The Court of appeal of Paris has confirmed the decision of the French Competition Authority ("FCA") sanctioning Stihl, a manufacturer of mechanical garden equipment, for prohibiting, between 2006 and 2017, the sale of certain dangerous products on its distributors' websites. The Court of appeal, however, reduced the fine by €1 million to €6 million.
| whatyou need to know - key takeaways |
- The sale of high quality and technical products that also present a safety risk for end users legitimates the creation of a selective distribution network.
- This does not allow the supplier to impose on its authorized distributors a requirement to deliver products by hand and thus to de facto exclude online sales.
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As a reminder, Stihl, a manufacturer of mechanical garden equipment such as chainsaws, brush cutters, pole-saws, imposed two restrictions on online sales on its authorised dealers (see our previous newsletter article).
First, Stihl prohibited the resale of its products (dangerous or not) on third party platforms. The FCA had considered that this prohibition was justified in light of the EU Court of Justice's Coty precedent.
Second, Stihl obliged its resellers to hand deliver those of its products that were deemed to be "dangerous". These products had to be either collected by the client at the dealer's premises or delivered by the dealer himself and not by a third party such as a transporter. This resulted in Stihl de facto preventing online sale of these products according to the FCA.
Stihl appealed that second aspect of the FCA's decision before the Court of appeal of Paris.
Whilst the Court of appeal concluded that this de facto restriction on online sales was a restriction of competition 'by object', it conducted an in-depth analysis to assess the object and effects of this practice.
First, it observed that the restriction was justified and likely to guarantee a proper use of the products and the users' safety. However, it considered that it went beyond what was necessary to achieve that purpose. The Court noted that the restriction applied to professional and non-professional users without distinction. It also pointed out that online assistance (i.e. not necessarily a hand delivery) could be an appropriate instrument to guarantee a proper use and users' safety.
Second, the Court of appeal considered that the object infringement was not liable to be exempted considering that direct advice by authorized dealers, whilst useful, was not necessary. It stressed that the only advantage of this practice consisted in the assurance that the end user would hear the safety instructions. Yet, other online tools could be implemented to achieve the same safety objective without restricting competition.
The Court of appeal concluded that the restriction deprived end users without justification of all the benefits of online sales.
