Title III: Brokers, commission agents, carriers, commercial agents and independent door-to-door sales persons; Chapter IV: Commercial agents
The commercial agent is an agent who, as an independent professional, is not bound by a service agreement, is responsible for negotiating and possibly concluding sales, purchase, rental or service provision agreements, in the name and on behalf of manufacturers, industrial firms, traders or other commercial agents. The commercial agent may be an individual or a legal entity.
The provisions of this chapter do not apply to representatives who work in an economic sector covered by specific legal provisions.
Art. L. 134-2.
Each party is entitled to obtain from the other party, on request, a signed document mentioning the content of the agency agreement, including any associated amendments.
Art. L. 134-3.
The commercial agent may accept to represent new principals without demanding authorisation. Nevertheless, he/she may not accept to represent a company which is a competitor of one of his/her principals without the principal’s consent.
Art. L. 134-4.
Agreements between commercial agents and their principals are concluded in the common interest of both parties.
The relationship between the commercial agent and the principal is governed by an obligation of loyalty and a reciprocal duty to inform. The commercial agent must fulfil his/her agency agreement in a professional manner: the principal must ensure that the commercial agent is able to fulfil his/her agency agreement.
Art. L. 134-5.
Any type of remuneration which varies with the number or value of sales, constitutes a commission within the meaning of this chapter.
Articles L. 134-6 to L. 134-9 apply when the commercial agent is remunerated in whole or in part by the commission defined above.
If nothing is mentioned in the agreement, the commercial agent is entitled to receive remuneration in accordance with the usual practices of the business sector covered by his/her agency agreement in the location in which he/she conducts his/her business. If there are no usual practices, the sales representative is entitled to a reasonable remuneration which takes account of all aspects relating to the transaction.
Art. L. 134-6.
For any commercial transactions concluded during the course of the agency agreement, commercial agent shall be entitled to the commission defined in Article L. 134-5 when these transactions have been concluded through his/her intervention or when the transaction has been concluded with a third-party whose custom he/she previously obtained for similar transactions.
When a commercial agent is responsible for a specific geographical area or a specific group of persons, he/she is also entitled to commission for any transactions concluded during the term of agency agreement with an person belonging to that area or that group.
Art. L. 134-7.
For any transaction concluded after the termination of the agency agreement, commercial agents shall be entitled to the commission either if the transaction is mainly due to his/her efforts during the agency agreement and was concluded in a reasonable time after its termination or, under the conditions provided for in Article L. 134-6, if the third party's order is received by the principal or by the commercial agent before the agency agreement expires.
Art. L. 134-8.
The commercial agent is not entitled to the commission provided for in Article L. 134-6 if, by virtue of Article L. 134-7 the commission is due to the previous commercial agent, unless circumstances dictate that it is fair to share the commission between the commercial agents.
Art. L. 134-9.
The commission is accrued as soon as the principal has completed the transaction or should have completed it by virtue of the agreement concluded with the third party or as soon as the third party has completed the transaction.
The commission is accrued no later than when the third party has completed its part of the transaction or would have completed it, had the principal completed its own part. It shall be paid no later than the last day of the month following the quarter during which it accrued.
Art. L. 134-10.
The right to the commission may be extinguished only if it is established that the agreement between the third party and the principal will not be performed and if the breach is not due to circumstances attributable to the principal.
The commissions which the commercial agent has already received shall be refunded if the right relating thereto is extinguished.
Art. L. 134-11.
A fixed-term agreement which continues to be performed by both parties after its term shall be deemed to have been converted into an indefinite agreement.
When the agency agreement is for an indefinite period, either party may terminate it by giving notice. The provisions of this Article are applicable to a fixed-term agreement that has been converted into an indefinite agreement. In this case, the length of the prior fixed term period will be taken into account when calculating the notice period.
The notice period is one month for the first year of the agreement, two months as from the start of the second year and three months as from the start of the third year as well as all subsequent years. Unless there is a contrary agreement, the end of the notice period coincides with the end of a calendar month.
The parties may not agree to shorter notice periods. If they agree to longer notice periods, the notice period provided for the principal shall not be shorter than that provided for the commercial agent.
These provisions shall not apply when the agreement is terminated due to the gross negligence of either party or due to force majeure.
Art. L. 134-12.
If the relationship with the principal is terminated, the commercial agent is entitled to receive compensation for the loss suffered.
The commercial agent shall lose entitlement to compensation, if he/she fails to notify the principal of his/her intention to assert his/her rights within one year after the agreement is terminated.
The legal successors of commercial agent also benefit from the right to compensation when the agreement terminated due to the death of the agent.
Art. L. 134-13.
The compensation provided for in Article L. 134-12 shall not be due in the following cases:
1° The agreement is terminated due to the serious misconduct of the commercial agent;
2° The agreement is terminated by the commercial agent unless such termination is justified by circumstances attributable to the principal or due to the age, infirmity or illness of the commercial agent, as a result of which the continuation of the latter’s activity can no longer be reasonably required;
3° Based on an agreement with the principal, the commercial agent assigns the rights and obligations held under this agreement to a third party.
Art. L. 134-14.
The agreement may contain a non-compete clause after the agreement expires.
This clause shall be drawn up in writing and shall cover the geographical area and, if applicable, the group of persons assigned to the commercial agent as well as the types of goods or services for which the commercial agent is responsible under the agreement.
The non-compete clause shall be valid only for a maximum period of two years after the agreement expires.
Art. L. 134-15.
When the activity of the commercial agent is carried out under a written agreement signed by the parties which has another principal purpose, the parties may decide in writing that the provisions of this chapter do not apply to the part concerning the commercial agency activity.
This waiver is void if the performance of the agreement demonstrates that the commercial agency activity is in reality the agreement's main or decisive purpose.
Art. L. 134-16.
Any clause or agreement contrary to the provisions of Articles L. 134-2 and L. 134-4, the third and fourth paragraphs of Article L. 134-11, and Article L. 134-15 or derogating, to the detriment of the commercial agent, from the provisions of the second paragraph of Article L. 134-9, the first paragraph of Article L. 134-10, Articles L. 134-12 and L. 134-13 and the third paragraph of Article L. 134-14 shall be deemed unwritten.
Art. R. 134-1
The commercial agent will inform the principal of any information necessary to perform the agreement.
Art. R. 134-2.
The principal will provide the commercial agent with any useful sales documentation on the products or services covered by the agency agreement. The principal will send the agent the information necessary to perform the agreement. The principal will inform the commercial agent by giving reasonable notice, especially if it anticipates that the volume of transactions will be significantly lower than the commercial agent could have normally expected.
He/she will also give the commercial agent reasonable notice of whether a transaction brought in by the commercial agent is accepted, refused or not carried out.
Art. R. 134-3.
The principal will provide the commercial agent with a statement of commissions due no later than the last day of the month of the quarter during which it was accrued. This statement will provide full details of how the commission was calculated.
The commercial agent is entitled to demand that his/her principal provide him with any information, in particular an extract from the accounts necessary to verify the commission amount due.
Art. R. 134-4.
In accordance with Article L. 134-16, any clause or agreement contrary to the provisions of Articles R. 134-1 and R 134-2, or derogating from provisions of Article R. 143-3, to the detriment of the commercial agent, shall be deemed unwritten.
Art. R. 134-6.
Before engaging in their business, commercial agents are required to register on a special register held at the registry office of the commercial court in the jurisdiction where they are based. As such, they shall file a statement, for which they will be given a receipt. (…)
Legal provisions on exclusivity clauses
Title III: Exclusivity clauses - (Art. L. 330-1 to L. 330-3)
Art. L. 330-1.
With respect to its seller, transferor or lessor, the duration of any exclusivity clause by which the buyer, transferee or lessee of movable property undertakes not to use similar or complementary items from another supplier is restricted to a maximum of ten years.
Art. L. 330-2.
Where the agreement containing the exclusivity clause referred to in Article L. 330-1 is subsequently followed by other similar agreements between the same parties, relating to the same type of goods, the exclusivity clauses contained in these new agreements shall expire on the same date as the first agreement.
Art. L. 330-3.
Prior to signing any agreement entered into in the common interest of both parties, any individual/entity who provides a corporate name, trademark or trade name to another individual/entity, by demanding an undertaking of exclusivity to exercise their business, is required to provide the other party with a document containing truthful information, so that such party can commit in full knowledge of the facts.
This document, whose content is set by decree, will notably state the age and experience of the company, the status and development prospects of the relevant market, the size of the operator network, the term and the conditions for renewing, terminating and assigning the agreement as well as the scope of exclusivity commitments.
When it is necessary to pay a sum prior to signing the agreement mentioned above, including to reserve a sales region, the services provided in return for such sum shall be specified in writing, as well as the reciprocal obligations of the parties in the event of retraction.
The document provided for in the first paragraph and the draft agreement shall be made available at least twenty days before signing the agreement, or, where appropriate, before paying the sum mentioned in the previous paragraph.
Art. R. 330-1.
The document provided for in the first paragraph of Article L. 330-3 contains the following information:
1° The address of the company’s registered office and the nature of its business, its legal form and the identity of the company manager in the case of an individual or if it is a legal entity of the corporate officers; where applicable, the amount of the share capital;
2° The details mentioned in points 1° and 2° of Article R. 123-237, or the registration number at the Register of Trades, as well as the date and registration or filing number for the trademark and, if the trademark to be covered by the agreement was acquired following a disposal or a license, the date and number of the corresponding entry in the National Trademark Register with, for licensing agreements, the term for which the licence has been granted;
3° The company’s bank account details. This information can be restricted to the five main bank accounts;
4° The date the company was established with a review of its main development phases, including that of the operator network, if applicable, as well as any details to assess the professional experience acquired by the manager or the corporate officers.
The information mentioned in the previous paragraph may only cover the last five years prior to submitting the document. It shall be supplemented by a presentation of the general and local situation of the market of products or services covered by the agreement and the growth prospects for this market.
The annual accounts for the last two financial periods shall be appended to this part of the document, or for companies whose financial securities are traded on a regulated market, the reports drawn up for the last two periods pursuant to III of Article L. 451-1-2 of the French Monetary and Financial Code;
5° A presentation of the operator network, including:
- The list of member companies, including for each of them, the agreed operating mode;
- The address of those companies based in France to which the individual/entity offering the agreement is bound by agreements of the same nature as that envisaged to be concluded; the date of concluding or renewing these agreements shall be stated;
When the network has more than 50 operators, the information mentioned in the previous sub-paragraph is only required for the fifty companies located closest to the planned operational site;
- The number of companies which, after being bound to the network by agreements of the same nature as that envisaged to be concluded, have ceased to be part of the network during the year prior to issuing the document. The document will specify whether the agreement has expired, been terminated or cancelled;
- Where applicable, the list of any establishment in the sales region proposed under the agreement where the products or services are available for sale, with the express agreement of the individual/entity offering the agreement;
6° The term of the proposed agreement and the conditions for renewing, terminating and assigning it, as well as the scope of exclusivity commitments.
In addition, the document will also specify the nature and the amount of expenses and investments specific to the trademark or trade name that the individual/entity to whom the draft agreement is addressed undertakes to outlay, prior to commencing operations.
Art. R. 330-2.
Making available a commercial name, a trademark or a trade name to an individual/entity, by demanding that such individual/entity makes a commitment of exclusivity or quasi-exclusivity to exercise their business without having provided the information document and the draft agreement mentioned in Article L. 330-3 at least twenty days before signing the agreement, is punishable as a fifth-class offence by paragraph 5 of Article L. 131-13 of the French Criminal Code.
In the event of a repeat offence, the fines provided for in paragraph 5 of Article 131-13 of the French Criminal Code for fifth-class offences committed as repeat offences are applicable.
Legal provisions on anti-competitive practices
Title II: Anti-competitive practices - (Art L. 420-1 to L. 420-7)
Art. L. 420-1.
Concerted actions, agreements, express or tacit understandings or coalitions are prohibited even through the direct or indirect intermediary of a company of the group located outside of France, when they have the purpose or effect of preventing, restricting or distorting competition on a market, especially when the aim is to:
1° Restrict access to the market or prevent other companies from competing freely;
2° Prevent prices being set freely on the market by artificially encouraging the prices to rise or fall;
3° Restricting or controlling manufacturing, outlets, investments or technical progress;
4° Share out markets or supply sources.
Art. L. 420-2.
Under the conditions provided for in Article L. 420-1, a company or group of companies is prohibited from abusing a dominant position in the internal market or in a substantial part of it. Such abuses may notably include refusing to sell, tying sales, or discriminatory terms of sales as well as the termination of established commercial relations for the sole reason that the partner refuses to accept unjustified commercial terms.
In addition, a company or a group of companies is also prohibited from abusing the state of economic dependency of a client or supplier, where this is liable to affect the functioning or structure of competition. This abuse may notably involve refusing to sell, selling under restrictive conditions, discriminatory practices referred to in Articles L. 442-1 to L. 442-3 or product range agreements.
Art. L. 420-2-1.
Agreements or collaborative practices with the purpose or effect of granting exclusive import rights to a company or a group of companies are prohibited in local authority areas covered by Article 73 of the Constitution and in the overseas local authority areas of Saint-Barthélemy, Saint-Martin, Saint-Pierre-et-Miquelon and Wallis and Futuna.
In the local authority areas mentioned in the first paragraph of this Article it is also prohibited for a company engaged in wholesale import or retail trade or a group of companies where at least one of the entities operates one of these trades, to apply discriminatory terms for products or services where there is a situation of de facto import exclusivity against a company in which it holds no share of the capital.
Art. L. 420-3.
Any commitment, agreement or contractual clause relating to the practices prohibited by Articles L. 420-1, L. 420-2, L. 420-2-1 and L. 420-2-2 is null and void.
Art. L. 420-4.
1° Those which result from implementing a legislative text or a regulatory text and their implementing texts;
2° Those for which the originating parties can prove that they deliver economic progress, including by creating or safeguarding jobs, and which allow users a fair share of the resulting profits, without enabling the relevant companies to eliminate the competition for a major part of the relevant products. These practices, which may involve organising production volumes and quality as well as the commercial policy for agricultural products or products from an agricultural source under the same trademark or trade name, including by agreeing a common sales price, may only set restrictions on competition to the extent that they are indispensable to achieving this objective of progress.
- Certain types of agreements or certain agreements, including when they have the purpose of improving the management of medium or small-sized enterprises, may be acknowledged as fulfilling these conditions by decree after obtaining the assent of the Competition Authority.
- Agreements where the originating parties can prove that the practices are founded on objective reasons of economic efficiency and which allow consumers a fair share of the resulting profit are not subject to the provisions of Articles 420-2-1 and L. 420-2-2.
Certain types of agreements, certain agreements or certain practices, especially when they aim to encourage the emergence of a new service, may be acknowledged as fulfilling the conditions mentioned in the first paragraph of this III by a joint order of the ministers of the economy and transport, implemented after the assent of the Competition Authority and for a period which may not exceed five years.
Art. L. 420-5.
The practice of setting retail prices that are unreasonably low in relation to the costs of manufacturing, processing and marketing is prohibited when such pricing practices have the purpose or effect of preventing access or eliminating a company or one of its products from a market.
In Guadeloupe, French Guiana, Martinique, La Réunion and the Department of Mayotte, when food products identical or similar to those produced and sold locally are offered to end users at prices which are manifestly lower that those practised in Mainland France, the representative of the State in the territory may make it mandatory for importers and distributors on the one hand, and local producers and processors on the other hand, to enter into an agreement. This will take account of the volumes of the relevant products, the economic situation of local producers and the interests of end users with very low income. This agreement, which will be negotiated under the stewardship of the State and the local authorities with competence in economic development, shall mention the continuous efforts of the distributors to offer end users local food products as well as the policy of local producers to best meet the needs of end users. The agreement is published by a prefectural order. In the absence of an agreement within ten working days as from the start of negotiations, the State representative in the territory will take any measure within their remit by order, in order to fulfil the above-mentioned objectives.
The marketing costs shall also include all the costs for the statutory obligations related to product safety.
The first and third paragraphs of this Article are not applicable for 'as is’ resales, with the exception of hard copies of sound recordings and videograms intended for private use of the general public.
Art. L. 420-6.
Any individual who fraudulently takes a personal and decisive part in instigating, organising or implementing the practice mentioned in Articles L. 420-1, L. 420-2 and L. 420-2-2 is liable to a prison sentence of four years and a fine of €75,000.
The court may order that its decision be published in full or in extracts in the publications which it designates, at the expense of the offender.
Legal instruments which interrupt the limitation period before the Competition Authority pursuant to the third paragraph of Article L. 462-7 will also interrupt the limitation period for prosecution.
Legal provisions on the terms of sale
Chapter I: Transparency in commercial relations
Section 1: General sales terms
Art. L. 441-1.
- The general sales terms notably include the payment terms as well as information on price setting such as the list of unit prices and any price reductions.
- Any person engaged in manufacturing, distribution or services who draws up general sales terms is required to make them available to any buyer who requests them for their business. This can be done by any means which constitutes a durable medium.
These terms of sale may vary depending on the type of buyers of products or services. In this case, the obligation to provide the sales terms provided for in the first paragraph of this II only concerns the general sales terms applicable to a same category of buyers.
- Once the general sales terms have been drawn up, they form the sole basis for negotiating sales.
In the context of this negotiation, the parties may agree on special sales terms which are not subject to the disclosure obligation provided for in II.
When the price of a service cannot be determined a priori or stated accurately, the service provider is required to either disclose the method for calculating the price to the requesting party such that it can be checked or provide a sufficiently detailed quotation.
- Any breach of II is liable to a administrative fine of up to €15,000 for an individual and €75,000 for a legal entity.
Art. L. 441-1-1.
- For food products and pet food products, the general sales terms, as decided by the supplier and without the buyer being able to interfere in this choice:
1° Either exhibit, for each of the agricultural raw materials and each of the processed products consisting of more than 50% of agricultural raw materials used in the composition of the product mentioned in the first paragraph of this section I, their share in the composition of the said product as a volume percentage and a percentage of the supplier’s price;
2° Or exhibit the aggregate share of the agricultural raw materials and processed products consisting of more than 50% of agricultural raw materials used in the composition of the product mentioned in the same first paragraph as a volume percentage and a percentage of the supplier’s price;
3° Or provide for, provided they mention a change in the supplier’s price of the product mentioned in the said first paragraph as compared to the previous year, the certification by an independent third party at the supplier’s expense at the end of the negotiations that, in accordance with II of Article L. 443-8, the said negotiations did not relate to the share of this change resulting from that of the price of the agricultural raw materials or processed products mentioned in the first paragraph of this section I. In this case, the supplier will transmit to the independent third party the necessary documents for this certification. This certification shall be submitted within one month of the conclusion of the agreement. Failing the said certification, should the parties wish to continue their contractual relationship, they will amend their agreement within two months after the signature of the initial agreement.
The independent third party shall be bound to professional secrecy for the facts, acts, and information coming to their knowledge by reason of their duties. The use of an independent third party does not exempt the supplier from keeping a copy of the supporting documents to respond to the administration’s requests, if needed.
Any breach of I is liable to an administrative fine under the conditions provided for in VI of Article L. 443-8.
A decree may provide that the obligation provided for in I does not apply to food products or pet food products having an aggregate share of the agricultural raw materials and processed products consisting of more than 50% of agricultural raw materials composing these products lower or equal to a threshold not exceeding 25%.
A. For the application of 1° of I, the buyer may, at their expense, ask the supplier to instruct an independent third party to certify the accuracy of the information included in the general sales terms. In this case, the supplier will transmit to the independent third party, within ten days, the documents supporting the accuracy of this information.
B. For the application of 2° of I, the buyer may, at their expense, ask the supplier to instruct an independent third party to certify the accuracy of the information included in the general sales terms. If the independent third party finds that the supplier wilfully made an inaccurate or misleading statement with regard to the aggregate share of the agricultural raw materials in the product volume or the supplier’s price rendering impossible the grant of the certification mentioned in the first sentence of this section B, the independent third party’s costs shall be borne by the supplier.
C. If 1° and 2° of I are applicable, the independent third party’s assignment will consist exclusively, based on an agreement concluded with the supplier, in receiving the documents transmitted by the supplier and the supporting documents, certifying the accuracy of the transmitted information, in particular determining the unit or aggregate share of the agricultural raw materials and processed products in the supplier’s price, and transmitting this certification to the buyer within ten days of the receipt of the documents mentioned in this section C.
D. The independent third party shall be bound to professional secrecy for the facts, acts, and information coming to their knowledge by reason of their duties.
The use of an independent third party does not exempt the supplier from keeping a copy of the supporting documents to respond to the administration’s requests, if needed.
- The price of the agricultural raw material is that paid for the delivery of agricultural products within the meaning of Articles 148 and 168 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007, by a first buyer, a producer organisation with transfer of ownership, or an agricultural cooperative.
- The general sales terms specify if a sales agreement concluded pursuant to Article L. 631-24 of the French Rural and Maritime Fishing Code on the agricultural raw materials used in the composition of the food product or pet food product has already been concluded.
- This Article does not apply to the purchase or resale of wholesalers within the meaning of II of Article L. 441-4 or to some food products, food product categories or pet food products, the list of which is defined by a decree after consultation with the interbranch organisations concerned, by reason of the specificities of their production sector.
- A decree may set the list of professions deemed to offer the guarantees to fulfil the assignment as an independent third party.
Art. L. 441-2.
Any service provider is required to comply with the obligations to inform defined in Article L. 111-2 of the French Consumer Code with regard to any recipient of services.
This obligation does not apply to the services mentioned in Books I to III and Title V of Book V of the French Monetary and Financial Code or to the operations carried out by companies governed by the French Insurance Code, by the employment-based pension funds mentioned in Article L. 381-1 of the same Code, by the mutual insurance companies or unions mentioned in Article L. 214-1 of the French Mutual Society Code, by the employment-based pension funds mentioned in Article L. 942-1 of the French Social Security Code, by the mutual societies and unions governed by Book II of the French Mutual Society Code and by the provident funds and unions governed by Title III of Book IX of the French Social Security Code.
Legal provisions requiring the conclusion of specific agreements
Title IV: Transparency, restrictive competitive practices and other prohibited practices
Chapter 1: Transparency in commercial relations (Articles L. 441-1 to L. 441-16)
Section 2: Negotiation and formalisation of the commercial relationship (Articles L. 441-3 to L. 441-8)
Art. L. 441-3.
- With the exception of product suppliers mentioned in Article L. 443-2, a written agreement concluded between the supplier and the distributor or service provider will mention the reciprocal obligations to which the parties are committed at the end of the commercial negotiations, in compliance with Articles L. 442-1 to L. 442-3. This agreement is drawn up either in a single document or in a bundle comprising a framework agreement and implementation agreements.
- Without affecting Articles L. 442-1 to L. 442-3, any amendment to the agreement mentioned in I will be set out in writing and mention the new information which justifies such amendment.
- In order to help determine the agreed price, the agreement mentioned in I above, will set the following obligations:
1° The terms of the transaction to sell the products or services, including price reductions, and if applicable, the types of situation in which and the terms under which exceptions to the sales terms are likely to be applied;
2° Any sales cooperation services, intended to promote the sales of the supplier’s products or services, provided by the distributor or service provider, which are not covered by the purchase or sale obligations, by specifying the purpose, the expected date, the performance terms, the fees for such services as well as the products or services concerned and the overall associated fee for all of these obligations;
3° Any other obligations intended to promote the commercial relationship between the supplier and the distributor or service provider, by specifying for each, the purpose, the expected date, the performance terms and the fees for such services as well as the overall price reduction associated with all of these obligations;
4° The purpose, date, performance terms, fees and products concerned of any service or obligation under an agreement concluded with a legal entity located outside of the French territory, to which the distributor is directly or indirectly linked.
- The agreement mentioned in I above, is concluded for a period of one year, two years or three years, no later than the 1 March of the year in which it comes into effect or in the two months following the effective commencement of the sales period for the products or services subject to a specific sales cycle. When it is concluded for a period of two or three years, it will set the terms under which the agreed price is to be revised. These terms may include taking account of one or more available indicators which reflect price changes due to manufacturing factors.
- The supplier will disclose its general sales terms to the distributor within a reasonable time period before 1 March or, for products or services subject to a particular sales cycle, before the effective start date of the sales period.
Art. L. 441-4.
- This Article is applicable to the agreement mentioned in I of Article L. 441-3 when it relates to consumer products defined as non-durable fast moving consumer goods. The list of these fast-moving consumer goods shall be set by decree.
- This Article does not apply to wholesalers, which means any individual or legal entity who, for business purposes, buys products from one or more suppliers and mainly resells them to other wholesalers or retailers, to processors or any other traders or companies that procures supplies for their business. Central procurement units and collective wholesale purchasing organisations are considered to be wholesalers.
Companies or groups of individuals or legal entities that directly or indirectly operate one or more retail outlets or work in the distribution sector as a central procurement unit or collective buying organisation for retail companies are excluded from the concept of wholesaler.
- The agreement will mention the unit price list, as previously disclosed by the supplier, with its general sales terms, or the procedure for consulting the version of this list which was used as a basis for negotiation.
- The agreement sets the forecast turnover, which, along with all the obligations set by the agreement in accordance with III of Article L. 441-3, constitutes the business plan of the commercial relationship. When the term is two to three years, this agreement sets the terms under which the forecast turnover is to be revised.
- The effective date of each of the obligations provided for in 1° to 3° of III of Article L. 441-3 is concurrent with the effective date of the agreed price. This applies no later than 1 March.
The provisions of 1° of III of Article L. 441-3 on the exceptions to the conditions of the sales transactions do not apply to this Article.
- The supplier will disclose its general sales terms to the distributor no later than three months before 1 March or, for products subject to a particular sales cycle, two months before the effective start date of the sales period. The distributor will have a reasonable time period after receipt of the general sales terms to send written notice of its acceptance of or its reasons for rejecting such terms or if applicable, the provisions of the general sales terms which it wishes to negotiate.
- The conditions under which, if applicable, the supplier undertakes to grant end users promotional deals on its products or services during the year, are set in the mandate entrusted to the distributor or the service provider, concluded and performed in accordance with Articles 1984 et seq. of the French Civil Code. Each of these mandates will notably specify the amount and type of promotional advantages granted, the period for which they are granted, the terms for implementing such advantages as well as the terms under which the distributor or supplier will render accounts.
For the agricultural products mentioned in Article L. 443-2, milk and milk products, these advantages may not exceed 30% of the value of the unit price list, including administrative costs.
Art. L. 441-5.
A written agreement shall be drawn up in accordance with Articles L. 441-1 and L. 442-1 to L. 442-3, for any purchase of manufactured products, produced at the request of a buyer for integration into its own production process, for which the amount is in excess of a threshold set by decree. It will mention the terms agreed between the parties, including:
1° The purpose of the agreement and the respective obligations of the parties;
2° The price and price calculation methods;
3° The billing and payment terms;
4° The respective liabilities of the parties and the guarantees such as, where applicable, the terms for applying title retention;
5° The rules governing intellectual property between the parties when justified by the type of agreement;
6° The term of the agreement as well as termination procedures;
7° The methods for settling disputes related to the performance of the agreement and, if the parties decide to make use of it, the terms for setting up mediation.
Art. L. 441-6.
Any breach of the provisions of Articles L. 441-3 to L. 441-5 is liable to a administrative fine of up to €75,000 for an individual and €375,000 for a legal entity.
The maximum fine is increased to €150,000 for an individual and €750,000 for a legal entity if the infringement is repeated within two years from the date on which the first penalty decision became final.
Art. L. 441-7.
- The agreement concluded between a supplier and a distributor on the design and manufacturing of food products in accordance with the specific needs of the buyer and sold under the distributor's trademark, will mention the price or the criteria and procedures for determining the purchase price of the agricultural products used in the composition of these food products.
The determination of the price takes account of the innovation efforts made by the manufacturer at the distributor’s request.
The agreement will include a clause for an automatic revision of prices based on a change in the cost of the agricultural raw material or processed products subject to I of Article L. 441-1-1 of this Code and used in the composition of the food products. The parties freely determine the revision formula by taking account in particular of the agricultural production cost indicators mentioned in III of Article L. 631-24 of the French Rural and Maritime Fishing Code.
The distributor may ask the manufacturer to instruct an independent third party to certify, within fifteen days, the accuracy of the change in the agricultural raw material cost borne by the manufacturer. In this case, the manufacturer will transmit to the independent third party, within ten days, the documents supporting the accuracy of this information. The independent third party’s costs shall be borne by the distributor. If the independent third party finds that the manufacturer wilfully made an inaccurate or misleading statement with regard to the change in the cost of the agricultural raw material or processed product rendering impossible the grant of the certification mentioned in the first sentence of this paragraph, these costs shall be borne by the manufacturer. The independent third party shall be bound to professional secrecy for the facts, acts, and information coming to their knowledge by reason of their duties.
- bis.-In the case of a call for tenders on the design and manufacturing of food products in accordance with the specific needs of the buyer and sold under the distributor’s trademark, the call for tenders will include an undertaking from the distributor on the forecast volume they wish to have manufactured.
- ter.-The agreement mentioned in I will include a clause on the forecast volume the distributor undertakes to have manufactured over a given period and a reasonable notice for the manufacturer to anticipate possible volume changes.
- quater.-The agreement will define the minimum contractual notice period to comply with in the event of termination of the contractual relationship. It will provide for how to deal with the packaging and finished products in the event of termination of the agreement.
- The obligation provided for in I only applies when the sale of agricultural products is subject to a written agreement. If applicable, it applies when the seller is a company mentioned in Article L. 521-1 of the French Rural and Maritime Fishing Code.
- The agreement mentioned in I will include a distribution clause between the distributor and the supplier of the various additional costs that may arise during the performance of the agreement.
- No expense related to promotional activities of a product sold under the distributor’s trademark can be borne by the manufacturer.
- The agreement establishes a warning and periodical information exchange system between the distributor and the manufacturer to optimise the supplying conditions and to limit the risks of shortages.
- Any breach of this Article is liable to an administrative fine of up to €75,000 for a physical person and €375,000 for a legal person.
The maximum fine is increased to €150,000 for a physical person and €750,000 for a legal person if the breach is repeated within two years from the date on which the first fine decision became final.
Legal provisions on restrictive competitive practices
Chapter 2: Unfair commercial practices between companies
Section 1: Restrictive competitive practices
Art. L. 442-1.
- Any party engaged in manufacturing, distributing or service provision, negotiates sales, concludes or performs an agreement, is liable for and required to compensate for any loss caused in the following cases:
1° Obtaining or attempting to obtain from the other party an advantage which does not correspond to any consideration or which is clearly disproportionate to the value of the consideration granted;
2° Subjecting or attempting to subject the other party to obligations which create a significant imbalance in the rights and obligations of the parties;
3° Imposing logistical penalties not complying with Article L. 441-17;
4° Regarding food products and pet food products subject to I of Article L. 441-1-1, charging or obtaining from the other party prices, payment terms, sales or purchase terms that are discriminatory and not justified by valuable consideration provided for in the agreement mentioned in Article L. 443-8, hence creating a competitive disadvantage or advantage for this partner.
- When any party engaged in manufacturing, distributing or service provision abruptly terminates an established commercial relationship, even partially, in the absence of any written formal notice which takes account of the duration of the commercial relationship, in reference to established trade practices or multi-sector agreements, the perpetrating party is liable to compensate for any loss caused.
In the event of a dispute between the parties on the length of the notice period, the terminating party may not be held liable for giving insufficient notice if it has given 18 months’ notice.
The provisions of this II do not preclude the possibility of termination without notice, when the other party is in breach of its obligations or in the event of force majeure.
- When any party engaged in providing an online intermediation service, within the meaning of the Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services, fails to comply with the obligations expressly provided for in the same Regulation, such party is liable to compensate for any loss caused.
Any clause or practice not expressly referred to in that Regulation is governed by the other provisions of this Title.
Art. L. 442-2.
When any party engaged in manufacturing, distributing or service provision directly or indirectly participates in the violation of the ban on off-network reselling to a distributor bound by a selective or exclusive distribution agreement exempted under the applicable rules of competition law, such party is liable to compensate for any loss caused.
Art. L. 442-3.
Are null and void clauses or agreements providing for any party engaged in manufacturing, distribution or service provision to:
- retroactively benefit from discounts, rebates or sales cooperation agreements;
- automatically benefit from more favourable conditions than those granted to competing companies by the co-contractor;
- prohibit the counterparty to assign receivables which it holds on the other party to a third party.
Art. L. 442-4.
- For the application of Articles L. 442-1, L. 442-2, L. 442-3, L. 442-7 and L. 442-8, proceedings are to be brought before the competent civil or commercial court by any party who can prove an interest, by the Public Prosecutor's Office, by the Minister for the Economy or by the President of the Competition Authority when the latter observes a practice mentioned in the aforementioned Articles, in the course of matters falling within its remit.
Any party who can prove an interest may ask the court before which the matter is brought to order the practices referred to in Articles L. 442-1, L. 442-2, L. 442-3, L. 442-7 and L. 442-8 to cease, as well as to order compensation for the loss suffered. Only the party who is the victim of the practices provided for in Articles L. 442-1, L. 442-2, L. 442-3, L. 442-7 and L. 442-8 may have the unlawful clauses or contracts declared null and void and apply for the restitution of the undue advantages.
The Minister for the Economy or the Public Prosecutor's Office may ask the court to order the practices mentioned in Articles L. 442-1, L. 442-2, L. 442-3, L. 442-7 and L. 442-8 to cease. For all these practices, they may also have these illegal clauses or agreements declared null and void and ask for the restitution of the advantages unduly obtained, when the victims of such practices are informed, by any and all means, of these legal proceedings being brought before the court. They may also ask the court to issue a civil fine which may not exceed the highest of the following three amounts:
- five million euros;
- three times the amount of the advantages unduly received or obtained;
- 5% of the turnover excluding VAT generated in France by the party perpetrating the practices during the financial year ended prior to that in which the practices were performed.
- The court will systematically order the publication, dissemination or posting of its decision or an extract of its decision in a manner which it will specify. It may order that this decision or this extract be added to the report on the operations conducted by the managers, board of directors or management board of the company. Costs shall be borne by the party convicted.
The court may order the enforcement of its decision under coercive fine.
The judge ruling by way of summary proceedings may order, if necessary under coercive fine, the abusive practices to cease or any other interim measure.
- Disputes relating to the application of Articles L. 442-1, L. 442-2, L. 442-3, L. 442-7 and L. 442-8 are assigned to courts whose location and jurisdiction shall be determined by decree.
Art. L. 442-5.
- Any trader who resells or announces that it is reselling a product ‘as is’ at a price that is lower than its actual purchase price will be punished by a fine of €75,000. This fine may be increased to half of the advertising expenses if an advertisement, regardless of the medium, states a price that is lower than the actual purchase price. The advertisement may be ordered to be withdrawn under the conditions provided for in Article L. 121-3 of the French Consumer Code.
The actual purchase price is the net unit price stated on the purchase invoice, less the amount of all the other financial advantages granted by the seller expressed as a percentage of the net unit price and including taxes on the turnover, specific taxes associated with this resale and the transport costs.
The actual purchase price is multiplied by a coefficient of 0.9 for the wholesaler which distributes the products or services exclusively to traders which are independent of the wholesaler and are engaged in the business of retailing, processing or providing services to the end client. Any company that is free to determine its commercial policy and which has no capital link or affiliation with the wholesaler is considered to be independent.
- The provisions of I do not apply to:
1° Voluntary or forced sales motivated by the cessation or change of a commercial business;
2° Products whose sale has a marked seasonal character, during the final period of the sales season and in the interval between two sales seasons;
3° Products which no longer meet the general demand due to changes in fashion or the emergence of technical improvements;
4° Products with identical characteristics, which are resupplied in smaller volumes, the actual purchase price will then be replaced by the price shown on the new purchase invoice.
5° Food products sold in a shop with a retail sales area of less than 300 square metres and non-food products sold in a shop with a retail sales area of less than 1,000 square metres, whose retail prices are aligned with the price legally charged for the same products by another trader in the same retail sector;
6° Perishable products from the moment they are likely to deteriorate rapidly, provided that the price is not advertised or announced outside of the point of sale;
7° Discounted products mentioned in Article L. 310-3.
- Legal entities found criminally liable for the offence provided for in I will incur the penalty mentioned in 9° of Article 131-39 of the French Criminal Code.
The advertisement may be ordered to be withdrawn under the conditions provided for in Article L. 121-3 of the French Consumer Code.
Art. L. 442-6.
Any person who directly or indirectly sets a minimum resale price on a product or good, on the price of a service or on a sales profit margin is liable for a fine of €15,000.
Art. L. 442-7.
A buyer of agricultural products or foodstuffs who allows its supplier to charge an unreasonably low sales price will be liable to compensate for the loss caused.
In order to characterise an unfairly low sales price, account shall be taken in particular of the manufacturing cost indicators mentioned in Articles L. 631-24, L. 631-24-1, L. 631-24-3 and L. 632-2-1 of the French Rural and Maritime Fishing Code or, where appropriate, any other available indicators, including those established by the Observatory of Food Product Price Formation and Margins mentioned in Article L. 682-1 of the same Code. In the event of an initial sales, the indicators in the agreement proposed by the farmer are also taken into account.
Article L. 442-4 applies to the action provided for in this Article.
Chapter III: Provisions specific to agricultural products and foodstuffs
- For perishable agricultural products or products with short production cycles, live animals, carcasses or for fishery and aquaculture products which appear on a list established by decree, a distributor or service provider may only enjoy discounts, rebates and refunds or provide for remunerating the services provided during their resale, specifically to promote their commercialisation and which are not covered by sales or purchase obligations, or services which have a specific purpose, if these are provided for in a written agreement covering the sale of these products by the supplier.
This written agreement will notably include clauses on volume commitments, methods for calculating the price based on the volumes and quality of the relevant products or services and setting a price. It will mention the price discounts agreed by the supplier to the distributor with respect to the supplier’s commitments
When a standard agreement relating to the activities mentioned in the first paragraph is included in a multi-sector agreement adopted by a multi-sector organisation recognised for the relevant product and extended pursuant to Articles L. 632-3 and L. 632-4 of the French Rural and Maritime Fishing Code, the agreement mentioned in the first paragraph shall conform with such standard agreement.
The second and third paragraphs do not apply to products for which Article L. 631-24-2 of the French Rural and Maritime Fishing Code has rendered it mandatory to conclude written agreements.
- By way of exception, a buyer, distributor or service provider may not enjoy discounts, rebates or refunds when purchasing fresh fruit and vegetables.
It may nevertheless enjoy price reductions if the delivered product fails to meet the qualitative or quantitative conformity requirements of the order, if an agreement concluded by a multi-sector organisation recognised under the conditions provided for in Article L. 632-1 of the French Rural and Maritime Fishing Code has specified the conditions.
This agreement may be extended in accordance with Articles L. 632-3 and L. 632-4 of the same Code.
- If the buyer, distributor or service provider fails in its performance of any of the provisions of I and II, it is liable to a administrative fine of up to €15,000 for an individual and €75,000 for a legal entity.
The maximum fine is increased to €30,000 for an individual and €150,000 for a legal entity if the infringement is repeated within two years from the date on which the first penalty decision became final.
- For food products and pet food products for which the general sales terms are subject to I of Article L. 441-1-1 a written agreement concluded between the supplier and the buyer will mention the reciprocal obligations to which the parties are committed at the end of the sales negotiations, in compliance with Articles L. 442-1 and L. 442-3. This agreement is drawn up either in a single document or in a bundle comprising a framework agreement and call-down contracts.
The agreement will mention each of the reciprocal obligations to which the parties are committed at the end of the sales negotiations and their unit price.
When concluded with a distributor the agreement is concluded under the conditions provided for in Articles L. 441-3 and L. 441-4, subject to this Article.
- The sales negotiations do not relate to the share in the supplier’s price of the price of the agricultural raw materials and processed products mentioned in I of Article L. 441-1-1.
- When the supplier has chosen to specify the information mentioned in 1° or 2° of I of Article L. 441-1-1 in their general sales terms the agreement will mention, in order to help determine the agreed price, the share of the unit or aggregate price of the agricultural raw materials and processed products mentioned in the same 1° or 2°, as specified in the general sales terms. The agreement will specify how this purchase price is taken into account in the determination of the agreed price.
- The agreement will include a clause for an automatic revision of the prices of the agreement based on a rise or fall in the cost of the agricultural raw material used in the composition of the food product or pet food product. The parties freely determine the revision formula based on the duration of the production cycle and the used indicators pursuant to III of Article L. 631-24 of the French Rural and Maritime Fishing Code. When the purchase of the agricultural raw material by the supplier is subject to a written agreement pursuant to I of the same Article L. 631-24 the revision clause mandatorily includes the indicators on the agricultural production costs.
- The agreement mentioned in I of this Article is concluded for a period of one year, two years or three years.
- The agreement is concluded no later than the 1st March and the supplier will disclose their general sales terms to the buyer no later than three months before that date.
- The distributor will have a one-month time period after receipt of the general sales terms either to state in writing their explicit and detailed reasons for rejecting such terms or, if applicable, the provisions of the general sales terms which they wish to negotiate or to send written notice of their acceptance thereof.
- Without affecting Articles L. 442-1 to L. 442-3, any amendment to the agreement mentioned in I of this Article will be set out in writing and mention the new information which justifies such amendment.
- Any breach of this Article is liable to an administrative fine of up to €75,000 for a physical person and €375,000 for a legal person. The maximum fine is doubled if the breach is repeated within two years from the date on which the first fine decision became final.