On 13 March 2014, the French Court of Appeal confirmed the decision of the French Competition Authority ("FCA") finding that Danish high-end electronics manufacturer Bang & Olufsen and its French subsidiary had breached Article 101 TFEU and its French equivalent for imposing a de facto prohibition on its dealers from selling their hi-fi and audio products online. The Court of Appeal however substantially reduced the amount of the fine from € 900,000 to € 10,000 due to uncertainties concerning the case law on restrictions on online sales prior to the judgment of the Court of Justice of the European Union ("ECJ") in the Pierre Fabre Dermo-Cosmétique case (Case C-439/10) and due to the very limited damage to the economy.
On 20 February 2002, the French Ministry of Economy brought proceedings before the FCA against four companies active in the high-end electronics sector, including Bang & Olufsen, on the grounds that these companies had breached Article 101 TFEU and its French equivalent by prohibiting their distributors from selling their products online. On 5 December 2012, the FCA imposed a fine of € 900,000 on Bang & Olufsen and its French subsidiary for restricting competition by object, as they imposed a de facto prohibition on online sales of their hi-fi and audio products. Bang & Olufsen subsequently appealed the decision before the Court of Appeal.
The Court of Appeal first confirmed the decision of the FCA finding that Bang & Olufsen had restricted competition by object by imposing a blanket and general restriction on its dealers from selling its electronic products online in breach of Article 101(1) TFEU. The Court of Appeal also dismissed the claim that the general and absolute restrictions on online sales could be exempt under Article 101(3) TFEU, finding that Bang & Olufsen did not demonstrate that the restrictions were either necessary or indispensable to fight against free-riding or to guarantee the quality of the presentation and the distribution of all the products sold. This was all the more true concerning the cheaper items of the product range offered by Bang & Olufsen, including headsets and other basic accessories which, contrary to certain more complex products, could not be considered to always require an in-store customer demonstration before being sold , and the stocking/distribution costs of which were not particularly high.
Concerning the amount of the fine, the Court of Appeal substantially reduced the amount of the fine from € 900,000 to € 10,000 on the ground that the damage to the economy was limited. More importantly, the Court of Appeal also considered that, from the time the investigations against Bang & Olufsen were carried out in 2002 until the ECJ judgment in the Pierre Fabre Dermo-Cosmétique case, there were significant uncertainties as to the state of the law concerning the validity of the restrictions on online sales. This was all the more true as the FCA had suspended the proceedings against Bang & Olufsen from 2008 to 2012 to await the outcome of the Pierre Fabre Dermo-Cosmétique case.
As a result of the foregoing, the Court of Appeal ruled that Bang & Olufsen could not be held liable for any illegal behaviour which occurred before the ECJ judgment of 11 October 2011 in Pierre Fabre Dermo-Cosmétique, and adjusted the amount of the fine to € 10,000 accordingly.
The case is of general interest because it implies that a restriction on online sales limited to more complex Bang & Olufsen products might have been justified under Article 101(3). The fact that Bang & Olufsen applied the restriction to its full product range meant, however, that the Court did not need to decide this point.
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