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CJEU to rule on right of French court to hear dispute about Amazon sales of Samsung products

The EU's highest court is to rule on whether a French court has the right to hear and determine the outcome of a dispute that concerns the sale of Samsung products on Amazon's websites.13 Jan 2016

The Court of Cassation in France, which is equivalent to the UK Supreme Court, has asked the Court of Justice of the EU (CJEU) if it has the jurisdiction to assess part of claim that concerns the sale of Samsung products on four non-French websites run by Amazon.

The French court has specifically asked the CJEU to interpret how EU rules on jurisdictional matters, set out under the Brussels Regulation, apply in an online context.

In the underlying dispute before the French court, online electronics retailer Concurrence wants to prevent rival companies from selling Samsung products on Amazon's websites in France, Germany, Italy, Spain and the UK.

Concurrence was previously a licensed distributor of Samsung products but Samsung revoked the company's right to sell its goods after Concurrence sold them via third-party online marketplaces, contrary to a distribution agreement it had in place with the technology giant.

According to a recent report by legal news service MLex, Concurrence lost a court case against the loss of the distribution agreement, but now claims that other suppliers have breached the same rules. It wants Amazon to stop the sale of Samsung products in France, Germany, Italy, Spain and the UK as it claims those sales cause it harm.

The EU's Brussels Regulation determines which courts have jurisdiction to hear and decide cases which have links between more than one EU countries. Generally, those being sued have the right to have the cases heard in courts in their home country. However, there are many instances in which that general rule does not apply.

One derogation from that general rule set out in the Regulation allows for EU businesses to be sued in another EU country from the one they are "domiciled in" where "the harmful event" at issue has occurred or may occur in that other country.

The CJEU will assess those provisions when assessing whether Concurrence has a right to pursue its case against the sale of Samsung's products on Amazon's websites in Germany, Italy, Spain and the UK before the French courts, or whether it would need to take up separate actions before the courts in those four countries. The CJEU's ruling will be preliminary only and it will be for the Court of Cassation to apply its findings to the dispute before it.

Late last year a court in Frankfurt ruled that backpack maker Deuter acted legally in preventing a retailer from selling its products on online marketplaces like Amazon, according to MLex.

The German court said that Deuter has a right to decide the conditions under which its products can be sold. It said, however, that banning the listing of goods on price comparison websites would break competition rules. Price comparison sites allow consumers to find traders who offer the products that they are looking for, the German court said, MLex reported.

Competition law expert Richard Snape of Pinsent Masons, the law firm behind Out-Law.com said: "Interestingly, Concurrence has claimed that Samsung’s online sales policy has been applied unfairly, preventing Concurrence but not other authorised retailers from using certain online marketplaces. It appears that Concurrence has asked the court to enforce the policy uniformly across a number of EU countries. This could be a contentious development as the practice of preventing retailers from selling via online marketplaces has itself widely been debated as potentially anti-competitive."

"While the case involving Deuter suggests that online marketplace restrictions may be lawful, given the significant amount of debate this area has received, it will be interesting to see if a court will go as far as actively enforcing such a policy," Snape said.

Snape said that in addressing the jurisdictional issues in the Concurrence case the CJEU could set out new guidance on when harm can be said to have occurred in an EU country when online sales are made via websites that are accessible in that country but which are targeted at consumers in other EU countries.

"Given the transnational nature of online sales this could have important implications for future litigation," he said.

"What with the European Commission’s e-commerce sector inquiry under way, the UK’s Competition and Markets Authority focus on online markets as a 'major priority' and the continued interest of Europe’s national competition authorities, cases involving online sales restrictions show no signs of relenting in the near future," Snape said.

Munich-based competition law expert Michael Reich, also of Pinsent Masons, said that the Concurrence and Deuter cases "seem to go against what could be perceived as the general trend of the past years, at least as far as Germany is concerned".

"In several cases, the German Federal Cartel Office (FCO) and German appeal courts have decided that a prohibition to sell over third-party market platforms such as Amazon marketplace or eBay violates the TFEU (Treaty on the Functioning of the EU)," Reich said. "The FCO had issued decisions against Sennheiser, Adidas and Asics, while appeals courts in Karlsruhe and Berlin have issued equivalent decisions in cases relating to school backpacks."

"Now the Frankfurt appeals court is taking a rather different view by declaring this type of restriction valid and enforceable, and we see a French case, where a retailer actually wants to ensure the enforcement of this restriction against competing retailers. Does this mean that there is a reversal of the trend? Perhaps," said Reich.

"In the light of the past rulings of the FCO, it certainly still appears more prudent not to include this type of restriction in distribution agreements, at least not if the German market is concerned. But the debate is far from over. On a European level, the views differ and in Germany the decision of the Frankfurt appeals court might lead to a review by the Federal Court of Justice, the highest German court. This would give the proponents of this restriction a fresh and prominent opportunity to set out their arguments," Reich said.