Belgian Court of Appeal Confirms Ducati’s Abuse of Dominant Position

On 1 October 2014, the Court of Appeal of Ghent confirmed that Ducati North Europe BV ("Ducati") had infringed Belgian competition law by abusively excluding a repairer from its distribution system.

The judgment settled a dispute between Ducati and DD Bikes bvba ("DD Bikes"). DD Bikes used to be an official dealer and repairer of Ducati motorbikes. On 26 October 2007, Ducati terminated the contract granting DD Bikes the status of authorised dealer and repairer of Ducati motorbikes, with effect as of 1 January 2009. DD Bikes requested to be maintained as an official repairer, which allowed DD Bikes to use the official Ducati logo, stay on the list of official repairers, order spare parts under the same conditions as other official repairers and carry out repair work covered by the two-year warranty applicable to Ducati motorbikes. Ducati refused to grant such a status, arguing that it only worked with repairers that were also official dealers. As a result, DD Bikes filed a complaint for unfair commercial practices before the Commercial Court of Dendermonde (the "Commercial Court").

The Commercial Court first established that the repair of Ducati motorbikes was not part of the same market as the sale of Ducati motorbikes: customers wishing to buy a motorbike could opt for other brands than Ducati, whereas owners of Ducati motorbikes could only have their motorbike repaired by an official repairer using Ducati spare parts in order to benefit from the two-year warranty. The Commercial Court thus found the market for after-sale services to be brand-specific and national in scope, in accordance with the practice of the European Commission.

The Commercial Court then noted that Ducati's distribution system could not benefit from the block exemption provided for under Regulation 330/2010 (as Ducati's market share exceeds 30%) or from an individual exemption, as it was excessively restricting competition. Indeed, Ducati unnecessarily forced repairers to also be dealers in order to be considered as official repairers. Furthermore, Ducati foreclosed competition for repairers that were not official dealers, notably by refusing the two-year warranty on motorbikes repaired by repairers that were not Ducati dealers and by limiting the access to technical information, specialised tools (including diagnosis IT equipment), spare parts and accessories to official dealers (independent repairers could only purchase spare parts and accessories from competing official dealers at a higher price). The Commercial Court found this system to constitute an anticompetitive agreement prohibited by Article 101 of the Treaty on the Functioning of the European Union ("TFEU") and Article 2 of the Belgian Competition Law (now Article IV.1 of the Code of Economic Law).

In addition, the Commercial Court noted that Ducati was dominant on the market for after-sale services for Ducati motorbikes in Belgium. The Commercial Court considered that Ducati's decision to limit the status of official repairer to official dealers was abusive, since selling and repairing motorbikes are unrelated activities. According to the Commercial Court, the fact that DD Bikes sells motorbikes other than Ducati's cannot justify Ducati's decision to exclude DD Bikes from its official repair network. Thus, the Commercial Court held that Ducati's behaviour also infringed Article 102 TFEU and Article 3 of the Belgian Competition Law (now Article IV.2 of the Code of Economic Law), which both prohibit the abuse of a dominant position.

The Commercial Court added that such infringements of Articles 101 and 102 TFEU and Articles IV.1 and IV.2 of the Code of Economic Law also amounted to an unfair market practice prohibited by Article 95 of the Belgian Law on Market Practices (now Article VI.104 of the Code of Economic Law).

Ducati appealed this judgment to the Court of Appeal of Ghent, which partly upheld the judgment of the Commercial Court.

The Court of Appeal followed the Commercial Court's reasoning on the definition of the relevant market. By contrast, it disagreed with the Commercial Court as regards the infringement of Article IV.1 of the Code of Economic Law and 101 TFEU. According to the Court of Appeal, DD Bikes did not show that Ducati's refusal to recognise DD Bikes as an official repairer had been based on the agreement between Ducati and its official dealers or repairers. Ducati's refusal was therefore a unilateral decision that falls outside the scope of Article 101 TFEU and Article IV.1 of the Code of Economic Law.

Conversely, the Court of Appeal confirmed the existence of an abuse of Ducati's dominant position. First, the Court found Ducati to be dominant on the Belgian market for after-sale services (maintenance and repair) of Ducati motorbikes, with no possibility for the independent repairers of Ducati motorbikes to exert any countervailing market power, due to the limitations applied to the warranty and the restricted access to spare parts, specific tools and technical information.

The Court then stated that, although undertakings are in principle free to choose their trading partners and dispose of their own belongings, dominant undertakings such as Ducati cannot refuse to sell a product (or sell it under unreasonable conditions) in a way that precludes the buyer from having a profitable business. Ducati had thus abused its dominant position by preventing DD Bikes from directly obtaining from Ducati, under the same conditions as Ducati dealers, the motorbike spare parts, equipment, technical information and tools (including diagnostic computers) necessary to repair Ducati motorbikes. As a result, DD Bikes could not effectively compete on the market for the maintenance and repair of Ducati motorbikes.

The Court of Appeal went on to dismiss Ducati's justifications for its abusive behaviour. The Court found that Ducati did not prove that DD Bikes had given its customers poor-quality services. Equally, Ducati had not shown that being forced to resume sales to DD Bikes would impact negatively on its capacity to innovate or invest. DD Bikes, on the other hand, would sustain serious damage if it were no longer allowed to repair Ducati motorbikes.

Therefore, Ducati had abused its dominant position contrary to Article IV.2 of the Code of Economic Law. In contrast, the Court of Appeal considered that Article 102 TFEU did not apply to this case. It considered that Ducati's abuse was not liable to have an effect on trade between Member States since there is no evidence that DD Bikes has any activities beyond the Dendermonde region.