How national courts are addressing tensions in the online world (the example of cosmetic products distribution in France) Cédric Manara EDHEC Business School (France)

The French landscape Numerous cosmetic manufacturers Strong brand legal protection E-commerce in 2006 11,9 billion euros 17,500 active websites 5 online platforms

Numerous cosmetic manufacturers

Strong brand legal protection

E-commerce in 2006

11,9 billion euros

17,500 active websites

5 online platforms

Resistance to online sales The example of cosmetic suppliers First “Channels conflict”: Pierre Fabre, 1999 Channels conflicts came back to the judicial scene in 2006: Festina Bose, Focal JM Lab, Triangle Cosmetics

The example of cosmetic suppliers

First “Channels conflict”: Pierre Fabre, 1999

Channels conflicts came back to the judicial scene in 2006:

Festina

Bose, Focal JM Lab, Triangle

Cosmetics

The case Distribution agreements of Bioderma, Caudalie, Cosmétique Active France (L’Oréal), Expanscience, Johnson & Johnson, Lierac, Nuxe, Oenobiol, Rogé Cavaillès and Laboratoires Uriage “ Every distributor must be free to use the Internet to advertise or to sell products …” “… An outright ban on Internet or catalogue selling is only possible if there is an objective justification .”

Distribution agreements of

Bioderma, Caudalie, Cosmétique Active France (L’Oréal), Expanscience, Johnson & Johnson, Lierac, Nuxe, Oenobiol, Rogé Cavaillès and Laboratoires Uriage

“ Every distributor must be free to use the Internet to advertise or to sell products …”

“… An outright ban on Internet or catalogue selling is only possible if there is an objective justification .”

The new framework Online sales allowed only to selected distributors who have a distribution agreement for their physical premises Distributors’ websites must be compliant with suppliers’ design and technical requirements Advice on products must be provided by a qualified professional “ … the supplier may require quality standards for the use of the Internet site to resell his goods … ”

Online sales allowed only to selected distributors who have a distribution agreement for their physical premises

Distributors’ websites must be compliant with suppliers’ design and technical requirements

Advice on products must be provided by a qualified professional

“ … the supplier may require quality standards for the use of the Internet site to resell his goods … ”

Tensions Only Johnson & Johnson allowed online sales by pure players Only Rogé Cavaillés mentioned the possible use of online platforms by its distributors – under very strict conditions

Only Johnson & Johnson allowed online sales by pure players

Only Rogé Cavaillés mentioned the possible use of online platforms by its distributors – under very strict conditions

Discrimination [1] Compulsory translation Design requirements Professional advice Costs / Fragmentation Costs / Content supplying Costs / Shared advice center

Compulsory translation

Design requirements

Professional advice

Costs / Fragmentation

Costs / Content supplying

Costs / Shared advice center

Discrimination [2] Distributors must operate their own website Distributors must have a physical point of sale to be allowed to sell on line Exclusion of online platforms ( de jure ) Exclusion of online platforms ( de facto )

Distributors must operate their own website

Distributors must have a physical point of sale to be allowed to sell on line

Exclusion of online platforms ( de jure )

Exclusion of online platforms ( de facto )

Transposition of traditional distribution standards to online distribution is problematic Directive on electronic commerce: “ to contribute to the proper functioning of the internal market by ensuring the free movement of information society services between the Member States ”

Transposition of traditional distribution standards to online distribution is problematic

Directive on electronic commerce:

“ to contribute to the proper functioning of the internal market by ensuring the free movement of information society services between the Member States ”