On 16 June 2015, the Paris Commercial Court (the "Court") rejected a claim for damages brought by Siac, a former member of Renault's selective distribution system, against Renault. Siac, which had been a dealer of new Renault cars for a period of forty-five years, primarily argued that: (i) Renault had provided wrongful reasons for the termination of its distribution contract; (ii) such a termination amounted to "brutal" termination under French law; and (iii) Renault did not objectively examine its new application to re-enter the distribution network in 2009 to sell cars.
With regard to the claim of wrongful termination, the Court noted that the then-applicable motor vehicle block exemption Regulation 1400/2002 ("Former MVBER") required car manufacturers to state objective and transparent reasons for terminating distribution agreements in order to ensure that termination was not in fact being used by the supplier to sanction practices of the dealer which the supplier could not validly restrict under the block exemption. Since Renault had explained the termination on the basis of the weak commercial performance of the dealer and that Siac had failed to demonstrate that termination was instead a consequence of conduct which the supplier could not validly restrict under the block exemption, the Court ruled that Renault's termination was not wrongful. In respect of the alleged "brutal" termination, the Court found that Renault had provided two years of prior notice to Siac, which is in line with the requirements set out in the Former MVBER. Since the termination period was in line with the distribution contract, EU competition law and industry practice, the Court rejected the claim.
Finally, applying the Auto 24 ruling of the EU Court of Justice ("ECJ") from 2011, the Court also found that Renault did not wrongfully reject Siac's new application to become a member of its distribution network in 2009 to sell cars. Renault operated a quantitative selective distribution system for the sale of cars and apparently applied a cap (numerus clausus) which fixed the total number of dealers it appointed. When Siac re-applied prior to the termination taking effect, Renault informed Siac that the total number of dealers in the network would be reduced by one when Siac's termination took effect and that it would not appoint another dealer from the town where Siac's dealership was located.
According to the judgment, it follows from the Former MVBER that a car manufacturer can apply whatever quantitative criteria it chooses to limit the number of dealers and, provided the criteria are defined, the manufacturer is not required to justify these criteria or, as the ECJ had also held in Auto 24, to apply them in a uniform or non-discriminatory manner. The Court found that Renault had defined the quantitative basis on which it selected new dealers by informing Siac that the maximum number of dealers in the network would be equal to the total number of dealership contracts that would remain in force after Siac's termination. The Court did need to consider whether or not this basis was reasonable and, as a result, it found that Renault was not required to examine Siac's new application to become a member of its distribution network. Furthermore, it found that it was not inconsistent with Renault's quantitative criteria that another existing Renault dealer opened a sales outlet in the town where the Siac dealership was located.
The judgment is significant in that the Court strongly endorses the freedom of suppliers to select dealers in a quantitative selective distribution system in the manner in which they consider best reflects their commercial interests. In doing so, the Court avoids taking a formalistic approach in considering the apparent technical requirement to "define" quantitative criteria that applied under the Former MVBER. This freedom should be even stronger under the current block exemption regime that governs vertical agreements in all sectors as – in the absence of any reference to quantitative criteria in Regulation 330/2010 – it is debatable whether there is now any requirement to define specifically quantitative criteria.
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