The French Competition Council was called upon to decide whether the practices of Montres Rolex S.A. of Switzerland and its French subsidiary in appointing French distributors for its watches complied with the French Freedom of Prices and Competition Ordinance and Article 85 of the Treaty of Rome. Rolex's practice in appointing distributors was to require them to be traditionalist establishments specializing in clocks, watches and jewelry, to be in a prime location, to have proper display facilities, and to employ a specialist watchmaker. However, the latter provision had been waived in a few cases where use of an external specialist watchmaker was approved. The action was brought as a result of Rolex's refusal to supply certain outlets.

The administrative investigation carried out as a result of the action found that the majority of Rolex distributors did not in fact employ a specialist watchmaker and that a significant percentage were not in fact specialist clock, watch and jewelry outlets at all but carried other types of luxury goods. The Council held that, although selective distribution agreements were permissible under the French law and Article 85 of the Treaty of Rome, the Rolex distribution scheme was unlawful in that it contained unreasonable provisions, was imprecise in its method of selecting distributors and was open to discriminatory practices. In particular it was found that it was unreasonable to require that all distributors are traditional specialist clock, watch and jewelry stores and that they employ a specialist watchmaker, particularly in view of the fact that this was almost an impossible requirement in some areas of France and that in practice most watches needing repair were shown to be returned to Rolex itself for such repair. Rolex was fined FF314,000 and ordered to amend its agreements.

In setting up selective distribution networks, one should ensure that the criteria employed for selection are objectively reasonable and are applied in a non-discriminatory manner.