Legal Update – No Significant Imbalance or Economic Dependence in a Longstanding Distribution Relationship

– The Paris Court of Appeal (Nov. 8, 2023, No. 21/05490) held that Article L. 442-6, I, 2° of the French Commercial Code (which was at the time of the dispute, drafted as follow : “I. – The liability of its author is incurred, and they are required to compensate for the harm caused, where any producer, trader, industrial operator, or person registered in the trade directory:
(…) 2° Subjects or attempts to subject a commercial partner to obligations that create a significant imbalance in the rights and obligations of the parties.”) applied to a distribution contract tacitly renewed since 1984. The judges found no significant imbalance in the contract, since the distributor could negotiate contract terms, terminate the agreement at will, and retained full pricing autonomy.

– The exclusivity clause applied only to specific products and did not prevent the distributor from sourcing other goods elsewhere. The distributor’s pricing freedom remained intact, and participation in advertising campaigns—organized uniformly for all distributors—did not amount to coercion.

– The Court also rejected any claim of economic dependence under Article L. 420-2 of the Commercial Code: the distributor had genuine sourcing alternatives and failed to show any lack of equivalent options or abusive exploitation by the supplier.