Use of well-known mark, along with other practices, may constitute abuse of dominant position

France

The decision of the Court of Appeal of Paris in Électricité De France SA v Solaire Direct  (2014/02694, May 21 2015) comes under the heading of antitrust law. However, it will be of interest to trademark professionals, since it deals with the role that a trademark can play in the characterisation of an abuse of dominant position within the meaning of Article 102 of the Treaty on the Functioning of the European Union (TFEU) – and its national equivalent, Article L.420-2 of the French Commercial Code.

The market at stake concerned services offered to private individuals wishing to produce solar photovoltaic electricity. Electricité de France (EDF), the French electricity incumbent, produces and supplies electricity. It held a market share of 80% on the electricity market in 2012.

EDF’s subsidiaries EDF ENR and EDF ENR Solaire are involved in the photovoltaic electricity sector. EDF ENR started operating in 2007. It progressively acquired all capital shares of EDF ENR Solaire (previously called Photon Technologies). EDF ENR Solaire commercialised EDF ENR’s services in its name and on its behalf, using EDF’s trademark BLEU CIEL D'EDF ('EDF’s sky blue').

A competitor of EDF ENR and EDF ENR Solaire filed a complaint with the French Competition Authority.

The authority considered that the following practices were likely to be anti-competitive:

  • the generation of confusion among consumers regarding EDF group’s activities in the photovoltaic sector;
  • the exploitation of the database of EDF; and
  • the provision of material and human means to EDF ENR and EDF ENR Solaire without justified financial compensation.

Therefore, on April 8 2009 the Competition Authority enjoined EDF, as an interim measure, to stop these practices. Notably, EDF was ordered to remove, in all communication materials bearing the trademark BLEU CIEL D'EDF, any reference to EDF ENR in the photovoltaic sector. Consequently, EDF ENR Solaire stopped using the trademark BLEU CIEL D'EDF and replaced it with the trademark EDF ENR.

On December 17 2013 the Competition Authority decided that EDF had violated the provisions of Article 102 of the TFEU and Article L.420-2 of the French Commercial Code. EDF brought an appeal before the Court of Appeal of Paris.

EDF contested the findings of the Competition Authority regarding the abusive use by EDF ENR and EDF ENR Solaire of EDF’s brand image and renown.

The court confirmed that EDF’s subsidiaries benefited from an intrinsic competitive advantage in the photovoltaic sector since they belonged to the EDF group. A report commissioned by EDF to assess the value of the EDF trademark emphasised the credibility of that mark and the fact that EDF ENR benefited from EDF’s good image. The court even considered that EDF had acknowledged this advantage, since it had chosen to rename Photon Technologies as EDF ENR Solaire. EDF ENR exploited this advantage by mentioning on its website that it benefited from the historical experience of its two shareholders, the electricity production expert EDF and the green energy producer EDF EN.

The court also confirmed that the EDF trademark played a determining role when private individuals chose their photovoltaic electricity service supplier. The aforementioned report indicated that the EDF trademark benefited from a high renown in the photovoltaic sector and that EDF's national marketing campaigns had a significant impact on consumers. Although the price constituted an important criterion, at the time of the litigious practices the brand image of the supplier was decisive. Indeed, in 2010 EDF ENR did not offer the cheapest contracts, but it was the first service provider in terms of number of contracts signed. It necessarily meant that individuals did not only take the price into account, but also - and above all - the brand's image and renown.

EDF also contested the existence of a risk of confusion, which would characterise an abuse of dominant position. However, EDF had set up Conseil Energie Solaire ('solar energy advice'), a telephone line giving advice to consumers interested in photovoltaic electricity production. All communication means available to EDF were mobilised in order to guide clients towards Conseil Energie Solaire. This platform was designed to attract clients and orientate them towards EDF ENR’s offers. EDF even gave information about clients to Conseil Energie Solaire in order to adapt the offers. This platform was reachable at 3929, the only phone portal of EDF; all efforts were thus made to make clients believe that the photovoltaic services were provided by EDF, and not by its subsidiaries.

In addition, it was found that EDF's subsidiaries benefited from EDF's brand image and renown. Until 2009, EDF ENR’s offers were commercialised essentially by EDF’s sale agents. From 2007, the communications of EDF’s subsidiaries in the photovoltaic sector used logos, names and trademarks similar to those of EDF; in particular, the promotion of EDF ENR’s offers was made using the BLEU CIEL D'EDF mark until 2009, and then using the EDF ENR mark. One year after EDF ENR stopped using the BLEU CIEL D'EDF mark, 48% of French TV viewers still associated it with the photovoltaic sector.

The BLEU CIEL D'EDF mark thus gave a competitive advantage which could not be replicated by competitors and which restrained competition. In addition, the photovoltaic market presented specific characteristics which amplified this advantage. Indeed, the photovoltaic market was only emerging and was closely linked with the market on which EDF held a dominant position. Further, the demand on the photovoltaic market emanated, at least until 2010, from individuals with a low level of expertise and a high risk aversion, who were sensitive to the brand image and renown of the service providers. Yet, EDF ENR’s competitors were small and medium-sized enterprises without any well-known trademarks. Since the equipment bought by the clients had a lifetime of 20 years, each sale made by EDF ENR meant that a consumer - and, therefore, a share of the market - was definitively lost by competitors.

The case shows that IP professionals must be aware that the use of a well-known trademark, along with other practices, may constitute an abuse of dominant position when the market presents specific characteristics.

Richard Milchior, Granrut Avocats, Paris

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