Private Enforcement: The Paris Court of Appeal Rejects a Damage Claim Based on an Abuse of Dominant Position Without Definition of the Relevant Market.

Kramer Levin Naftalis & Frankel LLP

In a decision dated March 9, 2022 (No. 19/19747), the Paris Court of Appeal ruled on a competition damage claim action for abuse of dominant position brought against Schneider Electric France and Schneider Electric SA by a company specializing in the installation, maintenance and repair of all brands of electrical equipment. This was a so-called “stand-alone action" (i.e., an action that was not based on a prior finding of an infringement of competition law by a national competition authority).

In 2012, SHB Electric had placed an order for OEM spare parts with Schneider Electric, which refused to sell it the so-called dry parts (i.e., parts without additional services), on the grounds that the parts could be replaced only by “duly trained Schneider Electric Energy France technicians.” Considering this commercial practice as constituting an abuse of eviction, SHB Electric demanded both compensation for its loss and cessation of this practice, in a claim it brought against Schneider Electric before the Paris Court of Appeal.

At the same time, Schneider Electric was involved in a proceeding before the French Competition Authority on its practices in the medium- and low-voltage electrical distribution equipment maintenance sector. The French Competition Authority considered, in its preliminary assessment, that Schneider Electric France’s tied selling practice was likely to be considered an abuse of its dominant position. In Decision No. 17-D-21 of November 9, 2017, the Competition Authority — accepting Schneider Electric’s commitments to make the sale of a significant number of spare parts, for which Schneider Electric had until now reserved installation to its own technicians, conditional on training for the personnel concerned — closed the proceeding.

In its decision of March 9, 2022, the Paris Court of Appeal dismissed the plaintiff’s claims, deciding that it had not defined the relevant market, which is an essential precondition for assessing a dominant position. SHB Electric had relied on the decision of the French Competition Authority, which had highlighted the high market shares in the supply of electrical distribution equipment in France, to argue that Schneider Electric had a dominant position.

For the Court of Appeal, even if Decision No. 17-D-21 “notes the importance of the Schneider Electric group in the primary markets for the supply of HTA and LV electrical distribution equipment and the corresponding secondary markets, it does not at any time establish a  ‘dominant position’ of the group in the meaning of Articles L. 420-2 of the French Commercial Code and 102 of the TFEU.” Consequently, the burden was on the plaintiff to rigorously delimit the relevant market by reference to the product purchased and to a geographical area and then to demonstrate the dominant position of Schneider Electric in such relevant market. The decision of the French Competition Authority could not replace either of these analyses.

Consequently, SHB Electric had to first carefully delimit the relevant market by reference to the purchased product and to a geographical area, before establishing the Schneider Electric group’s dominant position, as the Competition Authority’s decision could not replace any of these two analyses.

This case demonstrates the difficulty faced by victims of infringement of competition law, in the case there is no decision of the Competition Authority or the European Commission imposing a sanction and ruling on the existence of an anticompetitive practice. Only such decisions actually sanction an anticompetitive practice create an irrebuttable presumption of the existence of the anticompetitive practice under Article L. 481-2 of the French Commercial Code. Compared to “follow-on actions,” for which the burden of proof is considerably lighter based on this presumption, “stand-alone actions” require the victim, in addition to providing evidence of the damage, to conduct a precise analysis of the relevant market and the practices in question in order to prove the infringement of competition law.

For more details on this topic, you may read our contribution in The Legal 500 Comparative Guide on Competition Damages Claims.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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