The facts of the case
Alfa Romeo Nederland ("ARN") distributes Alfa Romeo cars in the Netherlands using a selective distribution system which, in turn, is part of the selective distribution system of Fiat Auto S.p.A. ("Fiat"). Alfa Romeo dealers within this system are bound by a resale restriction. The defendant in the case, Multicar, ceased to be an official dealer in 1994 but continued to sell new Alfa Romeo cars, obtaining them from an official Alfa Romeo dealer, who thereby – knowingly or unknowingly – breached the resale restriction. ARN demanded (in interlocutory proceedings) that Multicar be prohibited from buying new cars from official Alfa Romeo dealers in the EU and from selling these cars, as this constituted unlawful conduct towards ARN and the dealers, since Multicar was knowingly profiting from the relevant dealer's breach.
Proceedings before the lower courts
In the proceedings at first instance, the President of the District Court of The Hague denied ARN's claims, a ruling which was upheld by the Court of Appeal of The Hague. The Court of Appeal held that the evidence and arguments adduced by ARN were not sufficient for Multicar's conduct to be deemed unlawful. The court also considered it relevant that ARN and Fiat could trace the origin of the cars in question and close the leak themselves. In addition, the court held that even if it were true that official dealers were in a disadvantaged position compared to outsiders such as Multicar (e.g. because official dealers are bound by costly sales standards and resale restrictions whereas outsiders are not), this position was a result of the system chosen by ARN and Fiat, which system did not concern Multicar.
The Supreme Court
The Supreme Court stated that it was important to note that ARN claimed that its official dealers had been put in a disadvantageous position because, due to Multicar's conduct, it had become harder for them to recoup the investments necessary to comply with the system's standards.
Regarding the dealers
The Supreme Court ruled that if an outsider:
- sells products which it obtained by consciously using a breach by an official dealer of the latter's contractual obligations towards the distributor regarding the resale of those products;
- competes – by selling those products – with other official dealers who are under similar contractual obligations; and
- profits, for the promotion of its own business, from the fact that these official dealers are in a disadvantaged position because they are required to observe the contractual obligations.
this can be unlawful towards the official dealers. The court stated that it did not see why the dealers should be adversely affected by the distributor's choice to apply certain sales standards, in that they should be precluded from claiming that an unlawful act is being committed against them by the outsider who is profiting from their disadvantaged position.
Regarding the distributor
According to the Supreme Court, the type of competition described under a) through c) above can also be unlawful towards the distributor if the distribution system is undermined, e.g. because the other official dealers will also evade their obligations or terminate their participation in the system, or because third parties will become reluctant to join the system. However, the choices made by the distributor as to which sales standards to apply can be taken into account when answering the question of whether the above type of competition by an outsider is unlawful towards the distributor as well.
The Supreme Court annulled the decision by the Court of Appeal of The Hague and referred the case to the Court of Appeal of Amsterdam, which must now investigate the facts anew taking into account the Supreme Court's opinion. Although it remains to be seen whether or not the Amsterdam court will deem the evidence and arguments adduced by ARN sufficient to support a conclusion that Multicar acted unlawfully toward the distributor and/or the dealers, the Supreme Court's ruling that conduct such as that of Multicar at least can be unlawful toward those parties seems to be a favourable sign for participants in selective distribution systems.