The Competition Council requires Pierre Fabre to allow internet sales

23 January 2009

Romain Ferla

On 29 October 2008, the Competition Council condemned Pierre Fabre Dermo - Cosmétique (“Pierre Fabre”) for anti-competitive behaviour. The Council found that Pierre Fabre had prevented its authorised distributors from selling its products on the Internet.  The Council required Pierre Fabre to stop the prohibition on online sales in its distribution contracts for cosmetic and personal hygiene products. In addition, Pierre Fabre was fined 17,000  Euros.

Unlike ten other companies in the cosmetics sector, Pierre Fabre did not make commitments in March 2007 to modify the provisions of its selective distribution contracts to allow online sales. Pierre Fabre considered that its products could be sold over-the-counter only with specific pharmaceutical advice.

The Competition Council held that Pierre Fabre infringed competition rules and considered that Pierre Fabre’s practices could not benefit from the block exemption on vertical restraints since they amounted to a prohibition of passive sales outside the distributors’ territories and were therefore a ‘hardcore’ restriction.

In addition, the Competition Council considered that Pierre Fabre’s contracts could not benefit from an individual exemption as Pierre Fabre did not prove that the agreement promoted economic progress.

The Council stressed that, by prohibiting online sales, Pierre Fabre had not been acting in the interests of consumers but had been depriving them of the advantages of online sales compared to over-the-counter sales, such as home delivery, ease of price comparison and immediate provision of product information.

Finally, the Competition Council held that cosmetics are not pharmaceutical products and considered that the criteria used by Pierre Fabre to select its distributors could be applied to online sales.