The French Supreme Court recently stated that a service provider leading a selective distribution network could lawfully forbid any sale of its products on a marketplace. Indeed, 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., September 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, is suing eNova santé on the basis of Article L.442-6, I, 6 of the French Commercial Code for having sold its products on its online platform without 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: two decisions of the French Competition Authority of July 23, 2014 and of June 24, 2015 regarding the selective distribution network of Samsung, a decision dated November 18, 2015 of the same Authority regarding an Adidas case and of a decision of the German Competition Authority regarding Asics and Adidas. The facts were similar in each of the cases and the restriction of competition was recognized. 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 of the violation to the selective distribution network of Caudalie. Said selective distribution network has been precisely held lawful by a decision No. 07-D-07 dated March 8, 2007 of the French Competition Council.
The decision of the Paris Court of Appeal was thus devoid of any legal basis and therefore annulled.