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Selective distribution

On 24th May 2017, the Paris Court of Appeal issued a ruling that is very worrying for the heads of selective distribution networks. 

 
In 2009, Chrysler liquidated its business and transferred the goodwill to FCA France with effect on 1st May 2010. On 25th May 2010, Chrysler terminated all its sales and after-sales service contracts with one year’s advance notice and announced a complete reorganization of the network. A few days later, FCA notified the network that distribution of two Chrysler brands was resuming in France and invited interested dealers to apply. One of the members of the former network applied for authorization for both sales and repairs but its application was rejected by FCA on the basis of non-fulfilment of its authorization criteria and due to the sharp fall in the distributor’s performances during the notice period. The former dealer summonsed FCA before the Commercial Court on the grounds that this decision was unlawful. The court found against the distributor on the basis that the refusal to authorize was legitimate and that the application had not been presented in good faith. 
 
On appeal by the distributor, the Paris Court of Appeal found the manufacturer not guilty of any offence based on competition law (see I) but, however, found against it on the basis of contract law (see II). How should this result be viewed (see III) and what can companies do to protect themselves (see IV)? 
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Commercial negotiations

On 8 November 2016, the French parliament finally adopted the Law on transparency, the fight against corruption and to the modernization of economic life ("Sapin II"). The text provides adjustments to mechanisms regulating the commercial relations between traders in general and further amends the rules applicable to the agricultural sector. It also reforms Article L. 442-6 of the Commercial Code and toughens administrative sanctions.

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Corporate taxation - Whistleblowers/lobbies

The Sapin II Law in its anti-corruption and anti-tax fraud provisions laid down the requirement for companies to make public their "practices of transferring profits and tax base to tax haven countries”. The measure was challenged on the grounds that it forced French companies to disclose information to the public and to competitors which would reveal their commercial strategies, and was excessively burdensome.

 

 

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Merger control

The decision to clear FNAC/Darty merger (Decision No. 16-DCC-111 of 27 July 2016) represents a significant development in the decision-making practice of the French Competition Authority in the field of merger control. It is also likely to influence the law on anticompetitive practices.

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Competition and distribution

The Macron Law of 6 August 2015, which was adopted after several months of parliamentary debate and invoking on three occasions Article 49.3 of the Constitution (allowing a government to pass a law without parliament's approval), affects sectors as varied as coach transport, motorways, airports and driving schools. Competition and distribution law have not been overlooked in the process, although ironically the major changes expected in these areas will not take effect immediately. 

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