Commercial negotiations: large-scale distribution under the scrutiny of the authorities
While the period of commercial negotiations between suppliers and distributors ended as every year on March 1 with the signing of annual agreements, the practices of some large retailers are in the sights of the authorities, whose action is intensifying.
In July 2019 and February 2021, the Minister of the Economy, guarantor of economic public order, summoned two international purchasing and service centers of the E. Leclerc and Intermarché banners before the Commercial Court of Paris for restrictive competition practices. According to the Minister, these companies used purchasing centers located outside France to circumvent French law governing commercial negotiations (art. L. 441-3 et seq. of the French Commercial Code) and to impose services or price reductions without compensation on their suppliers.
In order to fight against these opaque practices, the "ASAP" law of December 7, 2020 requires suppliers and distributors to mention, in their annual commercial agreements, the existence of services provided or obligations entered into by international central offices with which the distributors are directly or indirectly linked, as long as these obligations or services are related to products sold in France. This new obligation is intended to facilitate the DGCCRF's control of the reality of the services provided, of a proportionate counterparty and of compliance with the resale at loss threshold.
The Commercial Court has not yet ruled on the two cases mentioned above. However, in a judgment dated February 22, 2021, it condemned the Carrefour chain for restrictive competition practices, ordered the cessation of the practices and imposed a fine of euros 1.75 million.
In this case, the DGCCRF, at the initiative of the summons, reproached CARREFOUR for having demanded from its suppliers a "complementary distribution discount", intended to finance the repositioning of the brand on the market of the proximity distribution. This discount, required as a prerequisite to the opening of commercial negotiations, had in reality no counterpart and was imposed by Carrefour on its suppliers thanks to dissuasive retaliatory measures.
As a reminder, the French Commercial Code prohibits restrictive practices such as (i) obtaining an advantage without consideration or disproportionate to the consideration given, (ii) subjecting or attempting to subject the other party to obligations that create a significant imbalance, (iii) imposing disproportionate penalties or (iv) automatically deducting penalties or rebates from the supplier's invoices (Article L. 442-1 I. of the French Commercial Code).
As every year, the commercial negotiation period is subject to reinforced controls by the DGCCRF. These controls can lead to in-depth investigations, while the legislative arsenal that governs commercial negotiations requires suppliers and distributors to be increasingly transparent in their business relationships and to adhere to a strict formalism that is part of a tight schedule with the signing of annual agreements no later than March 1st of each year. After having attacked large-scale distribution "for the sake of example", let's bet that the authorities will target other distribution operators in the future.
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