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

In motor vehicle distribution networks organized according to the exclusive distribution system, dealers are protected from competition from other network members by the ban on active sales outside the sales area. Where the manufacturer has chosen selective distribution, the authorized distributor is protected by the ban on resale to unauthorized resellers, which guarantees network imperviousness  …

Unfair competition.

In motor vehicle distribution networks organized according to the exclusive distribution system, dealers are protected from competition from other network members by the ban on active sales outside the sales area. Where the manufacturer has chosen selective distribution, the authorized distributor is protected by the ban on resale to unauthorized resellers, which guarantees network imperviousness . By contrast, where absolute territorial protection is prohibited by competition law, distributors are subject to competition from parallel importers, which is favored by the competition authorities as they consider it to be a factor of the opening up of the market. Thus, according to the predominant case law, reselling outside the network goods covered by exclusive rights does not constitute an act of unfair competition per se, even if made in full knowledge of the facts .

T. com. Paris, 21 November2016, LawLex201800000606JBJ; T. com. Paris, 21 June 2017, LawLex201700001411JBJ, holding that a selective motor vehicle distribution network is lawful and enforceable against third parties when the clause sealing the network is consistent with the requirements of the Vertical Restraints Regulation.

CA Dijon, 30 November 1995, LawLex200200001404JBJ; Cass. com., 9 July 1996, LawLex200200001343JBJ, quashing CA Poitiers, 14 March 1994, LawLex200200001590JBJ; 13 January 1998, LawLex200200001195JBJ, quashing CA Poitiers, 11 January 1995, LawLex200200001501JBJ; 9 October 2001, LawLex200200000613JBJ, approving CA Poitiers, 23 February 1999, LawLex200200000998JBJ.

Many dealers have purported to rely on the argument that Motor Vehicle Regulation No 123/85 of 12 December 1984 and No 1475/95 of 28 June 1995 allowed manufacturers to prevent their distributors from selling to third parties outside the network or provided the conditions under which they could sell to motor vehicle intermediaries on an exceptional basis, to show that they could directly rely on those provisions to have the activity of resellers outside the network prohibited. At first such actions had some success . The Court of Justice, when referred to for a preliminary ruling, asserted however that the motor vehicle regulation does not prevent “a trader who is neither an approved reseller in the distribution network of a manufacturer of a particular make of motor vehicle nor an authorized intermediary […], from carrying on an independent business reselling new vehicles of that make” . Some have considered that the Court of Justice had purely and simply legalized the activity of reselling outside the network. In fact, such is not the case. In effect, the Court only restated that the regulation merely covered the contractual relationship between suppliers and their distributors, that it was limited to stipulating the conditions for exemption and was not aimed at directly regulating the activity of third parties, whether they act with or without authorization, or whether they combine activities with and without authorization. The Court of Cassation quickly aligned itself to that position . The activity of resellers outside the network can therefore not be exercised unreservedly.

First of all, resale by network members to resellers can still be prohibited under European law. In effect, Article 4(c)(i)(2) of the Vertical Restraints Regulation 2022/720 provides that in selective distribution systems, the exemption applies to the restriction of sales to unauthorized distributors on the markets where the selective distribution is applied. Likewise, the motor vehicle guidelines state that independent resellers are not to be considered as end users to which the sale may be prohibited .

Also, resale outside the network is likely to fall foul of the national rules, which treat it either in terms of third-party complicity to the breach of the obligations of a network member punishable under Article L. 442-2 of the Commercial Code  or in terms of a refusal by the reseller to disclose its sources of supply, or misconduct that may be disassociated from the resale activity (misleading commercial practices, unlawful comparative advertising, acts of unfair competition etc.).

CA Orléans, 29 November 1994, LawLex200200005423JBJ; CA Poitiers, 11 January 1995, LawLex200200001501JBJ; 21 November 1995, LawLex200200001407JBJ. See however CA Montpellier, 8 June 1995, LawLex200200005473JBJ; CA Chambéry, 11 October 1995, LawLex200200001419JBJ; CA Dijon, 30 November 1995, LawLex200200001404JBJ.

Cases C-226/94 Grand garage albigeois and others [1996] ECR I-651, LawLex200500005121JBJ and C-309/94 Nissan France and others [1996] ECR I-677, LawLex200500005128JBJ. See also Cases C-128/95 Fontaine and others [1997] ECR I-967, LawLex200500005092JBJ; C-41/96 VAG-Händlerbeirat eV v SYD-Consult [1997] ECR I-3123, LawLex200500005108JBJ, indicating that European competition law does not prevent from applying a national case law that subjects enforceability to third parties of a motor vehicle distribution network to the latter's imperviousness.

Cass. com., 9 July 1996, LawLex200200001343JBJ; 15 October 1996, LawLex200200005603JBJ; 7 October 1997, LawLex200200001216JBJ; 13 January 1998, LawLex200200001191JBJ and LawLex200200001195JBJ; 10 February 1998, LawLex200200001182JBJ; 1 December 1998, LawLex200200001044JBJ; 25 January 2000, LawLex200200000851JBJ; see also CA Metz, 18 November 2021, LawLex202100005949JBJ.

Automotive guidelines 2010/C 138/05 of 28 May 2010, pt 52, not modified by Notice 2023/C 133 I/01 of 17 April 2023.

T. com. Paris, 21 November 2016, LawLex201800000606JBJ; T . com. Paris, 21 June 2017, LawLex201700001411JBJ, holding that the resale of new vehicles by an operator only approved for repair violates Article L. 442-2 of the Commercial Code, regardless of whether the vehicles were obtained from members of the network or intermediaries.

Vertical Restraints Regulation.

Although absolute territorial protection is prohibited and the competition authorities are favorable to parallel imports, in practice different types of responses have developed in order to fight against those parallel imports. However, such reactions must neither be wrongful nor characterize an anticompetitive practice.

Neither the activity of resellers outside the network nor that of motor vehicle intermediaries are prohibited by the block exemption regulation . Motor vehicle dealers cannot therefore engage in concerted practices aimed at impeding access to the market by intermediaries or resellers outside the network. Exerting pressure on the organizers of a fair in order that they ban motor vehicle intermediaries from access to that fair falls foul of Article L. 420-1 of the Commercial Code . The same applies to the threat of a boycott against a local newspaper which circulates advertisements on behalf of third parties outside the network  or against a credit institution having business relations with intermediaries . A concerted refusal by several dealers to supply spare parts to intermediaries is also an unlawful boycott .

2) Circulation of misleading allegations.

Although publicizing the risks in resorting to motor vehicle intermediaries, which is a sales channel of which the delimitations are poorly defined, is not disparagement per se, such is not the case of misleading allegations contained in an advertising according to which a government benefit would only be reserved for purchases made from an official dealer .

A manufacturer may under certain conditions grant financial aid to dealers located in cross-border regions and locally affected by parallel imports by reason, in particular, of the activity of motor vehicle intermediaries. The provision of aid is not an anticompetitive practice where its sole purpose is to support the network, to develop sales or to limit a fall therein, as long as it does not directly restrict the freedom of consumers to only purchase from the distributor of their choice within the internal market and does not allow dealers to offset price differences announced by intermediaries for the same goods. It must not result in predatory pricing or be discriminatory, or be provided according to the consumer's place of residence . By contrast, a manufacturer is not required to grant specific aid to its cross-border dealer in order to re-establish equal competition . Likewise, aid granted to a distributor when it starts its activity to help it face cross-border competition is not an acquired right for it that it would be entitled to claim for the duration of performance of the contract, unless otherwise provided for in that contract .

Like commercial aid, the introduction on the market of special series vehicles (green plates) is not regarded as being unlawful by the competition authorities. The practice, which is mainly aimed at adjusting the offer to consumers' preferences and meeting the tax and regulatory requirements in force in the various Member States, falls within the supplier's industrial and commercial decision-making power, and does not result from any agreement with its distributors. As noted by the Competition Authority, Article 101 TFEU does not imply a ban on any type of product differentiation between the various Member States .

A refusal to sell by several manufacturers against an operator resorting to mass retailing techniques does not show the existence of a restrictive agreement between those manufacturers where it is justified by the adoption of qualitative and quantitative selective distribution networks under the Motor Vehicle Regulation . Such an operator must, for any claim for supplies, comply with the authorization procedures implemented by the manufacturer.

Cases C-226/94 Grand garage albigeois and others [1996] ECR I-651, LawLex200500005121JBJ and C-309/94 Nissan France and others [1996] ECR I-677, LawLex200500005128JBJ. See also Case C-128/95 Fontaine and others [1997] ECR I-967, LawLex200500005092JBJ.

Competition Council decision No 94-D-05 of 18 January 1994, LawLex200200002446JBJ, approved by CA Paris, 3 February 1995, LawLex200200002731JBJ; No 94-D-37 of 21 June 1994, LawLex200200002556JBJ; No 96-D-42 of 25 June 1996, LawLex200200002444JBJ, approved by CA Paris, 25 March 1997, LawLex200200002642JBJ. However, a boycott would not be characterized where the fact of not participating to a professional fair results from an interest for the holding of another event which is more adapted to expectations of professionals who keep their decision-making power and the freedom to take part to other fairs.

Competition Council decision No 06-D-11 of 16 May 2006, LawLex200600001250JBJ.

Competition Council decision No 90-D-35 of 9 October 1990, LawLex200200002939JBJ; No 97-D-62 of 16 September 1997, LawLex200200002524JBJ, No 03-D-68 of 23 December 2003, LawLex200400000047JBJ approved by CA Paris, 29 June 2004, LawLex200400001644JBJ.

Competition Council decision No 03-D-68 of 23 December 2003, LawLex200400000047JBJ.

Competition Council decision No 97-D-62 of 16 September 1997, LawLex200200002524JBJ.

CA Dijon, 10 February 2000, LawLex200200000841JBJ.

Competition Council decisions No 03-D-66 and No 03-D-67 of 23 December 2003, LawLex200400000056JBJ and LawLex200400000078JBJ, confirmed by CA Paris, 29 June 2004, LawLex200400000056JBJ and 21 September 2004, LawLex200400002807JBJ, and approved by Cass. com., 12 July 2005, LawLex200500009786JBJ and 17 January 2006, LawLex200600000439JBJ.

CA Paris, 26 January 2005, LawLex200500003766JBJ; CA Metz, 16 January 208, LawLex200800000105JBJ: a manufacturer who is not required to commercially help cross-border dealers to support competition from parallel importers, cannot be blamed for its failure to act where it is an established fact that it has sent circulars to network members in order for them to observe their territories, brought action for unfair competition against many intermediaries, reduced sales objectives and granted cyclical bonus.

CA Paris, 5 April 2007, LawLex200700001417JBJ.

Competition Council decisions No 03-D-66, LawLex200400000056JBJ and No 03-D-67 of 23 December 2003, LawLex200400000078JBJ.

French Distribution Law

254. Unfair competition.

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Les notions juridiques connexes

254. Unfair competition.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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