Aftermath of the STIHL case (Part II): the Paris Court of Appeal confirms almost entirely the French Competition Authority’s decision

Paris Court of Appeal, 17 October 2019, RG 18/24456

On 24 October 2018, the French Competition Authority (the “Adlc”) considered that, by demanding a hand-over to deliver its products (eg: chainsaws, pole-saws, electric pruners, brushcutters), STIHL de facto forbade the sales of its products on its selective distributors’ websites, thus breaching Articles 101 of the TFEU and L.420-1 of the French commercial Code.

STIHL was fined €7,000,000 and four injunctions were pronounced against it. STIHL inter alia had to amend the selective distribution contracts to stipulate in clear terms that the authorized distributors were authorised to sell STIHL & Viking’s products online without requiring a “hand-over” to the buyer.

On 23 January 2019, the first President of the Court of Appeal pronounced a stay of execution order for all the injunctions until the Paris Court of Appeal (“CoA”) rules on the merits of the case.

On 17 October 2019, the CoA confirmed, almost in its entirety, the Adlc’s decision.

Surprisingly, the CoA refused to apply the principle of protection of legitimate trust by refusing to follow the German, Swedish and Swiss competition authorities which had decided to give up the proceedings on this matter. The CoA confirmed the existence of a restriction by object and recalled that only the Commission is entitled to decide when article 101 of the TFEU is not applicable, which was not the case here.

Consequently, the Court of Appeal classically analysed the conditions to eventually consider that a restriction by object was characterized. It examined whether the hand-over delivery was appropriate and necessary.

Contrary to the Adlc, the CoA considered the hand-delivery for dangerous products, which was also imposed by STIHL’s main competitors, as being appropriate and able to ensure the safety of users.

However, it considered that the hand-delivery which applied indistinctively to professional and laypersons, was a restriction to online sales which went beyond what was necessary to maintain product safety. Besides, it considered that a remote assistance could also allow to maintain the safety of the products.

Then, the Court of Appeal analysed whether STIHL could benefit from an individual or block exemption. Judges rejected both. The Block exemption of Regulation 330/2010 could not apply as the practice was a hard-core restriction (art. 4.c of Reg.330/2010) and as the restriction was not essential and the efficiency gains were not enough, the cumulative conditions of an individual exemption were not met.

Regarding the sanctions, the CoA reduced the amount of the fine to €6,000,000 as from 2014, STIHL only imposed hand-deliveries for dangerous products. The CoA granted a 6-month delay to STIHL to comply with the injunction aiming at modifying the distribution contracts. The publication of the decision is also requested by the Court. This decision implies that there will be two different distribution schemes according to the distributor’ localisation in the EU. There will be no hand-delivery for dangerous products in France. However, different is the situation in the other EU Member States where hand-delivery is still allowed.

Finally but unfortunately, judges refused to refer preliminary questions to the Court of Justice. This is regretful considering the opposite position of the German, Swedish and Swiss competition authorities. A further clarification of passive online sales would have been welcomed at the EU level.