On 25 October 2017, the Paris Court of Appeal confirmed the 7 July 2014 decision of the Paris Commercial Court which had dismissed – for lack of proof of causation – Speed Rabbit Pizza’s claims that its competitor Domino’s Pizza had engaged in aggressive and anti-competitive practices to its detriment. In the first instance, the Commercial Court also ordered Speed Rabbit to pay Domino’s attorneys’ fees of EUR 487,852, as well as EUR 2,300,000 of damages on account of Speed Rabbit’s denigration of the latter (EUR 1,000,000) and abuse of procedure and disorganization of Domino’s Pizza’s network (EUR 1,300,000).
On appeal, the Court reduced the sums owed by Speed Rabbit Pizza to only those amounts found sufficiently proven, i.e. EUR 500,000 in respect of denigration, in addition to EUR 487,852 plus EUR 50,000 in respect of attorneys’ fees.
This case arose from Speed Rabbit’s allegation that from 2003 to 2013, it lost 26 franchisees (out of a total of 98 remaining points of sale in 2013) and corresponding turnover due to aggressive business practices by its competitor, Domino’s Pizza, which operated a network of 227 franchisees in 2013.
Speed Rabbit Pizza alleged that Domino’s Pizza abused its dominant position, erected barriers to entry to the market by potential competitors, and granted its own franchisees abnormally long payment deadlines, unjustified forgiveness of debt and loans in violation of the banking monopoly. Speed Rabbit claimed this compelled its franchisees to abandon their activity and thus had an adverse effect on Speed Rabbit’s turnover, derived from royalties. Speed Rabbit sought damages in excess of EUR 75 million.
On its side, Domino’s sought dismissal of Speed Rabbit’s claims and counterclaimed that Speed Rabbit had engaged in multiple procedures and complaints and a targeted campaign of denigration against it at trade fairs and on the internet. On appeal, Domino’s sought confirmation of the amounts awarded by the Commercial Court plus an additional EUR 350,000 of damages for Speed Rabbit’s continued public denigration and an additional EUR 150,000 of attorneys’ fees.
Decision of the Paris Court of Appeals
In line with the Paris Commercial Court, the Appeals Court ruled that no causal link was demonstrated between the alleged aggressive business practices of Domino’s Pizza and the damage allegedly suffered by Speed Rabbit. The Paris Court of Appeals added that the fact that there may have existed a “consecutiveness” between the alleged unfair competition and the alleged damages, Speed Rabbit did not demonstrate a causal link between the two.
As regards the alleged anti-competitive practices and abuse of a dominant position, the Court of Appeals found that Speed Rabbit did not prove that Domino’s occupied a dominant position in the relevant market or that Domino’s and its franchisees accounted for a market share greater than the 30% “black clause” threshold.
As regards the abuse of procedure complained of by Domino’s, the Paris Court of Appeals noted that the right to sue is fundamental and may be considered as being misused for exceptional reasons only, and thus overturned the award of EUR 1,300,000 the Paris Commercial Court had granted.
Finally, regarding Domino’s claim for denigration by Speed Rabbit, the Court reduced the damages to EUR 500,000 in the absence of a more precise economic impact study produced by Domino’s.