In a ruling dated March 9, 2022, the Paris Court of Appeals partially quashed a 2019 judgment in which the Paris Commercial Court had held that Schneider Electric France was in a dominant position in certain markets for the supply of spare parts. The ruling confirms that the burden of proving the existence of a dominant position falls on the claimant, even though the defendant may have previously offered commitments to address concerns of abusive conduct under Article 102 TFEU.

Background

Schneider Electric France (“Schneider”) is a subsidiary of the Schneider group, which is specialized in electrical distribution, industrial control and automation, and one of the main manufacturers of medium- and low-voltage electrical distribution equipment in France. Schneider Electric also provides maintenance services on electrical distribution equipment, along with subsidiaries of other manufacturers (such as GE Alstom, ABB or Siemens), independent facility managers, electrical contractors and other third party maintenance providers.

In 2012, a third-party maintenance provider, SHB Electric (“SHB”), placed an order with Schneider for the supply of Schneider “level 4” maintenance parts.[1] Schneider refused to sell the spare parts to SHB unless the latter agreed to let Schneider’s own employees perform the associated maintenance services, ultimately prompting SHB to file a claim against Schneider before the Nanterre Commercial Court in April 2016. In a judgment issued on September 28, 2016, the Nanterre Commercial Court held that the Paris Commercial Court had jurisdiction on the case.

In parallel, in May 2016, the French Competition Authority (“FCA”) opened ex-officio proceedings in the sector for the maintenance of medium- and low-voltage electrical distribution equipment in France. Following a preliminary assessment, the FCA expressed concerns that Schneider was committing an abuse of dominant position by, engaging in refusals to sell on the same grounds as those faced by SHB. Schneider argued that its conduct aimed at ensuring the safety of property and people and at protecting its business model, in particular its brand image. The FCA, however, took the view that Schneider’s policy was not necessary to achieve these objectives and potentially amounted to unlawful tying, thereby preventing third-party maintenance providers from carrying out a full range of maintenance services on Schneider’s medium- and low-voltage equipment.[2] Ultimately the case was solved through commitments, as Schneider agreed to authorize for a five year-period the sale of a significant number of spare parts (1506 items) subject to level 4 maintenance, provided that third-party maintenance providers wishing to install these parts undergo mandatory Schneider- organized trainings.[3]

On September 23, 2019, the Paris Commercial Court held that Schneider held a dominant position in the secondary market for the supply of spare parts for Schneider equipment but did not commit any abuse.[4] The judgment was, however, appealed by both SHB and Schneider, with the latter seeking to reverse the Court’s findings regarding the existence of a dominant position.

The Paris Court of Appeals’ ruling

On March 9, 2022, the Paris Court of Appeals (the “Court of Appeals”) dismissed SHB’s claim on the ground that it had omitted to define the relevant market(s), meaning that the existence of a dominant position held by Schneider could not be established. According to the Court of Appeals, the burden of proof fell on SHB, who should have defined both the relevant product market and the relevant geographic market in which Schneider was alleged to be dominant.

The Court of Appeals further held that neither the judgment issued by the Paris Commercial Court, nor the FCA’s commitments decision could compensate for SHB’s lack of demonstration on this issue. Specifically, in its ruling, the Court of Appeals noted that the Paris Commercial Court “only stated that Schneider [held] strong positions in the markets for the supply of equipment, providing [Schneider] with an essential leverage over competing third party maintenance providers in the low- and medium-voltage market.” Similarly, the FCA had merely “not ruled out” the existence of a secondary market for the provision of in-depth maintenance services on Schneider’s medium- and low-voltage equipment, and the possibility that Schneider held a dominant position in this market. According to the Court of Appeals, this was insufficient to conclude on the existence of a dominant position.

The Court of Appeals added that even if it were accepted that the relevant market was the market for the provision of level 4 and 5 maintenance services on Schneider equipment, it was incumbent on SHB to (i) show that these products are substitutable for a specific customer base, namely companies specialized in the installation, maintenance and repair of electrical equipment, and (ii) establish the scope of the relevant geographic market and, should it correspond to the French market, demonstrate that it was sufficiently homogenous with respect to the conditions of competition.

The Court of Appeals therefore dismissed SHB’s claims. While the ruling’s reasoning relies on market definition issues, it may more generally be seen as a reminder that contrary to FCA prohibition decisions, FCA commitments decisions do not significantly alleviate the burden of proof resting on claimants in the context of private antitrust damage actions.


[1]      The AFNOR standard defines, at EU level, five levels of industrial maintenance and specifies the persons or companies authorized to intervene at each level. Level 4 covers significant corrective or preventive maintenance work and significant improvements. Only specialized and professional technicians of a central maintenance workshop and/or specialized companies can intervene to perform this type of maintenance.

[2]      The FCA found that the supply and maintenance of electrical distribution equipment constituted separate markets. The FCA identified (i) potential primary markets for the supply of medium- and low-voltage electrical distribution equipment, (ii) secondary markets for the supply of spare parts for Schneider Electric equipment, on which Schneider Electric was likely to hold a dominant position, and (iii) potential secondary markets for the provision of maintenance services on Schneider Electric equipment.

[3]      FCA Decision No 17-D-21 of November 9, 2017, relating to practices in the maintenance of medium- and low-voltage electrical distribution equipment.

[4]      Commercial Court of Paris ruling of September 23, 2019 (No. j2019000381).