On 8 November 2016 the French Supreme Court (Cour de Cassation) overturned the decision of the Paris Court of Appeal of 21 January 2015, which had found that extremely low prices practiced by an internet site constituted unfair competition.
In the considered case, JPL Café Coton ("Café Coton"), a French textile company selling through a French and international exclusive and selective distribution network, sued BLT Développement ("BLT"), the operator of a merchant website owned by the family of controversial businessman Bernard Tapie, for having marketed Café Coton’s products at very low prices and without having entered into a selective distribution agreement with Café Coton. According to Café Coton, this represented a violation of the terms of the network agreements prohibiting out‑of‑network sales for resale and depreciated the image of its brand.
BLT argued that it acquired the goods in question from an Italian company which had itself acquired them from the Italian subsidiary of Café Coton, neither of which companies had entered into a selective distribution agreement with Café Coton. Therefore, BLT claimed that it did not participate in the violation of any ban on resale outside the Café Coton network, and that in consequence it was free to resell the Café Coton products at prices it deemed fit.
In its ruling, the Paris Court of Appeal had found that BLT did not violate or harm the Café Coton network, but nonetheless held BLT liable for unfair competition by marketing Café Coton's products at prices which were excessively low, i.e., from 17% to 37% lower than those generally practiced by Café Coton distributors. These low pricing practices were deemed, ipso facto, by the Court of Appeal to constitute unfair competition by taking advantage of Café Coton’s reputation and causing a diversion of customers and damaging the brand’s image. The Court of Appeal thus held BLT liable for €50,000 of moral damages in this regard.
In overturning the Court of Appeal decision, the Cour de Cassation ruled that because BLT’s supply was not unlawful, the resale of the products at low prices did not, without more, either constitute a fault, harm the network or depreciate the products' image. The case has been remanded to other judges at the Paris Court of Appeal.