Classics of authorised dealer law still relevant

In 2023, important clarifications were made by higher courts in cases regarding the law governing authorised dealers. The rulings are very relevant to drafting dealer contracts and also give important tips on terminating contracts with authorised dealers and service partners.

Setting basic discounts and bonuses outside the dealer agreement is admissible

In 2021, a ruling by Frankfurt Regional Court (LG Frankfurt) dated 16 December 2021 – 2‑03 O 410/20 caused a stir by stating the contractually agreed right of a manufacturer to set basic discounts (margins) unilaterally in circulars, each valid for one year, was to be classified as being in breach of antitrust law. The appeal judgment caused just as great a stir (Frankfurt Higher Regional Court (OLG Frankfurt), judgment dated 14 February 2023 – 11 U 9/22 (Kart)), setting aside the decision of the lower court and instead ruling it admissible to set basic discounts and bonuses outside of an authorised dealer agreement and change them on a regular basis. In particular, the court said, the manufacturer reserving the right to unliterally set these does not constitute unreasonable discrimination against the authorised dealer. With consistent application of the related high court and higher court case law, Frankfurt Higher Regional Court provides more certainty in future contract drafting, especially in a principal’s drafting of a margin and bonus system. The ruling is not yet final and non-appealable.

Termination pending a change of contract: old and new contracts permitted to exist side by side

In other proceedings, Frankfurt Higher Regional Court (judgment dated 13 June 2023 – 11 U 14/23 (Kart)) also considered terms and conditions in an authorised dealer relationship, but this time in the context of a termination for variation of contract. In this case, the importer had issued its authorised dealer notice of termination pending a change of contract, with the terms structure of the new proposed contract differing from the terminated “old” dealer agreement; the deadline for the authorised dealer to accept the new dealer contract was 2 1⁄2 months. In the event that the dealer accepted the new proposed contract, the new dealer agreement would replace the old dealer agreement during the notice period for termination of the old dealer agreement. The court found that the sued importer had not committed a breach of antitrust law or of its fiduciary duty. It said that firstly, the importer had not put inadmissible pressure on the authorised dealer by setting a deadline for acceptance of the new dealer agreement. Secondly, it was not a breach of antitrust law or fiduciary duty by the importer if old and new contracts coexisted in the principal’s distribution system until the expiry of the standard notice period for termination of the old contract. The ruling by Frankfurt Higher Regional Court gives key starting points for validly introducing new authorised dealer contracts into an existing dealer network.

Terminating a service partner agreement

Dusseldorf Higher Regional Court’s (OLG Düsseldorf) judgment dated 28 September 2023 – Vl‑6 U 7/22 (Kart) (not published) examined a termination on structural grounds. In the case leading to the ruling, the importer first terminated the distribution agent agreement and then the service partner agreement with due notice. The importer justified terminating the service partner agreement by saying it was necessary to adapt the size and structure of the service partner network to ensure it was fit for the future. The dealer bringing the action was not offered any new contracts and has therefore been operating as an independent repair garage since the expiry of the termination notice periods. The dealer referred to a company-related dependency and considered itself unreasonably disadvantaged by the loss of the service partner agreement. Dusseldorf Higher Regional Court, however, confirmed the lower court’s ruling which found the claimant had no claim to the continuation of the old service partner agreement nor a claim to entering into a new service partner agreement. The claimant could perform all work on vehicles of the make in question in an economically viable manner even without a service partner agreement, the court added. Dusseldorf Higher Regional Court emphasised in its decision that specialising in one manufacturer’s vehicles based on the company’s own decision cannot establish a company-related dependency without additional circumstances. Ultimately, Dusseldorf Higher Regional Court rejected the existence of a company-related dependency given the special facts and individual opportunities for the former service partner to switch to other makes.

It is clear that traditional topics such as the termination of authorised dealer and service partner contracts as well as the design of margin and bonus systems have played a key role in the case law of the higher courts in 2023. Even though manufacturers and importers have been putting new distribution models into place for some time now, authorised dealer law remains topical. Developments in case law in this area will thus continue to be worth watching.

This article is part of the "Update Commercial 2024". All insights and the entire report as a PDF can be found here.