On 5 July 5 2017, the French Supreme Court drew the consequences from the decision of the ECJ rendered on 21 December 2016 relating to the jurisdiction of a Member State to rule on the infringement by websites operated in other Member States of a prohibition on resale outside a selective distribution network.
The ECJ’s decision followed a request from the French Supreme Court for a preliminary ruling in the case involving Concurrence, a French retailer of consumer electronics products based in Paris which had entered into a selective distribution agreement with Samsung for the distribution of Samsung’s high-end range called “Elites” (see our EU Competition Newsletter of February 2017. Despite the prohibition in the distribution agreement to sell the Elites products online, Concurrence put them on sale on its website. As a result, Samsung terminated the selective distribution agreement for infringement of the prohibition on resale outside the selective distribution network.
In return, Concurrence challenged the validity of that prohibition and sued Samsung before the Commercial Courts in summary proceedings, joining in such proceedings Amazon, a company incorporated under the laws of Luxemburg, which sold the Elites products on its French, German, English, Spanish and Italian websites despite the same contractual prohibition to do so. Concurrence argued that it could lose profit due to the offers made by Amazon on its various websites, all of which were accessible from France, thus diverting customers away from Concurrence.
In the first instance judgement and on appeal, the French Courts ruled that they did not have jurisdiction to rule regarding the Amazon websites operated outside of France as such sites did not specifically target French consumers. Concurrence then lodged an appeal to the French Supreme Court, which referred the question to the ECJ.
The decision was awaited as it was the first time that the ECJ had to rule on an action brought for an injunction to stop an illegal behaviour, rather than on the indemnification of a damage that had already occurred.
The ECJ reminded that when the place where the damage occurred and the place of the event giving rise to it differ, the defendant may be sued, at the option of the plaintiff, in the courts of either of those places.
Then, the ECJ reminded that the likelihood of a damage occurring in a particular Member State is subject to the condition that the right whose infringement is alleged is protected in that Member State. The ECJ pointed out that this was the case in France where Article L. 442-6 I) 6° of the French Commercial Code holds liable the party involved in the infringement of the prohibition on resale outside a selective distribution network.
Therefore, the ECJ acknowledged the jurisdiction of the French Courts in this matter under Article 5.3 of the EU Regulation.
Thus, the French Supreme Court followed the ECJ’s rationale and ruled that the fact that the websites on which the offers for the products covered by the selective distribution appear are operated from Member States other than the State of the court seized is irrelevant, as long as the events which occurred in those Member States resulted in or may result in the alleged damage in the jurisdiction, i.e. in this case, the reduction in the volume of Concurrence’s sales resulting from Amazon’s sales made in breach of the conditions of the selective network.
The Supreme Court therefore remanded the case to the Paris Court of Appeal, composed of different magistrates, to rule on the injunction relief sought by Concurrence against the German, UK, Spanish and Italian sites.
Decision: French Supreme Court Commercial Section, July 5, 2017, decision no. 14-16737