On 15 January 2013, the Cour de Cassation, France's highest court, ruled that Jaguar Land Rover France ("Jaguar Land Rover") has the right to limit the number of dealers appointed to its selective distribution network in France. In reaching this finding, the Cour de Cassation follows the guidance given by the Court of Justice of the EU (the "ECJ") in its preliminary reference ruling last year (see VBB on Competition Law, Volume 2012, No. 6, available at www.vbb.com).

In 2005, French motor vehicle dealer Auto 24 brought proceedings against Jaguar Land Rover seeking compensation for the loss allegedly caused by the latter's refusal to appoint it as a distributor. Jaguar Land Rover had refused to appoint Auto 24 as its authorised distributor on the grounds that its formal numerus clausus provided for a limited number of distributors to be appointed and did not contemplate the appointment of a distributor in the town in question.

Auto 24 was unsuccessful before the Commercial Court of Bordeaux and, on appeal, the Paris Court of Appeal. Auto 24 then appealed further to the Cour de Cassation arguing that Jaguar Land Rover's conduct was contrary to EU competition law. In particular, it claimed that, in a quantitative selective distribution system such as the one at issue, the supplier was obliged to use quantitative selection criteria that were specific, objective, proportionate and applied in a non-discriminatory manner. The Cour de Cassation stayed proceedings and sought guidance from the ECJ on the meaning of "specified criteria" within the definition of the term "selective distribution system" in Commission Regulation No 1400/2002 (the "2002 MVBER").

In June 2012, the ECJ considered that, with regard to a quantitative selective distribution system, the 2002 MVBER does not require a vehicle supplier to apply selection criteria that are objectively justified or to apply them in a non-discriminatory manner. Such requirements are only applicable in respect of qualitative selective distribution systems. In the context of a quantitative selective distribution system, it is sufficient that the criteria are specified by the supplier so that their content can be verified.

In its judgment, the Cour de Cassation has followed the ECJ's ruling and accordingly rejected Auto 24's argument that Jaguar Land Rover's limit on the number of its distributors restricted competition. The Cour de Cassation stated that no legislation or regulation, whether at the national or EU level, imposed an obligation on Jaguar Land Rover to justify the reasons why it chose to draw up a numerus clausus as a quantitative selection criterion. Since this criterion in question expressly limited the number of dealers to 72 dealership contracts for 109 sites, it constituted a specified criterion whose content could be verified. Accordingly, Jaguar Land Rover's distribution system complied with the requirements set out by the ECJ.

The judgment of the Cour de Cassation brings the dispute to an end and confirms that a numerus clausus in a quantitative selective distribution system may be freely defined by the supplier, since it is for the supplier to define the scope and composition of its network.

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