Paris Court of Appeal refers case to the European Court of Justice to shed light on online distribution rules

On 29 October 2009, the Paris Court of Appeal put on hold the Pierre Fabre case and asked the European Court of Justice to rule on whether a naked prohibition on online sales to final consumers imposed on authorized distributors within the context of a selected distribution network should be considered an “hard core” restriction by object under Article 81 of the EC Treaty (now Article 101 of the TFEU), which falls outside the scope of the Block Exemption Regulation on vertical agreements, but which may benefit from an individual exemption when under Article 81.3 of the EC Treaty.

The question was raised in the appeal by medical-cosmetics manufacturer Pierre Fabre against the decision by the French competition authority fining the company for restricting the distribution of some of its brands over the internet.

The European Commission also intervened before the Court of Appeal in support of the French competition authority argument that the prohibition of online sales within a selective distribution is illegal unless there is an overriding reason to prohibit it, e.g. when this is required by a national or European law in order to protect public order for reasons of security or consumers health.

The French competition authority took the view that Pierre Fabre, by prohibiting the online sale of its products infringed competition rules, because the prohibition of online sales equates to a prohibition of active and passive sales, and cannot be considered exempt, either under a block exemption allowed by the EC Regulation of 1999 on vertical agreements (set to expire in May 2010 and currently under review by the European Commission). [Gabriele Accardo]