Ford Italia: An Authorised Dealer May Be Liable as an Apparent or Quasi-Manufacturer Alongside the Actual Manufacturer

Judgment of the Court of Justice of the European Union (CJEU) of 19 December 2024, Case C-157/23

Facts of the case:

A consumer purchased a Ford vehicle in Italy from the authorised Italian dealer Stracciari. The vehicle was manufactured by Ford WAG in Germany and supplied through Ford Italia. Ford WAG and Ford Italia belong to the same group of companies.

Following an accident in December 2001 in which the airbag failed, the consumer brought an action for damages against the authorised dealer Stracciari and Ford Italia. Ford Italia disputed the claim on the grounds that it had not manufactured the vehicle. As it was merely the distributor and supplier, it identified Ford WAG in Germany as the actual manufacturer.

Question referred to the CJEU:

In essence, the Italian Court of Cassation asked the CJEU:

• Whether manufacturer liability under Article 3(1) of the Product Liability Directive 85/374/EEC is limited to cases in which a supplier physically places its name, trademark or another distinguishing feature on the product, thereby creating possible confusion between its identity and that of the manufacturer;
• or whether a supplier may be liable as an apparent manufacturer even though it did not physically place its name or trademark on the product, where it nevertheless “presents itself as the producer” within the meaning of Article 3(1) by using in its company name the same distinguishing feature placed on the vehicle by another party, thereby sharing a name with the actual manufacturer.

The CJEU’s decision:

A company that does not manufacture a product itself but merely distributes it may nevertheless qualify as a “producer” under the Product Liability Directive 85/374/EEC. This applies where it places its name, trademark or another distinguishing feature on the product and thereby presents itself as the producer. According to the CJEU, this may give consumers the impression that the company is responsible for the product’s quality and safety.

The CJEU emphasised, however, that liability does not depend on whether the distributor applied the distinguishing feature itself. The authorised dealer had not done so in this case. It had, however, used the relevant distinguishing feature in its own company name. The decisive issue is therefore whether, through this shared name, the supplier or dealer benefits from consumers’ trust and is perceived as the responsible producer.

The authorised dealer is jointly and severally liable with the actual manufacturer. Consumers may therefore bring their claim directly against either the manufacturer or the dealer. The dealer may subsequently seek recourse from the actual manufacturer for the loss incurred.

Comment:

The CJEU places strong emphasis on consumer protection. In my view, this reasoning goes too far:

• According to the CJEU, consumers should not bear the complex burden of identifying the actual manufacturer of a defective product.
• A company that distributes a product while using its name or trademark creates consumer trust. Liability of the authorised dealer is intended to protect that trust, regardless of whether the company actively placed the distinguishing feature on the product.
• This increases the liability exposure of authorised dealers, which must obtain suitable insurance coverage for such risks. In this scenario, authorised dealers may unexpectedly face substantial claims under strict product-liability rules.

Sound legal advice need not be expensive:

• These scenarios should be addressed legally when drafting and negotiating distribution agreements with automotive manufacturers, taking the CJEU judgment into account.
• Authorised dealers should also reconsider the use of manufacturers’ brand names in their own company names and corporate presentation.