On 13 March 2014, the French Court of Appeal confirmed the
decision of the French Competition Authority ("FCA")
finding that Danish high-end electronics manufacturer Bang &
Olufsen and its French subsidiary had breached Article 101 TFEU and
its French equivalent for imposing a de facto prohibition on its
dealers from selling their hi-fi and audio products online. The
Court of Appeal however substantially reduced the amount of the
fine from € 900,000 to € 10,000 due to uncertainties
concerning the case law on restrictions on online sales prior to
the judgment of the Court of Justice of the European Union
("ECJ") in the Pierre Fabre Dermo-Cosmétique case
(Case C-439/10) and due to the very limited damage to the
On 20 February 2002, the French Ministry of Economy brought
proceedings before the FCA against four companies active in the
high-end electronics sector, including Bang & Olufsen, on the
grounds that these companies had breached Article 101 TFEU and its
French equivalent by prohibiting their distributors from selling
their products online. On 5 December 2012, the FCA imposed a fine
of € 900,000 on Bang & Olufsen and its French subsidiary
for restricting competition by object, as they imposed a de facto
prohibition on online sales of their hi-fi and audio products. Bang
& Olufsen subsequently appealed the decision before the Court
The Court of Appeal first confirmed the decision of the FCA
finding that Bang & Olufsen had restricted competition by
object by imposing a blanket and general restriction on its dealers
from selling its electronic products online in breach of Article
101(1) TFEU. The Court of Appeal also dismissed the claim that the
general and absolute restrictions on online sales could be exempt
under Article 101(3) TFEU, finding that Bang & Olufsen did not
demonstrate that the restrictions were either necessary or
indispensable to fight against free-riding or to guarantee the
quality of the presentation and the distribution of all the
products sold. This was all the more true concerning the cheaper
items of the product range offered by Bang & Olufsen, including
headsets and other basic accessories which, contrary to certain
more complex products, could not be considered to always require an
in-store customer demonstration before being sold , and the
stocking/distribution costs of which were not particularly
Concerning the amount of the fine, the Court of Appeal
substantially reduced the amount of the fine from € 900,000 to
€ 10,000 on the ground that the damage to the economy was
limited. More importantly, the Court of Appeal also considered
that, from the time the investigations against Bang & Olufsen
were carried out in 2002 until the ECJ judgment in the Pierre Fabre
Dermo-Cosmétique case, there were significant uncertainties
as to the state of the law concerning the validity of the
restrictions on online sales. This was all the more true as the FCA
had suspended the proceedings against Bang & Olufsen from 2008
to 2012 to await the outcome of the Pierre Fabre
As a result of the foregoing, the Court of Appeal ruled that
Bang & Olufsen could not be held liable for any illegal
behaviour which occurred before the ECJ judgment of 11 October 2011
in Pierre Fabre Dermo-Cosmétique, and adjusted the amount of
the fine to € 10,000 accordingly.
The case is of general interest because it implies that a
restriction on online sales limited to more complex Bang &
Olufsen products might have been justified under Article 101(3).
The fact that Bang & Olufsen applied the restriction to its
full product range meant, however, that the Court did not need to
decide this point.
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