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

Using loss-leaders consists, for the non-authorized distributor, in inter alia using the brand image of a prestigious product, usually distributed within a network, to attract consumers and sell neighboring products. This practice is an act of unfair competition where the distributor has used those products only as a lure for secondary products, has no sufficient stock to meet the demand  and is u …

Loss-leaders

Using loss-leaders consists, for the non-authorized distributor, in inter alia using the brand image of a prestigious product, usually distributed within a network, to attract consumers and sell neighboring products. This practice is an act of unfair competition where the distributor has used those products only as a lure for secondary products, has no sufficient stock to meet the demand  and is unable to promptly obtain supplies .

Using loss-leaders is not only a factor of market disruption, but also an act of parasitism . Via this process, the parallel distributor certainly takes advantage of the reputation and advertising value of the brand to develop his/her own business. However, according to the Paris Court of Appeal, a discount retailer cannot be held liable for acts of parasitic competition by offering branded products as loss leaders in order to benefit free of charge from the investments and prestige of the brand, when its business model leads it to sell a wide variety of food and non-food products, branded or unbranded, in order to offer a wide choice to its customers, especially since it does not particularly promote the products in question over other products and presents and sells them alongside brand products of equivalent renown . While the Competition Authority holds that it is settled case law that the concept of loss-leader prices requires proof of the unavailability of the product and the selective decrease in the price of the product being promoted , the Court of Cassation, which considers that these criteria are not cumulative, has upheld the condemnation of a non-authorized distributor who had purchased only two copies of the contract goods to organize a promotional campaign and attract consumers . This practice is now expressly set out in Article L. 121-4 of the Consumer Code which lists commercial practices that are deemed misleading.

Exceptionally, ordering a limited supply of loss-leaders can be accepted. Thus, by virtue of a practice in the jewelry sector, a trader may occasionally obtain supplies from another distributor in order to meet the specific demand of a customer. In this case, the sale, by a non-authorized third party of two watches covered by a selective distribution network does not constitute an act of unfair competition with regard to the official reseller . This solution nevertheless appears contestable in light of the principles of selective distribution.

CA Paris, 28 September 1989, LawLex200200001898JBJ; CA Lyon, 25 June 1990, LawLex200200001864JBJ; TGI Toulon, 15 March 1993, LawLex200200001657JBJ; Cass. com., 19 May 1998, LawLex200200001123JBJ; T. com. Paris, 3 June 2008, LawLex200900000737JBJ.

By contrast: CA Bourges, 3 July 1989, LawLex200200001905JBJ: there is no loss-leader brand where the distributor keeps the possibility to obtain more supplies.

CA Bordeaux, 25 January 1994, LawLex200200001602JBJ; Cass. com., 19 May 1998, LawLex200200001123JBJ.

CA Paris, 19 October 2022, LawLex202200009084JBJ.

Competition Council decision No 96-D-76 of 26 November 1996, LawLex200200002663JBJ.

Cass. com., 19 May 1998, LawLex200200001123JBJ.

Cass. com., 31 March 2015, LawLex201500000434JBJ.

French Distribution Law

222. Loss-leaders

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

222. Loss-leaders

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