France: Competition, Distribution And Consumer Law

Last Updated: 7 September 2015
Article by Anne-Laure-Hélène des Ylouses and Franck Veisse

On the one hand, the Macron Law provides for new procedural measures in matters of competition law, and on the other, for the distribution sector.

The procedure before the French Competition Authority (hereafter ''FCA") is subject to the following modifications:

  • Increasing powers for the inspectors of the FCA in charge of antitrust investigations

    • The Macron Bill provided that, within antitrust investigations, the FCA shall be given access to and the right to request a copy of detailed invoices and connection data stored and processed by electronic communications operators. The right to access and request a copy of connection data was invalidated by the Constitutional Council as too extensive an investigation power in the lack of legally provided guarantees to ensure the respect of privacy rights. The invalidation of this provision does not affect however the access and right to request a copy of detailed invoices by the FCA investigators within antitrust investigations.
  • The French "no-challenge" procedure becomes a "transaction" procedure

    • The current "no-challenge" procedure before the FCA will be henceforth entitled "transaction" procedure and its regime will be similar to the existing transaction procedure before the European Commission. Within this new procedural framework, companies which do not challenge the objections notified to them will be immediately informed by the FCA of the maximum amount of the proposed penalty. The maximum fine incurred will be, nevertheless, raised to 10% of the worldwide turnover of the company concerned, compared to 5% under the previous regime of the "no-challenge" procedure.
  • The modification of the certain merger control rules

    • The FCA adopts complementary dissuasive and incentive procedural instruments within the merger control regime. Like the Commission, the FCA will be enabled to "stop the clock" starting from phase 1, and not only during phase 2, what was previously the case.
    • The merger controllability thresholds will be modified for operations realised in the overseas departments and regions. From now on, for the calculation of such thresholds, the FCA will refer to the turnover realised by the concerned parties in all overseas departments and regions rather than in the sole department or region concerned by the operation.
    • The FCA may impose more stringent penalties in case of non-compliance with commitments undertaken after the authorisation of the merger.
  • The halt to the expansion of the scope of the structural injunction to the whole French territory

    • The Macron Bill intended to enlarge the scope of the structural injunction mechanism, in place since 2012 for the retail trade in the French overseas territories, to include all of France. This would have enabled the FCA to require any economic player holding a dominant position and over 50% market share to assign a part of its assets if its pricing policy raised competition concerns, in the absence of any commitments in order to overcome said competition concerns. The Constitutional Council invalidated this provision, considering that it created a disproportionate interference with property rights and business freedom. Moreover, a forced sale of assets was considered too heavy a burden on companies that have not committed any abuse. Moreover, this measure was considered disproportionate in so far as it concerned the entire country and the entire retail trade, while the legislature's objective was to address particular situations in the food retail sector.

The distribution sector is targeted by several new provisions:

  • The organisation of commercial distribution networks

    • The Macron Law aims to regulate the terms of attachment of retail stores to a distribution network in order to enhance the freedom of affiliation of retail businesses. Thus, the different types of affiliation contracts binding the retail business to a distribution network shall have a common term in order to enable the retail business to switch to another distribution network if desired. The limitation of the duration of affiliation agreements to a maximum of 9 years, adopted after the first reading by the National Assembly, was finally abandoned. This provision was approved by the Constitutional Council, which does not consider that it creates a manifestly disproportionate interference with the freedom to contract and the right to enforce legally concluded agreements.
    • The commercial relationship between a supplier and a wholesaler shall be governed by a written agreement setting the prices resulting from commercial negotiation. This agreement may take the form of a single document or a set consisting of a framework agreement and implementation agreements. This agreement must contain certain mandatory provisions. Inspired by the existing legal provisions on the obligation to conclude a single agreement in relations between suppliers and retailers or service providers, the formalism of this new obligation in the wholesale trade is nonetheless lighter.
    • Following Opinion No 15-A-06 of March 31st, 2015 of the FCA, the cooperation agreements between retailers of different distribution networks shall be communicated to the FCA within two months before their conclusion, provided that the aggregate turnover of the undertakings concerned by the agreement exceeds certain thresholds set by decree.
  • The extension of mandatory payment terms

    • The maximum payment term shall be set at "sixty days" from the date of issue of the invoice, this payment term becoming thus the maximum payment term under ordinary law. The payment term of "forty-five days end of month" becomes an exception and subject to contract, provided it is not abusive. Exceptions to the maximum payment term may be provided in certain seasonal sectors, which will be enumerated by a decree.
  • The increase of the fining threshold in case of restrictive practices

    • The civil fine incurred in case of a finding of restrictive commercial practices (sudden termination of established commercial relations, subjecting a business partner to a significant contractual imbalance etc.) provided for under article L.442-6 of the French Commercial Code, being previously capped at a maximum of two million euros, can now reach a maximum amount equivalent to 5% of the French turnover. This civil fine is in addition to the damages which may be ordered by the Court upon request of the victim of the restrictive commercial practices.

The Macron Law also aims at improving consumer information and their access to remedy in case of damage:

  • The possibility of a dual display of prices

    • Retailers have the possibility to display dual prices for the same product proposed for sale (a "usual price" and the selling price).
  • Associations' support for individual damages actions

    • The Macron Law grants consumers' associations the right not only to intervene in proceedings brought by a consumer against a professional party, but also to join as parties in a civil action for damages introduced by a consumer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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