where they have developed new enhancement methods for the sale of luxury products, especially when they have created specialized sub-names . It is then necessary to establish how consumers perceive the name which should be established objectively. Objective elements such as opinion polls may be used. Lastly, the criterion of the business name must not be used to systematically exclude stores charging reduced prices where they observe conditions of distribution positive for the product . Only the conditions of sale of the products at issue must be taken into consideration, irrespective of the pricing policy usually applied by the distributor.

Case T-19/92 Leclerc v Commission [1996] ECR II-1851, LawLex200500003930JBJ and Case T-88/92 Leclerc v Commission [1996] ECR II-1961, LawLex200500003933JBJ.

Commission Decision No 92/33/EC of 16 December 1991, Yves Saint Laurent Parfums, LawLex200500005352JBJ: by reason of the specific nature of the luxury cosmetics in question, the selection criteria relating to the presence of specialized technical advice, location and aesthetic or function quality of the sales outlet, justified by the need to preserve the brand image of the product, do not restrict competition. See, also, CA Paris, 29 June 2000, LawLex200200005313JBJ: a manufacturer of luxury cosmetics may legitimately refuse entrance to its selective distribution network to a trader who does not meet the conditions relating to location, setting-up of the sales outlet and fitting-out of its shop windows, which are authorization criteria essential to the maintenance of the brand image of the products.

Competition Council decision No 96-D-57 of 1 October 1996, LawLex200200002855JBJ: the clause of a selective distribution contract for cosmetics which requires the compatibility of the business sign with the brand image of the para-pharmacy cosmetics in question is anticompetitive by reason of its vague and non-objective character.

CA Paris, 27 November 1998, LawLex200200001046JBJ and LawLex200200001047JBJ, confirmed by Cass. com., 16 January 2001, LawLex200200000678JBJ and LawLex200200000681JBJ, for a logo formed of the letter L, while on a green background identifying a para-pharmacy area.

Competition Council decision No 98-D-67 of 27 October 1998, LawLex200200003133JBJ: the ban on selling faded or out-of-date items outside sales periods restricts the resellers' commercial freedom beyond what is necessary to protect the brand reputation.

French Distribution Law

202. Business name.

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

202. Business name.

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