France: French Competition Authority Imposes EUR 0.9 Million Fine On Bang & Olufsen For Curtailing E-Tail

Last Updated: 20 December 2012
Article by Charles van Sasse van Ysselt, Herman Speyart and Vincent Wellens

Today, the French Competition Authority (Autorité de la concurrence) has imposed a EUR 0.9 million fine on Bang & Olufsen France and its Danish parent company for having prohibited their French dealers from selling the brand's products online.

The Decision sets out that B&O's distribution contract for France, which dates back to 1989 and provides for selective distribution, contains a clause prohibiting distance selling. B&O did not address e-tail in that contract, but in a separate letter issued in 2000 to all of its 48 French dealers. In that letter, B&O indicated that a certain category of dealers could apply for a separate page on B&O's global website, subject to approval by B&O, and that any reference to B&O on the dealers' own sites should be limited to statements to the effect that the dealer is entitled to distribute B&O products and to provide advice on these products from its brick and mortar outlets. The letter also contained a prohibition to use B&O logo's and trade marks on the dealers' own websites. B&O concluded the letter by requesting the dealers to comply with its contents and by stating that it was firmly determined to impose its terms. 

In its Decision, the Autorité de la concurrence holds that these measures result, de facto, in a ban on internet sales. It points out that B&O's global site does not contain a single dealer page and that dealers are in effect barred from selling B&O products on their own sites. The Autorité goes on to refer to the ECJ's preliminary reference judgment of 13 October 2011 in the Pierre Fabre Dermo-Cosmétique Case confirming that a clause in a selective distribution contract preventing dealers from selling their products online amounts to a restriction of competition by object, unless that clause is objectively justified. It therefore finds that the de facto ban put in place by B&O in France infringes French and EU competition rules.

The Autorité not only imposed a fine, but also ordered B&O France to amend its distribution contracts within three months so as to make it clear that its dealers are authorised to sell online.

The full text of the Decision can be found here.

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