Abuse of Economic Dependence - The Centre for European Policy ...

Abuse of Superior Bargaining Position/Economic Dependence 33
• difficulty for the company to find other suppliers of equivalent products.
50
Applying the four criteria defined above—Daniel Grenin’s firm is considered
here as a distributor—the Competition Council considered that Daniel
Grenin was able to offset the noted reduction by means of other activities;
indeed, even though the share of its turnover attributable to IUP had been
decreasing for three years, Daniel Grenin’s total turnover had remained
fairly constant. The complaint for abuse of economic dependence was
therefore dismissed.
In a case involving a franchise agreement for a supermarket operated
under a trade name belonging to the Promodès Group, the Cour de
Cassation concluded, first of all, that the franchisee was in a position of
economic dependence as its purchases of supplies from the franchiser represented
two thirds of the value of its turnover. The court then held that the
franchisor abused this dependence by taking responsibility for the management
and accounting services of the franchised store, in return for a
substantial increase in the franchise fees. In addition, the franchisee was
obliged to place orders without prior knowledge of purchase prices. 51 Thus,
the franchisor acted in a manner contrary to the franchisee’s interests. The
court also held that, due to the unlimited term of the agreement, the franchisee
was unable to safeguard itself from the influence of the franchisor, as
termination of the agreement would inevitably lead to the termination of
the management leasing agreement, thus resulting in the franchisee being
effectively prevented from using any alternative sources of supply. 52
In another case, the Cour de Cassation on an appeal brought by a
distributor of audiovisual products against the dismissal of its claims that
the respondent supplier had abused the state of economic dependence
stated that for a distributor, a state of economic dependence was defined as
the situation in which an undertaking had no opportunity of replacing its
supplier or suppliers so as to meet its demand for stock on comparable technical
and economic terms. The mere fact that a distributor obtained a very
large proportion, or even all, of its stock from a single supplier was not
enough to establish a state of economic dependence within the meaning of
Art.L.420-2 of the Code. 53
50 L Nollet, ‘France: Anti-competitive Practices’ [2003] 24(7) ECLR N116-117. The last
criterion is normally the decisive one.
51 The franchisor also attempted and in fact obtained a power of attorney and a banking
signature from its franchisee.
52 Y Utzschneider, ‘France: Franchise Agreement—Position of Economic Dependence’
[1998] 19(5) ECLR N82.
53 Concurrence SA v Sony SA [2005] ECC 4.