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 business of resale outside the network, which does not constitute unfair competition per se, may become so where the reseller's supply is unlawful or where resale contains unfair maneuvers . For a long time, the breach of Article L. 121-1 of the Consumer Code (now Articles L. 121-2 and L. 121-3) has been a useful basis for the action for unfair competition brought by manufacturers or their dea …

Unfair commercial practices.

The business of resale outside the network, which does not constitute unfair competition per se, may become so where the reseller's supply is unlawful or where resale contains unfair maneuvers . For a long time, the breach of Article L. 121-1 of the Consumer Code (now Articles L. 121-2 and L. 121-3) has been a useful basis for the action for unfair competition brought by manufacturers or their dealers against third party resellers. Advertising is misleading where it is likely to mislead consumers as to some quality of the good or the identity, capacities or skills of the resellers.

After having penalized operators solely for failure to indicate their status as intermediaries , or the fact of not indicating clearly that the intermediary does not act as a reseller , case law is now more demanding  and requires positive acts of unfair competition by confusion , unlawful misleading or comparative advertising . Third party resellers must not create confusion as to their status as network members, otherwise they are guilty of misleading advertising  or unfair competition with respect to the supplier or the official dealers . A parallel importer creates misleading confusion where it uses a manufacturer's brand without authorization . However, advertising is not misleading due to the sole fact that the unauthorized distributor does not specify its precise status, where the fact of failing to mention the status as independent reseller in the advertising does not necessarily create confusion in the public's mind .

A third party reseller's advertisement which mentions the existence of the manufacturer's warranty does not constitute unfair competition  where that mention is true and the warranty attached by the car manufacturer to the good it sells has to be applied in the whole of the European Union and cannot be restricted to vehicles purchased from an authorized distributor . By contrast, it has been held that a former exclusive distributor commits the offense of misleading advertising according to the rules applicable to warranties (now obsolete)  at the time of the facts, by claiming it can ensure the after-market of branded motor vehicles, without specifying that to do so would withdraw the benefit of the manufacturer's warranty.

False or misleading allegations as to the quantities of goods or services also incur the advertiser's liability. Therefore, advertising on the immediate and unproven availability of a motor vehicle is wrong even where it is an isolated act . In effect, an intermediary or a third party outside the network may not falsely lead others to believe that it has a stock of branded motor vehicles .

Lastly, a consumer must not be misled on the price of a good or a service mentioned in the advertising. Therefore, an independent reseller's advertisement which asserts that its price is lower than prices charged in the official network is misleading where it does not specify that the difference is explained by the fact that the vehicles it sells are equipped with fewer accessories .

Law No 2008/3 of 3 January 2008 for the development of competition in favor of consumers has transposed into French law Directive No 2005/29 of 11 May 2005 concerning “unfair business-to-consumer practices in the internal market”. It sets out in Article L. 120-1 (now L. 121-1) of the Consumer Code a larger and more general offense of misleading advertising. Thus, “commercial practices are unfair where they are contrary to the requirements of professional diligence and materially distort or are likely to materially distort the economic behavior of a consumer who is reasonably well-informed and reasonably observant and circumspect with regard to a product or a service”. Moreover, commercial practices are now defined as misleading where:

- “they create confusion with other products or services, trademarks, trade names or other distinguishing marks of a competitor” (Consumer Code, Article L. 121-2, 1° (former Article L. 121-1, I, 1º));

- “the person on behalf of whom they are implemented is not clearly identifiable” (Article L. 121-2, 3° (former Article L. 121-1, I, 3º));

- “taking account of the specific limits of the communication means that is used, they omit, conceal or provide in an unintelligible, ambiguous or untimely manner a material information or fail to identify their true commercial intent if not already apparent from the context” (Article L. 121-3, (former Article L. 121-1, II)).

The scope of application of misleading advertising has been extended and now includes, inter alia, the failure to disclose material information. Thus, failing to disclose one's status as an independent reseller or intermediary could characterize a misleading commercial practice under the new provision.

CA Reims, 14 December 1994, LawLex200200001506JBJ.

TGI Paris, 12 June 1992, LawLex200200005929JBJ; TGI Sarreguemines, 15 March 1993, LawLex200200006145JBJ.

Cass. com., 7 October 1997, LawLex200200001216JBJ, LawLex200200001191JBJ; 10 February 1998, LawLex200200001182JBJ; 1 December 1998, LawLex200200001044JBJ; 19 October 1999, LawLex200200000898JBJ. 

Case C-373/90 X [1992] ECR I-131, LawLex200900000577JBJ, LawLex200200004703JBJ: since the limitation of the manufacturer's warranty only to purchases made from official resellers is anticompetitive, the fact that a third party outside the network relies on that warranty does not constitute misleading advertising; CA Poitiers, 23 February 1999, LawLex200200000993JBJ.

Cass. crim., 7 April 1999, LawLex200300003890JBJ. 

Cass. com., 4 December 2001, LawLex200200000586JBJ, quashing on that issue CA Metz, 5 November 1998, LawLex200200001065JBJ.

CA Aix-en-Provence, 5 March 1998, LawLex200200001167JBJ; TGI Sarreguemines, 15 March 1993, LawLex200200006145JBJ.

Case C-373/90 X [1992] ECR I-131, LawLex200900000577JBJ.

CA Nîmes, 9 June 1994, LawLex200200001560JBJ; TGI Metz, 9 May 1995, LawLex200200001458JBJ.

TGI Metz, 5 November 1998, LawLex200200001065JBJ: a motor vehicle intermediary's advertising is not misleading due to the sole fact that it does not indicate in which capacity its intervenes; CA Metz, 12 March 2003, LawLex200300004142JBJ.

CA Grenoble, 8 July 1992, LawLex200200005940JBJ; CA Riom, 15 February 1995, LawLex200200005449JBJ; TGI Metz, 3 October 1995, LawLex200200004791JBJ; CA Toulouse, 20 March 1996, LawLex200200001370JBJ: an advertising mentioning "new imports from the EEC" is not likely to create confusion on the belonging of the advertiser to the official network; TGI Metz, 2 December 1997, LawLex200200005074JBJ. 

CA Nîmes, 4 October 1996, LawLex200200005601JBJ; CA Poitiers, 27 February 1997, LawLex200300002224JBJ; CA Metz, 12 March 2003, LawLex200300004142JBJ.

CA Rennes, 23 October 1996, LawLex200200001321JBJ.

CA Rennes, 23 October 1996, LawLex200200001320JBJ; CA Rouen, 4 September 1997, LawLex200200001231JBJ, approved by Cass. com., 23 November 1999, LawLex200200000876JBJ. 

CA Toulouse, 19 June 1997, LawLex200200001248JBJ. 

CA Colmar, 13 August 1996, LawLex200200001339JBJ; Cass. com., 26 January 1999, LawLex200200001015JBJ; CA Paris, 10 November 1999, LawLex200200005250JBJ; Cass. com., 11 July 2000, LawLex200200000752JBJ.

On the basis of unfair competition, an action may be brought against a reseller for attempting to bring confusion to the purchasers' mind, in particular where it circulates advertisements using the expression “new second-hand” , or disrupts a network by sending circulars that disparage the manufacturer and induce its distributors to breach their contractual duties , or invites distributors to join its distribution system  or to purchase their supplies from said reseller . The offer by an intermediary of a free trip with the purchase of a vehicle is also an act of unfair competition since, at the time of the facts, sales with bonuses were prohibited under Article L. 121-35 of the Consumer Code (now Article L. 121-19) .

Cass. 2e civ., 7 January 1999, LawLex200500009929JBJ.

CA Reims, 14 December 1994, LawLex200200001506JBJ approved by Cass. com., 24 June 1997, LawLex200200001246JBJ.

T. com. Charleville-Mézières, 10 April 1997, LawLex200200001272JBJ.

CA Aix-en-Provence, 5 March 1998, LawLex200200001167JBJ.

Cass. com., 25 January 2000, LawLex200200000851JBJ, approving CA Rennes, 25 June 1997, LawLex200200001242JBJ.

Action for unfair competition.

Pursuant to Article L. 122-1 (formerly L. 121-8) of the Consumer Code, comparative advertising is lawful only where “it relates to goods or services fulfilling the same requirements or having the same objective”. Unlike other types of advertisement the purpose of which is purely commercial, comparative advertising is authorized only insofar as it is likely to guarantee that consumers are provided with impartial information on the advantages and drawbacks of compared products. Thus, the comparative advertising of a motor vehicle intermediary which contains incomplete or ambiguous information as to the identity of the vehicles and their accessories is likely to mislead consumers .

To be comparative, the advertisement must explicitly or tacitly identify an economic operator , with whom the author of the message is in a competitive situation: offerors of compared products must be active on the same market . Therefore dealers cannot rely on Article L. 122-1 where a third-party reseller's advertisement compares its prices with those charged by the manufacturer and not with their own . The advertisement must compare products fulfilling the same requirements or having the same objective. An importer is not entitled to compare the price of imported vehicles and of vehicles sold by the official network where the imported vehicles have fewer options .

Cass. crim., 20 October 1993, LawLex200200005341JBJ, quashing CA Nîmes, 26 June 1992, LawLex200200005937JBJ.

CA Riom, 15 February 1995, LawLex200200005449JBJ. 

Cass. com., 4 December 2001, LawLex200200000586JBJ.

TGI Thionville, 4 April 1996, LawLex200200004703JBJ; CA Rennes, 23 October 1996, LawLex200200001320JBJ; CA Metz, 5 November 1998, LawLex200200001065JBJ; 12 March 2003, LawLex200300004142JBJ.

TGI Sarreguemines, 15 March 1993, LawLex200200006145JBJ; CA Nîmes, 4 October 1996, LawLex200200005601JBJ; TGI Metz, 2 December 1997, LawLex200200005074JBJ; Cass. com., 4 December 2001, LawLex200200000586JBJ.

Comparative advertising.

It is a misleading act for an intermediary to deliver to a consumer a vehicle which is not capable of being registered . Likewise, there is infringement where a brand is used without authorization by an operator who is neither an agent nor a dealer of the manufacturer , or the term “specialist” is mentioned and followed by the brand as domain name, without reference to the reseller's name, or where the logo and a manufacturer's brand are reproduced as the background image for the website of a third-party reseller of second-hand vehicles of the brand, without being related to a sales offer . The sale by a non-network third party of vehicles of a brand bearing VIN numbers indicating that they are not destined for the European Union market allows the manufacturer to apply to the court for an order for the seizure of counterfeit goods . In this regard, the fact that the manufacturer has issued a certificate of conformity in his capacity as holder of an EC type-approval for each of the vehicles offered for sale by the non-network third party seller is not sufficient to establish its consent to their marketing in the European Union . 

Cass. crim., 27 February 2002, LawLex200200004652JBJ upholding CA Rennes, 11 January 2001, LawLex200200004647JBJ.

TGI Lyon, 3 October 2001, LawLex200200004745JBJ.

CA Paris, 8 September 2004, LawLex200400003335JBJ, confirming TGI Paris, 20 December 2002, LawLex200300000837JBJ. See also CA Angers, 25 May 2021, LawLex202100003248JBJ, holding that the use of a carmaker's logo and trademark by a former dealer and authorized repairer, on his advertising documents and website, engages his liability. Cf. CA Lyon, 8e ch., 11 May 2021, LawLex202100002944JBJ, ruling that a former car distributor who suggests on his website that he is continuing to sell the brand's vehicles, following the termination of his contract with the manufacturer, is not committing an act of counterfeiting or unfair competition, since in reality he is only offering used models.

CA Paris, 20 September 2018, LawLex201800001368JBJ.

CA Paris, 20 September 2018, LawLex201800001368JBJ, cited above.

French Distribution Law

259. Unfair commercial practices.

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Les décisions de justice citées dans ce paragraphe :

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259. Unfair commercial practices.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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