The Motley Fool

Domino’s share price lower after French legal update

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has edged lower in morning trade following an update on its French legal proceedings.

At the time of writing the pizza chain operator’s shares are down 1.5% to $55.93.

What did Domino’s announce?

This morning Domino’s revealed that the Cour de Cassation in France has delivered its judgment in relation to an appeal by competitor, Speed Rabbit Pizza, against a decision of the Paris Court of Appeal in favour of its French subsidiary.

Speed Rabbit Pizza alleges that Domino’s and its franchisees breached French laws governing payment time limitations and lending. This allegedly gave Domino’s and its franchisees an unfair competitive advantage in the country.

Speed Rabbit Pizza’s initial claim was dismissed in July 2014, as was its appeal in the Paris Court of Appeal on October 2017.

What now?

The Cour de Cassation is France’s highest Court and reviews the decision-making process of lower courts on points of law or procedure.

According to today’s release, the Cour de Cassation has held Speed Rabbit Pizza liable for disparaging Domino’s and ordered it to pay €500,000 in damages. This decision is now final and cannot be further appealed.

Furthermore, the Cour de Cassation did not find Domino’s liable for any unlawful conduct and made no findings in relation to the merits of Speed Rabbit Pizza’s allegations.

However, it has partially set aside the Paris Court of Appeal decision on procedural grounds. This is because it did not properly examine all the evidence submitted by Speed Rabbit Pizza in relation to alleged unfair competition practices by Domino’s.

The Court has also created a new legal principle that any act of unfair competition necessarily causes damage. Based on the new principle, it held that the Paris Court of Appeal should have examined whether Domino’s conduct adversely affected its competitor in terms of profitability and economic attractiveness or provided an unfair advantage to its franchisees.

Speed Rabbit Pizza now has around two months to lodge an appeal of the original 2014 decision of the Paris Commercial Court.

Domino’s continues to deny all claims and will defend any new proceedings if they are initiated.

It notes that any new appeal could take 18 – 24 months from the time it is brought before any decision is made. In the meantime, it is reviewing the judgment and its potential implications and will provide further updates if any material developments arise.

Our Top 3 Blue Chip Shares To Buy Now

You’re invited! For a limited time, The Motley Fool Australia is giving away a fantastic FREE report detailing our 3 TOP BLUE CHIP SHARES to buy and own for now and beyond!.

So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!

Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...

While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...

Even better, Stock #3 offers a whopping grossed-up dividend of over 6%! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.

You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!

Simply CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!