Cour de cassation Commercial chamber, December 16th, 2008 – Decision N°07-21903 (Garage Gremeau v. Mercedes Benz France)

In this case, the Cour de cassation was asked to determine the existence or not of an abuse in the right to terminate a concession contract.

This litigation concerned Mercedes France and one of his distributors.

Mercedes France, who imports in France Mercedes cars, decided to simplify its distribution scheme by diminishing the numbers of distributors. Mercedes preferred to have only large regional distributors.

Mercedes had a distributor named Garage Gremeau, in the Burgundy region (Dijon). The distribution contract had been signed in 1996. The contract didn't have any terms.

On the 8 of January, 2001, MERCEDES informed Gremeau that it planned to give the distribution exclusivity to another distributor for the burgundy region. Mercedes asked Gremeau to find an agreement with the new regional distributor for the take over of its activity.

All the propositions made by the new distributor were refused by Gremeau.

On June 21, 2001, Mercedes finally informed Gremeau that the distribution contract would be terminated two years later on the 30th of June 2003.

Gremeau considered that this termination was abusive.

The Versailles Court of appeal dismissed in 2007 (8 november 2007) the damages claims of Gremeau. The Appeal judges ruled that the termination of the contract wasn't abusive and that Gremeau didn't prove any contractual misconduct from Mercedes.

Gremeau appealed of this decision to the Cour de cassation. The Cour de cassation rejected Gremeau's appeal and confirmed the Court of appeal's decision.

The Supreme Court held that the appeal judges had correctly determined and motivated the absence of abuse in the termination of the contract.

The termination would have been abusive if its sole purpose had been to take over the activity of the distributor for free.

The Supreme Court more specially considered that Mercedes had only invited the distributors to find an agreement without intervening in these negotiations. The Cour de cassation also noticed that Gremeau had continuously refused all the offers made.

Finally, the Court noticed the distribution had no exclusivity clause. Therefore, Mercedes was free to place a second distributor on the same territory.

This decision is an interesting application of the non abusive termination of a distribution contract. These situations are often contentious considering the economic importance of these contracts for the distributors.

Article written by Olivier VIBERT, Attorney, Lawyer, Paris, France

This article has been published on the European Journal of Commercial Contract Law or EJCCL.

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