According to a recent French Supreme Court ruling, a service provider leading a selective distribution network could lawfully forbid any sale of its products in a marketplace. In a decision dated September 13, 2017, the Court held that if a lawful selective distribution network is in place, there is no reason to contest its right to forbid the sale of products on online platforms that have not been approved. Cass. Com., Sept. 13, 2017, No. 16-15.067.
In this case, Caudalie, a manufacturer of cosmetic products under its trademark and distributing its products via a selective distribution network, was applying for interim measures by fast-track proceedings against eNova santé on the basis of Article L.442-6, I, 6 of the French Commercial Code. Caudalie was contesting eNova’s sale of Caudalie’s products on eNova’s online platform without eNova being part of the selective distribution network.
Caudalie considered that the sale of its products via the online platform, thus outside of the selective distribution network, constituted a manifestly unlawful disturbance. The company argued that such behavior was against the prohibition of selling outside the scope of the selective distribution network to its selective vendors.
In a ruling dated February 2, 2016, the Paris Court of Appeal ruled in favor of eNova santé and held that the restriction requested by Caudalie represented a restriction of competition. It referred to several decisions in which similar facts presented themselves and the restriction of competition was recognized: two decisions of the French Competition Authority (n°14-D-07, July 23, 2014 and n°15-D-11, June 24, 2015) regarding the selective distribution network of Samsung; a press release dated November 18, 2015, of the same French Competition Authority regarding a case involving adidas (Press releases 2015, 18 November 2015: Online sales, "The Autorité de la concurrence has closed an investigation against Adidas"); and a decision of the German Competition Authority regarding Asics and adidas (Bundeskartellamt, n° B2-98/11, August 26, 2015).
Judges held that the interdiction imposed on Caudalie’s selective vendors to use an online platform, whatever the characteristics, could constitute a restriction of competition excluded from the benefice of any exemption. Therefore, no manifestly unlawful disturbance could be found.
The Supreme Court overruled this decision and stated that the Paris Court of Appeal did not explain how the decisions it referred to were susceptible to exclude the existence of a manifestly unlawful disturbance resulting from the violation of the selective distribution network of Caudalie, which had been held lawful by decision No. 07-D-07, dated March 8, 2007, of the French Competition Council.
The Court thus found the decision of the Paris Court of Appeal devoid of any legal basis and reversed it. As a consequence, the Supreme Court referred the case back to the Paris Court of Appeal with a different composition.
For another recent case on selective distribution networks see the November 1 issue of the INTA Bulletin.
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