On 12 December 2012, the French Competition Authority
(Autorité de la Concurrence) issued its decision
fining Danish high-end electronics manufacturer Bang & Olufsen
and its French subsidiary € 900,000 for imposing a de
facto prohibition on online sales of its hi-fi and audio
products, thereby weakening competition between distributors. The
entire selective distribution network of the Bang & Olufsen
brand in France, comprising 48 distributors, was affected by this
The French Competition Authority first examined the terms of the
selective distribution agreement entered into between Bang &
Olufsen France and its dealers, which was drawn up in 1989. A
clause in the agreement prohibited distance selling although no
reference was made to Internet sales, which did not, at that time,
constitute a sales channel. Subsequently, in a circular sent on 23
August 2000 to all of its dealers in France, Bang & Olufsen
indicated that a certain defined category of its dealers could
apply for a separate page on Bang & Olufsen's global
website, subject to approval by Bang & Olufsen. The circular
also stated that any reference to Bang & Olufsen on a
dealer's own site should be limited to statements to the effect
that the dealer was entitled to distribute Bang & Olufsen
products and to provide advice on these products from its brick and
mortar outlet. The use of Bang & Olufsen logos and trade marks
on a dealer's own website was prohibited. Bang & Olufsen
concluded the circular by requesting the dealers to comply with its
In its decision, the Authority referred to the preliminary
reference ruling of the Court of Justice of the EU in the
Pierre Fabre Dermo-Cosmétique case (Case C-439/09),
confirming that a clause in a selective distribution contract that
imposes a de facto prohibition on dealers from selling
their products online amounts to a restriction of competition by
object, unless that clause is objectively justified (see previous
issue of Competition Newsletter). In the present case, the
Authority considered that the provisions of Bang &
Olufsen's selective distribution contract and the statements
made by it in, among others, the 23 August 2000 circular amounted
to a de facto ban on Internet sales by its authorised
dealers. In reaching this conclusion, the Authority noted, among
other factors, that the website of Bang & Olufsen France did
not make any provision for Internet sales and that the prohibition
on the use of Bang & Olufsen logos and trade marks by
authorised dealers made Internet sales "materially
In addition to the fine, the French Competition Authority has
ordered Bang & Olufsen France to amend its selective
distribution contracts within three months from the date of the
decision so as to make it clear that its dealers are authorised to
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