Qualitative selective distribution networks: the Paris Commercial Court has confirmed for the third time that suppliers are not required to approve candidates meeting their selection criteria.

The 21 March 2018

The Paris Tribunal de commerce has once again expressed its clear and reasoned position on the freedom of qualitative selective distribution network not opt not to approve the candidacy of a former authorized repairer even if it meets the selection criteria.

After first instituting this position in the Mazda contracts case (Commercial Court, Paris, 29 June 2016, LawLex201600001202JBJ) and then the Hyundai case (Commercial Court, Paris, 14 Dec. 2016, LawLex20170000120JBJ), it was recently upheld in the Mercedes judgment handed down on 21 February 2018.

The legal reasoning in the case is particularly compelling. The court found that:

to accept that, where no fault has been committed, an authorized repairer is entitled to have its contract renewed on expiry of the initial notice period in a selective distribution network would be to create a contract in perpetuity in violation of the fundamental principles of French law;

it would also undermine the right not to renew an expired contract;

the application of the European law on anticompetitive agreements presupposes the existence of concerted actions or agreements whereas the rejection of a candidate constitutes a unilateral act unless it constitutes systematic behavior; proof that it is not an isolated act must be brought by the rejected candidate;

– in this case, the candidate provided no evidence that the refusal of approval was such as to affect the competitive functioning of the market or that it was the result of an agreement between the network and its authorized repairers;

  there would also be a violation of the freedom to contract;

the reasoning adopted by the European law on restrictive agreements may be applied to the French law of Article L. 420-1 of the Commercial Code, and;

former Article 1382 of the Civil Code (now Article 1240) cannot form the basis of a demand for approval, it being specified that refusals to sell and per se discriminatory practices between professionals was repealed a long time ago under French law.

Although the solution is not new, the judgment deserves to be highlighted due to its highly compelling reasoning thus eliminating all the arguments of those advocating an indefinite right of re-approval for former members of qualitative selective networks fulfilling the selection criteria.

This confirms a real paradigm shift by the courts – from the obligation to approve to the freedom not to approve with limited exceptions.


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