In recent months, the French Competition Authority (the “Authority”) has fined 3 companies for prohibiting their distributors from reselling their products online. 

These cases illustrate the risks for suppliers that attempt to restrict their distributors from selling their products on the internet. 

Mariage Frères fined €4 million for two practices, including restriction of online sales (decision No 23-D-12 of 11 December 2023).

Mariage Frères’ general terms and conditions of sale prohibited distributors from selling products on the internet. Distributors could only indicate on their websites that they sold the products in their physical shops. From January 2019, Mariage Frères required its distributors to obtain prior authorisation to sell online, since they had to apply for a separate contract. 

The Authority considered that this prohibition constitutes a restriction by object (as opposed to effect) based on the content and objectives of the agreement, the economic and legal context of the practice and the fact that the restrictions were not necessary and proportionate. 

Mariage Frères argued the prohibition was intended to protect the “prestigious image” of its products. However, the Authority rejected this argument, because Mariage Frères had not set up a selective distribution system to preserve the environment of its products and because, in any case, the control of online sales must be based on objective criteria and cannot absolutely neutralise the use of this channel, which was the case.

Rolex fined €91.6 million for prohibiting its authorised retailers from selling its watches online (decision No 23-D-13 of 19 December 2023).

In this case, the selective distribution contract prohibited retailers from selling the brand’s watches on the internet. 

Once again, the Authority considered that this prohibition constituted a restriction by object.

Rolex argued the prohibition was intended to protect its brand image and fight counterfeiting and off-network sales. Even if such defense could be considered legitimate in the context of a selective distribution network, the Authority rejected these arguments since (i) Rolex’s main competitors had implemented solutions to reconcile online sales with the fight against counterfeiting and off-network sales, and (ii) Rolex had developed itself, in collaboration with one of its retailers, an online sale program for second-hand watches. 

Rolex also argued that it could benefit from an individual exemption, but the Authority considered that the conditions were not met as the restrictions were not necessary to achieve the potential efficiencies. 

Chocolat De Neuville fined €4,068,000 for two practices, including restriction of online sales (decision No 24-D-02 of 6 February 2024).

De Neuville had included in its franchise agreements a clause whereby De Neuville was granted the exclusive right to sell products online. Although exceptions were made for franchisees to sell online, they had to obtain the prior agreement of the franchisor and in any case, they could only sell products online in their allocated geographical zone. 

Once again, the Authority considered that this prohibition constituted a restriction of competition by object. 

De Neuville argued that these restrictions were justified by the scale of the investment made to create its website and by its concern with maintaining the high quality of the network’s brand image. These arguments were rejected by the Authority which pointed out the absence of a selective distribution network and considered that in any case, these restrictions were neither necessary nor proportionate.

For more information or further guidance in this area, please contact Thomas Oster and Matthieu de Calbiac.

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