In response to appeals by Union de la Bijouterie Horlogerie and Pellegrin & Fils, France’s competition authority, the Autorité de la concurrence (Autorité), fined Rolex France for prohibiting its retailers from selling Rolex watches online for more than a decade.
The selective distribution agreement regulating the dealings between Rolex and its retailers prohibited retailers from selling the brand’s watches by mail order and over the internet. Indeed, in a letter to one of its retailers, Rolex wrote: “we confirm that under no circumstances can our Authorised Retailers, who are the only parties authorised to sell our products, do so via the Internet or by mail order. Any sales via the Internet contravene the provisions of Article IV.3.b of the Selective Distribution Agreement signed by all our Authorised Retailers.” The Autorité and case law consider this type of clause to be inherently anticompetitive.
The Autorité considered that the terms of this selective distribution agreement between Rolex France and its retailers constituted a vertical agreement restricting competition. Moreover, the Autorité found that Rolex’s main competitors, which face the same risks, authorise the sale of their products over the internet under certain conditions, and that these objectives can be achieved by less restrictive instruments.
Consequently, with online distribution of luxury goods, including watches, increasing sharply in the last 15 years, the Autorité considers such practices subject to investigation to be highly dangerous, as they amount to the closure of a marketing channel to the detriment of consumers and retailers. Taking into account the duration (more than ten years) and the nature of these practices, the Autorité imposed a fine of EUR 91,600,000 on Rolex. Due to the capital, organisational and legal links between Rolex France and Rolex Holding SA, Rolex SA and the Hans Wilsdorf Foundation, the Autorité holds these companies jointly and severally liable for the payment of the fine.
