Refusal to supply is an abuse of dominance
January 2022 – Refusing to deliver to a business customer with whom you are involved in court proceedings can be a form of abuse of dominance. And it can cost you a lot of money.
Advance notice
A hunting shop has a concession to sell a particular type of shotgun. At the insistence of the German manufacturer of the weapon, the company splits its activities into a shop for the final consumer and a distribution company for Belgium. This split takes place in 1985. After 35 years, the manufacturer terminates the concession rather abruptly. The notice is given at the end of February 2020 and the concession ends on 1 July 2020. The manufacturer will now supply Belgian retailers directly.
The retailer believes that it has exclusive rights to sell the products and demands damages. On 30 April, it took the manufacturer to court. But the shop also finds itself in trouble: following the termination of the concession, the shop must go directly to the manufacturer to obtain the weapons and accessories.
Refusal of delivery
At first, the manufacturer did not seem to have any problem with the fact that there was a pending procedure between it and the shopkeeper's sister company. The trader places orders in July and August, with delivery scheduled for October, and is even sent a list of the new products and prices. But before delivery, the manufacturer informs the trader that no delivery will take place until the procedure with the distributor is settled.
The trader files an action for an injunction against this refusal to deliver. The shop asks the judge to condemn the manufacturer for refusal to deliver and sell - and thus to force it to deliver and sell.
Dependency
The judge examines whether there is a question of economic dependence. He does not have to look far: the dealership with the sister company has already been running for 35 years. The trader sells mainly, or almost exclusively, the brands of the manufacturer (which has a very good reputation in the small world of hunting). The judge notes that the name of the shop (and the distributor) is closely associated with these brands.
Although the manufacturer contradicts him, it is simply not possible for the trader to sell other brands. As we have said, there is the quality of the product in question. But the shop also has a stock of parts that would become unsellable if it turned to another manufacturer's brands.
The judge largely follows the shop's argument.
The sale of parts accounts for a large part of the turnover. A shop that specialises in a certain brand cannot simply switch to another brand, because there are no alternatives for these parts.
The judge considers that economic dependence is established.
Abuse of dominant position
The judge also considers that there is an abuse of a dominant position.
The judge points out that after ending the concession with the distributor, the manufacturer initially continued to act normally with the shop. It was only at the end of October that the manufacturer informed the shop that it would stop sales and refuse orders as long as the procedure with the distributor had not been settled. However, the shop is not a party to these proceedings (except that it is the legal predecessor of the distributor). According to the judge, there is therefore no question of an aggressive attitude on the part of the shop in this case, nor is there any question of a breach of trust.
Rather, the judge has the impression that the manufacturer wants to put pressure on the retailer in order to reach a more favourable outcome or arrangement for him. The decision not to deliver is therefore not an economic decision by the manufacturer, but merely a means of pressure in the settlement of the dispute with the distributor.
Obligation to redeliver
The judge condemned the German manufacturer to stop refusing to deliver and sell and imposed a penalty of 10 000 euros per day of delay for each refusal to deliver, with a maximum of 100 000 euros. We do not know if there has been any progress in the proceedings between the manufacturer and the distributor since then...
