On 14 June 2012 the European Court of Justice ("ECJ") ruled (Case C-158/11) that a distribution system for the sale of new motor vehicles prohibiting resale to unauthorised distributors that is based on criteria that limit the number of distributors, may be classified as a (permitted) "quantitative selective distribution system" within the meaning of Regulation No 1400/2002, the motor vehicle block exemption (the "Regulation").
Prior to 2004 the French car dealer Auto 24 SARL ("Auto 24") had been the exclusive distributor of new cars imported by Jaguar Land Rover France SAS ("JLR"). Upon termination of the dealership agreement, Auto 24 requested JLR to be appointed as an authorised distributor. JLR however rejected this request because of restrictions as to the number of distributors ("numerus clausus").
Auto 24 did not agree with JLR's refusal and the matter ultimately ended up at the ECJ who was requested to provide guidance on how the concept of "specified criteria" in art. 1(1)(f) of the Regulation should be interpreted in situations involving quantitative selective distribution systems. Article 1(1)(f) of the Regulation defines a selective distribution system as a system "where the supplier undertakes to sell the contract goods or services (…) only to distributors or repairers selected on the basis of specified criteria".
The ECJ decided that the concept of "specified criteria" must be read as meaning that it requires a quantitative selective distribution system to be based on criteria which are objectively justified and applied in a uniform and non-differentiated manner in respect of all parties that apply to be appointed as an authorised dealer.
The ECJ also considered that it is required that the content of the "specified criteria" is verifiable. It is however not necessary that to this end the selection criteria are published. Furthermore, the ECJ held that the concept of "quantitative selective distribution system" does not entail that the selection criteria are applied in a uniform and non-differentiated manner for all parties that apply for an authorised dealership. Such requirement only applies in situations involving qualitative selective distribution systems.
In view of the judgment of the ECJ it appears unlikely that Auto 24 will be successful in its proceedings against the refusal to be appointed as an authorised dealer.