COMPETITION • FRENCH LAW • RESTRICTIVE AGREEMENTS
An exclusive distribution contract is one by which “a trader called a concessionary (dealer) puts his distribution business at the service of a trader or manufacturer, called the concession grantor (supplier), in order to ensure the exclusive distribution in a given territory of products for which he has been granted a resale monopoly”. Such contracts are very strongly marked by intuitus personae. It has thus been held that dealers are selected on a discretionary basis, which distinguishes the exclusive concession from selective distribution agreements which are subject to objective selection criteria. In terms of competition, the exclusive dealership presents an ambiguous picture: more inter-brand competition is obtained at the price of less intra-brand competition. The exclusive concession restricts competition while at the same time contributing to its development. It is therefore likely to fall outside the prohibition of restrictive agreements, either under the rule of reason or on the basis of an individual or collective exemption.
The choice of a distribution method is at the supplier’s discretion, provided that it does not engage in conduct contrary to the rules of competition. The manufacturer remains free to modify the organization of its distribution network without its contractual partners being entitled to maintain their situation. Modification of the network does not in itself constitute an anticompetitive practice provided that the resellers have, notably, the possibility of sourcing their supplies from the distributor designated by the supplier. The supplier may therefore decide to move from a selective to an exclusive distribution system, from an exclusive distribution system to a franchise system, or to have exclusive and multi-brand distributors or exclusive and non-exclusive territories co-exist within the same network. The professional and technical qualities of applicants for an exclusive concession remain subject to the supplier’s own judgment, notwithstanding the fact that the selection must not be discriminatory.
The vertical agreement between the exclusive distributor and the supplier must not restrict the commercial liberty of the reseller, who must be permitted to determine its resale prices independently. The competition authorities condemn practices that lead to the imposing of prices even if the distributors are not located in the same catchment areas.