The ban on online sales within a selective distribution network constitutes a hardcore restriction of competition.

In a decision dated December 19, 2023, the French Competition Authority fined the ROLEX group 91.6 million euros for prohibiting its authorized distributors from reselling its watches online for more than 10 years.

The authority points out that this practice constitutes a restriction of competition by object, including in a selective distribution network based on a high value-added business model. In this respect, the objectives put forward by ROLEX, namely preserving the prestige image of the products, combating counterfeiting and improving product distribution, could in the Authority's view be achieved by means less restrictive of competition than a total ban on online sales. Consequently, the practice implemented by ROLEX, and followed by its distributors, could not benefit from an exemption on the grounds of economic progress.

Our comments:

✅ This decision applies tried and tested solutions in both French and European competition law. While the total ban on online sales applies to all distribution networks, including selective ones, it remains possible for suppliers to provide for a strict framework for online sales, through the use of objective qualitative criteria.

✅ The particularly high fine imposed on ROLEX may come as a surprise, given the previous penalties imposed for similar practices banning online resale in the Pierre Fabre (17,000 euros) and Bang & Olufsen (900,000 euros, reduced to 10,000 euros by the Paris Court of Appeal) cases. There is no doubt that, given the amount of the fine, decided by the Autorité as "both dissuasive and proportionate [...] in view of the company's specific financial situation", an appeal of the decision is to be expected.

Decision 23-D-13 of December 19, 2023