Pierre Fabre Dermo-Cosmétique (PFDC) which is a manufacturer of cosmetic and personal care products, challenged the decision of the (now) Autorité de la Concurrence (French Competition Authority) before the Cour d'appel de Paris (Paris Court of Appeal) that PFDC's banning of all internet sales under its distribution agreements constituted anti-competitive agreements which infringed the French Commercial Code as well as EU competition law. The Paris Court of Appeal made a request for a preliminary ruling of the CJEU on whether the general and absolute ban on internet sales constitutes a "hardcore" restriction of competition by object in relation to a selective distribution agreement.
On 3 March 2011, Advocate General Mazák, said that a general and absolute ban on selling via the Internet in the context of a selective distribution network which goes beyond what is objectively necessary in order to distribute goods in an appropriate manner in light of their material qualities, aura and image, has the object of restricting competition and falls within the scope of Article 101(1) of the TFEU.
In this regard, the Advocate General considered that PFDC's claim that the ban is justified on public health grounds, as correct use of its products requires the advice of a pharmacist, appeared to be objectively unfounded. Such products were not medicinal products and there was no regulatory requirement which would mandate their sale in a physical space and only in the presence of a qualified pharmacist.
As to the aim of preserving the luxury image of the beauty products in question, Advocate General Mazák noted that, in the past, the CJEU has found that selective distribution agreements may be justified in order to preserve the aura and image of the goods in question. While accepting that the cosmetic and personal care products are, in principle, appropriate for a selective distribution agreement and that the presence of a pharmacist may enhance the image of those products, the Advocate General believed that the national court must examine whether a general and absolute ban on Internet sales is proportionate. In his view, given that a manufacturer could impose appropriate, reasonable and non-discriminatory conditions on Internet sales, thereby protecting the image of its products, a general and absolute ban on Internet sales could only be proportionate in very exceptional circumstances.
Advocate General Mazák also stated that such a ban on Internet sales restricted both active and passive sales by preventing use of a modern communicating and marketing tool. It therefore constituted a hardcore restriction within the meaning of the Vertical Agreements Block Exemption Regulation and was ineligible for the exemption provided by that Regulation. The Advocate General disagreed with PFDC's assertion that sales on the Internet should be classified as sales from an unauthorised (virtual) establishment.
Finally, the Advocate General said that any anti-competitive agreement may, in principle, benefit from the exemption provided by Article 101(3) TFEU (e.g. to promote technical and economic progress). However, he said he had insufficient evidence to be able to give a view on this.