In the context of a dispute between a football club and its jersey partner, the matter was referred to the Court of Cassation. The question raised before it was how to compare two competing offers from two sports suppliers.

The Court of Cassation ruled that the comparison of two equipment suppliers’ offers cannot be made solely on the basis of financial elements. The comparison must be made according to different criteria.

Judges cannot therefore rely solely on the financial elements of a contract to determine whether an offer is better, identical or less interesting than another offer.

Court of Cassation, Commercial Chamber, 7 May 2019, Appeal No. 17-31733

A football club (Football club Lorient Bretagne Sud) had concluded a contract with an equipment manufacturer H. to make the latter its official supplier.

Under this contract, H. had an exclusive license to use the club’s logo for certain products. The equipment manufacturer could therefore sell these products using the club’s logo, particularly the highly desired jerseys.

This contract was to last for 3 seasons (the 2011/2012, 2012/2013 and 2013/2014 seasons).
The contract provided that, at the end of these three seasons, it could be renewed.

If the club and the equipment manufacturer did not agree, the club could freely seek another partner but the equipment manufacturer retained a right of pre-emption. The Supplier could therefore align with a competitor’s offer to remain the official supplier.

More precisely, the equipment contract stipulated:

Article 12.2: « If no agreement can be reached between the parties following negotiations in accordance with the provisions of Article 12.1 above, then FC Lorient shall be free to seek other suppliers of technical equipment and any other product which may be the subject of this agreement, in place of H… »

Article 12.4:  » If FC Lorient obtains a satisfactory offer from another supplier after negotiations conducted in accordance with paragraph 12.2 above, H… may conclude a new agreement with FC Lorient for the supply of technical equipment on the same or better terms than those proposed by the third party supplier, provided that such an option is exercised within 30 days of written notification from FC Lorient. »

Contractually, if the football club decided not respect this right of pre-emption, the contract provided for a penalty in favour of the equipment manufacturer.

The contract ended at the end of the 2013/2014 season or more precisely on May 30, 2014.

A negotiation phase had therefore begun between FC LORIENT and its equipment manufacturer H. as of January 2013.

There was no agreement on the conditions for the renewal of the contract between FC LORIENT and equipment manufacturer H..

FC LORIENT then looked for a new partner and received an offer from Adidas.

The FC LORIENT informed the equipment manufacturer H. who made a new offer.

FC LORIENT compared these offers but decided to sign the contract with the new equipment manufacturer Adidas, considering that this offer was more interesting than that of equipment manufacturer H. .

The evicted equipment manufacturer H., who lost the club’s jersey,  legally claimed that the penalty clause be invoked, considering that his right of pre-emption had not been respected.

On 7 November 2017, the Court of Appeal of Rennes sentenced FC LORIENT to pay the penalty clause, i. e. an amount of €200,000.

The Court of Appeal of RENNES ruled that FC LORIENT had not respected the right of pre-emption provided for in the contract.

The FC LORIENT referred the matter to the Court of Cassation.

The Court of Cassation overturned the judgment of the Court of Appeal of RENNES.

For the club, FC LORIENT, the Court of Appeal could not compare the bids of the two equipment suppliers by limiting itself solely to financial conditions.

FC LORIENT objected that other criteria should be taken into consideration.

The Court of Cassation followed FC LORIENT’s analysis.

It ruled that the Court of Appeal couldn’t only compare the financial elements of the bid to determine if the suppliers bids were identical or if one bid was higher or lower.

The Court of Cassation therefore ruled that in order to compare the supplier’s bids, it is necessary to take into consideration all the elements of the offer and not only the financial elements.

It is therefore necessary to take into account the characteristics of both offers when comparing two offers.

Price is one of the characteristics but not the only one. As claimed by FC LORIENT, the Court of Cassation therefore asked to take into account « different criteria relating, in particular, to the quality, technicality of the products, the importance of the range offered and the extent of the distribution network« .

The Court of Appeal of Rennes will again be seized of this dispute and will therefore have this time to take all these criteria into consideration to determine whether Adidas’ offer was better than or equal to that of the former equipment manufacturer.

This dispute will therefore be resolved during extra-time before the Court of Appeal, which will have to reconsider this legal dispute.

 

Article written by Olivier VIBERT

Attorney, Paris

French Law.blog

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