Vertical agreements

Vertical agreements are closely monitored by the ADLC and the competent jurisdictions. The ADLC has a very good knowledge of the distribution and retail sectors and monitors them closely.

The ADLC follows the practice of the European Commission and verifies whether the companies concerned have exchanged their consents in writing or orally, tacitly or expressly.

Next, the ADLC checks whether the parties to the agreement are at different levels of the production chain of a product or service (as opposed to competitors who are at the same level of the production chain).

Firstly, Article L. 420-1 of the Commercial Code is applicable, which prohibits express or tacit agreements and concerted practices which have as their object or may have the effect of preventing, restricting or distorting gambling. competition.

Secondly, Articles 101 and 101§3 of the Treaty on the Functioning of the European Union are also applicable when vertical agreements restrict competition on the internal market or a substantial part of this market and affect trade between Member States.

Article L. 420-4 of the Commercial Code provides for the specific conditions under which an agreement considered anti-competitive pursuant to Article L. 420-1 of the Commercial Code may benefit from an exemption in accordance with Article L 420-4 of the Commercial Code (see question 5). Specific regulations may exempt certain types of agreements. In addition, an anti-competitive practice may be exempted if the undertakings concerned are able to demonstrate (i) that the agreement contributes to economic progress, (ii) that the end user benefits from it and that (iii) competition for a substantial part of the products or services concerned is not eliminated. Finally, the restrictions of competition must be limited to what is strictly essential for the implementation of the agreement in a context of economic progress.

See question 10.

As a general rule, the ADLC follows the practice of the European Commission when analyzing vertical agreements. After having defined the relevant markets concerned, the ADLC refers to the block exemption regulation to assess a vertical agreement.

The ADLC verifies whether the market shares of each of the parties on the relevant market concerned exceed 30 % and whether the agreement does not contain any hard-core restrictions of competition. If the market shares of each of the parties do not exceed 30% and the agreement does not contain any hardcore restriction (except in the case of entry into a market by a new entrant), the agreement will be exempted. On the other hand, if the market shares exceed 30 %, the ADLC will assess whether the vertical agreement has an anti-competitive object or effect.

However, an agreement considered anti-competitive may be exempted (see point 2.3).

The ADLC uses the same analytical framework as the European Commission. The product market and the geographic market must be identified in order to define the relevant market.

The relevant product market is defined as all products or services considered substitutable by consumers given their characteristics, prices or uses.

The relevant geographic market comprises the territory in which the undertakings concerned are engaged in the supply of the goods and services in question, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighboring geographic areas because, in particular , the conditions of competition there differ appreciably.

In accordance with European Union law, dual distribution is considered a vertical agreement when (i) the supplier is both a manufacturer and a distributor of products, while the buyer is only a distributor but does not is not a competitor in the manufacture of the products and (ii) the supplier is a service provider intervening at different levels of the distribution chain while the buyer operates at the retail level and is not a competitor in the level of the distribution chain at which it purchases the services.

Under French law, the calculation of the market share is crucial and essential to assess a vertical agreement and determine whether it falls within the scope of an exemption. This calculation also makes it possible to determine the market power of the company concerned, which is a key element in the assessment of an anti-competitive practice.

Economic analysis can be used by the ADLC in particular to compare the effects of vertical agreements with the scenario that would have occurred if the agreement had not been concluded. The company concerned can also use economic studies to demonstrate productivity gains from the vertical agreement or the absence of damage caused to the economy.

Productivity gains are used in particular to demonstrate that although an agreement restricts competition, it can benefit from an individual exemption.

No

The ADLC does not have to demonstrate the anti-competitive effects of a restriction which is considered to have an anti-competitive object (policy of imposed prices for example). In other cases, the anti-competitive effects must be demonstrated.

As mentioned in question 3 of the “Procedural aspects” section, the ADLC will determine whether the four conditions, in particular productivity gains, are met for an individual exemption to apply.

See questions 3, 5 and 10 under the heading “Procedural aspects”.

The ADLC is based on the guidelines of the European Commission concerning the application of block exemptions.

The imposition of resale prices is considered as a restriction of competition by object and therefore as a serious restriction of competition preventing the benefit of a block exemption and the provisions of article L. 464-6-1 of the Code of trade.

Exclusivity clauses in vertical agreements are not prohibited per se. The ADLC and the courts examine whether these clauses have an anti-competitive effect by referring to several criteria: the market power of the parties, the nature and proportion of the products concerned by the clause, the duration of the exclusivity, the presence or not of similar contracts, the existence of justifications and the consideration obtained by the party bound by the exclusivity, etc.

If the agreement contains an exclusive supply obligation, the duration of the contract must be limited to 10 years pursuant to Article L. 330-1 of the Commercial Code.

Tied selling is only considered from the perspective of a potential abuse of a dominant position.

They are analyzed from the angle of abuse of a dominant position.

The ADLC analyzes all vertical restraints which have the purpose or effect of making it possible to monitor (i) resale prices to consumers, (ii) the various distribution methods (including the Internet) and (iii) market sharing.

In accordance with Article L. 442-6 II d of the Commercial Code, clauses or contracts authorizing a party to automatically benefit from the most advantageous rates granted to competitors are void. MFN clauses are prohibited under French law.