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
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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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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