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 purpose of the non-compete clause is to encourage dealers to focus their efforts on branded vehicles and therefore to ensure a distribution and an after-sale service which are suitable to their characteristics. Regarding motor vehicle distribution, its legal regime has varied depending on the applicable exemption regulation.
Regulation No 123/85 of 12 December 1984, in favor of single-branding …

Non-compete clause.

The purpose of the non-compete clause is to encourage dealers to focus their efforts on branded vehicles and therefore to ensure a distribution and an after-sale service which are suitable to their characteristics. Regarding motor vehicle distribution, its legal regime has varied depending on the applicable exemption regulation.

Regulation No 123/85 of 12 December 1984, in favor of single-branding, exempted non-compete obligations by making it possible to extend the non-compete commitment to “undertakings linked” to the dealer . However, the Court of Cassation was stricter and, except in case of fraud, refused to impose the non-compete clause on companies distinct from that of the dealer .

Regulation No 1475/95 of 28 June 1995 authorized the dealer to sell goods competing with those of the manufacturer, provided that the two businesses were carried out on separate sales premises, under separate management, in the form of a distinct legal entity and in a manner which avoided confusion between makes . The French courts therefore reverted to the previous solution by applying the non-compete clause not only to the dealer but also to the intermediary legal entity . Accordingly, the distribution of motor vehicles in competition with those of the dealer by a company separate from the dealer but managed by the same managers, from the premises of the dealership, without any separation between the two brands, would justify the termination of the dealer agreement . By contrast, notwithstanding any exclusivity clause, the distribution of competing brands by the dealer was not held to be wrongful . Under Regulation No 1400/2002, the issue of the conditions of lawfulness of the non-compete clause was no longer relevant since the regulation excluded the benefit of exemption for any direct or indirect non-compete obligation .

On 1 June 2013, motor vehicle distribution came within general regulation on vertical restraints, which exempts non-compete clauses of a duration not exceeding five years, where the market shares of both the supplier and the distributor do not exceed 30%. The possibility to resort to single-branding once again is however strictly controlled. In the motor vehicle guidelines , the Commission refers to the provisions of the Regulation on Vertical Restraints which prevent the supplier, as part of selective distribution, from excluding the distribution of goods of specified suppliers . The exemption may furthermore be withdrawn in case of cumulative effects that may foreclose the market .

Regulation No 123/85 of 12 December 1984, Article 11.

Cass. com., 15 December 1992, LawLex200200001676JBJ.

Regulation No 1475/95 of 28 June 1995, Article 3(3).

Cass. com., 23 March 1999, LawLex200200005196JBJ.

CA Paris, 18 February 2000, LawLex200200005280JBJ.

TGI Paris, 25 November 2004, LawLex200500004026JBJ; CA Paris, 16 September 2009, LawLex201000000214JBJ.

Regulation No 1400/2002 of 31 July 2002, Article 5(1)(a).

Motor Vehicle Guidelines, 2010/C 138/05 of 28 May 2010, pt 27, not amended by Notice No 2023/C 133 I/01 of 17 April 2023.

Regulation No 2022/720 of 10 May 2010, Article 5(1)(c).

Suppliers who have individually market shares below 30% may be withdrawn the benefit of exemption if the total of motor vehicles sales that are subject to single-branding obligations on the market in question (i.e. total tied market shares) exceeds 40%; likewise, a supplier who does not have a dominant position but has a market share of more than 30% whereas all other suppliers' market shares are below 30%, may be withdrawn the benefit of exemption if the total tied market share exceeds 30%: Motor Vehicle Guidelines, par. 34 et seq.

French Distribution Law

276. Non-compete clause.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

276. Non-compete clause.

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