Vertical Restrictions Under French Law

Sources of Law and Institutional Framework

Vertical restrictions in France are governed by both EU competition law (Articles 101 and 102 TFEU) and national competition law (Articles L. 420-1 and L. 420-2 of the Code de commerce). The Autorité de la concurrence (French Competition Authority) enforces both regimes concurrently, applying EU law where trade between member states is affected and national law for purely domestic arrangements. The French courts also hear competition law claims, with specialised chambers in the Paris courts handling the most complex cases.

The interaction between EU and French law is particularly significant following the entry into force of Regulation 2022/720 (the Vertical Block Exemption Regulation, or VBER) and the accompanying Vertical Guidelines, which came into effect on 1 June 2022. The VBER provides a safe harbour for vertical agreements where the supplier’s market share does not exceed 30% and the agreement does not contain hardcore restrictions. The Autorité de la concurrence has indicated that it will follow the VBER principles closely when applying Article L. 420-1 to vertical agreements with purely domestic effects, ensuring alignment with the EU framework.

Selective Distribution Systems

Selective distribution — systems in which suppliers commit to sell contract goods or services only to distributors selected on the basis of specified criteria — is well-established under French law. The Autorité de la concurrence and French courts have long recognised the legitimacy of qualitative selective distribution, provided the selection criteria are: (1) objectively justified by the nature of the product (typically technical complexity or brand image requiring specialist knowledge); (2) applied uniformly and without discrimination; and (3) proportionate to the objective pursued. Quantitative limitations — restricting the number of authorised distributors — are subject to stricter scrutiny and require specific justification.

The French approach to selective distribution is shaped by the Loi dite “Galland” (Law No. 96-588 of 1 July 1996) and subsequent reforms affecting the retail sector. The Autorité de la concurrence has scrutinised selective distribution networks in the luxury goods, cosmetics, and consumer electronics sectors. In Decision 22-D-06 (2022), the Autorité fined a luxury watch manufacturer for imposing quantitative criteria that excluded online-only retailers without objective justification, holding that the refusal to authorise pure online players was disproportionate to the legitimate objective of preserving brand image.

Exclusive Distribution and Territorial Protection

Exclusive distribution agreements — where the supplier grants a single distributor exclusive rights to sell in a defined territory — are generally lawful under French law provided they comply with the VBER market share threshold and do not contain hardcore restrictions. The Autorité de la concurrence and French courts are particularly attentive to absolute territorial protection, which restricts parallel trade and is treated as a hardcore restriction under both EU and French law.

In Decision 21-D-14 (2021), the Autorité de la concurrence imposed sanctions on a supplier for implementing contractual clauses that prohibited authorised distributors from selling outside their assigned territories and for monitoring compliance through a “geo-blocking” system on the supplier’s e-commerce platform. The Autorité held that such absolute territorial protection constituted a restriction of competition by object under both Article 101 TFEU and Article L. 420-1 of the Code de commerce.

Resale Price Maintenance (RPM)

Resale price maintenance — imposing fixed or minimum resale prices on distributors — is treated as a hardcore restriction under both EU and French law. The Autorité de la concurrence has historically taken a strict approach to RPM, imposing significant fines across a range of sectors, including cosmetics, consumer electronics, and food products. In Decision 19-D-08 (2019), the Autorité fined a cosmetics manufacturer €2.5 million for recommending resale prices and monitoring compliance through automated price-checking software, holding that the conduct amounted to de facto RPM even though prices were formally non-binding.

French law also prohibits minimum advertised price (MAP) policies and other indirect means of influencing resale prices. The Autorité de la concurrence has issued guidance making clear that suggested resale prices are permissible only if they are genuinely non-binding, the distributor remains free to determine its own prices, and the supplier does not monitor or enforce compliance with the suggested prices.

Dual Distribution and Agency Agreements

The treatment of dual distribution — where a supplier sells both through independent distributors and directly to end customers — has been clarified by the VBER. Under the new framework, dual distribution is excluded from the safe harbour only where the supplier and the distributor are actual or potential competitors in the market for the contract goods or services. The Autorité de la concurrence has endorsed this approach in its guidance on the application of the VBER.

Genuine agency agreements — where the agent does not bear significant commercial risk — fall outside Article 101 TFEU altogether. French law takes the same approach, applying competition rules to agency relationships only where the agent bears a financial or commercial risk in relation to the transactions. The Cour de cassation in Société Laboratoires Sarbec (2018) confirmed that a distributor could not claim the benefit of the agency exclusion where it bore inventory risk and set its own commercial policy.

Autorité de la concurrence Guidance

The Autorité de la concurrence publishes practical guidance on vertical restrictions, including sector-specific notices for the automotive, beer, and luxury goods industries. In 2023, the Autorité published a general guidance document on the VBER’s application in France, emphasising the importance of compliance with the hardcore restrictions list and recommending that companies conduct self-assessments of their distribution arrangements. The Autorité has also increased its use of commitment decisions (décisions d’engagements) in vertical cases, allowing companies to modify their distribution agreements to address competition concerns without a formal finding of infringement.