On April 25, 2019, Ordinance No. 2019-359 revising Title IV of Book IV of the Commercial Code relating to transparency, restrictive competition practices and other prohibited practices was published in the Official Journal [1].
Taken pursuant to the law of October 30, 2018 known as “Egalim” [2] , this ordinance reorganizes, clarifies and simplifies the provisions of said Title IV in order to make it more readable, better take into account the realities of business life and put a stop to certain excesses of case law [3] .
The new provisions of the ordinance entered into force on April 26, 2019 . They apply immediately to all agreements or amendments concluded after this date, even if the amendment relates to an agreement concluded previously.
Two exceptions however:
- with regard to multi-year agreements in progress on the date of entry into force of the ordinance, these must be brought into compliance by March 1, 2020 at the latest;
- regarding the new invoicing rules, these apply from 1 October 2019 [4].
Presentation of the main changes.
Terms of Sales
The provisions relating to the general conditions of sale no longer appear in article L441-6 of the Commercial Code, but appear in article L441-1 which is dedicated to them.
For better readability, the article is divided into four parts:
- content of the T&Cs;
- terms of their communication;
- role of the T&Cs in the context of commercial negotiation;
- penalties for failure to communicate.
The main developments in this area are as follows:
- the GCS are no longer required to mention the conditions of sale , but are required to include the methods for calculating the price of a service when this is not determined in advance in the general conditions;
- the lack of communication of the GCS is sanctioned by an administrative fine (and no longer a civil fine) pronounced by the administrative authority in charge of competition and consumption, this modification making it possible to no longer seize the civil jurisdiction and to gain in speed and efficiency.
Unique agreements
In fifteen years, the framework for the Single Conventions has undergone six reforms [5] . The objective of the order is thus to restore consistency to the system but also to once again improve its readability.
All of the provisions relating to single agreements are now brought together in a sub-section dedicated to “ Written agreements ”.
In addition, since Law No. 2016-1691 of December 9, 2016, there were two regimes applicable to agreements: one between suppliers and distributors and the second between suppliers and wholesalers. If today the ordinance leaves two regimes in Articles L441-3 and L441-4 of the Commercial Code, the divisions are different:
- Article L441-3 establishes a general regime for all agreements entered into between a supplier and a distributor or a service provider (including wholesalers), regardless of the sector .
First of all, the obligations of the general scheme seem to be lightened :
- the communication of the price list is no longer required;
- the communication of the GCS must take place “ within a reasonable time before March 1st ”.
In addition, the notion of " agreed price " is modified to include all the elements contributing to the determination of the price at the end of the commercial negotiation, namely: discounts linked to the conditions of the sale transaction, the commercial cooperation (which was previously excluded) and other obligations intended to promote the commercial relationship. This new definition would thus make it possible to be consistent with the reality of the negotiations made on the basis of a “ triple net ” price applicable for the year [6] . From now on, before March 1 of each year, the parties will have to determine the overall remuneration for commercial cooperation services .
Finally, the ordinance provides that any amendment to the agreement must be the subject of a writing mentioning the new element justifying . According to the Report to the President of the Republic explaining the ordinance, this addition will make it possible to ensure that this amendment “ does not call into question the general economy of the contract ” [7] .
- Article L441-4 of the French Commercial Code relates only to single agreements entered into between suppliers and distributors or service providers concerning consumer products . These products are defined as non-durable products with high frequency and recurrence of consumption and do not apply to agreements concluded between producers and wholesalers. The regime of article L441-4 of the Commercial Code thus targets the major retail chains.
The system provided for in this article does not include the reductions in the general scheme. The following are thus maintained for the single agreements relating to consumer products: the communication of the scale of unit prices and the communication of the GCS three months before March 1st.
In addition, an additional obligation is now inserted for these agreements: they must set the annual forecast turnover which corresponds to what the ordinance calls the “ business plan of the commercial relationship ”.
With regard to breaches relating to single agreements, the former article L441-7 of the Commercial Code provided that " the fact of not being able to justify having concluded within the time limits provided for an agreement satisfying the requirements of I is liable to a fine administrative, the amount of which may not exceed €75,000 for a natural person and €375,000 for a legal person ”. The ordinance extends the scope of the sanctions to any breach of formalism relating to the conclusion of single agreements . The amounts remain unchanged.
Billing
The billing statements also have a dedicated article (article L441-9 of the Commercial Code).
The ordinance specifies the date of issue of the invoice in order to align its wording with the general tax code and remove the ambiguities between the wordings. From now on, it is planned to issue an invoice upon completion of the delivery (and no longer upon " completion of the sale ") or the provision of a service within the meaning of the General Tax Code.
In order to speed up the payment period for invoices, the new provisions relating to invoicing include two additional and mandatory statements on invoices :
- buyer's and seller's billing address (if different from their address);
- the purchase order number when it has been previously established by the buyer.
Finally, with regard to the sanction incurred in the event of failure to comply with the provisions on invoicing, the ordinance puts an end to the criminal sanction in order to continue the process of decriminalization initiated by the Hamon law of March 17, 2014 [8] and reinforce the constraint weighing on professionals. The fine is now administrative , its amount not exceeding 75,000 euros for a natural person and 375,000 euros for a legal person.
Anti-competitive practices
In order to make it more intelligible, the famous article L442-6 of the Commercial Code is divided, its provisions reorganized and modified.
The new article L442-1 of the Commercial Code establishes the list of restrictive practices and reduces it to the only practices concentrating the main part of the litigation in this matter , namely:
- obtain an advantage that does not correspond to any consideration or is manifestly disproportionate;
- subject the other party to obligations creating a significant imbalance;
- break an established business relationship.
Two modifications can be noted here a priori only with regard to the first two subjects.
First of all, the notion of “ commercial partner ” disappears to be replaced by “ the other party ”, which is likely to significantly broaden the scope of the article.
In addition, the procedures for controlling the obtaining of a benefit are changing, going from “ not corresponding to any commercial service actually rendered ” to “ not corresponding to any consideration ”. The old wording could in fact have led to a limitation of this practice to commercial cooperation agreements only because of the reference to a “ commercial service ”.
With regard to the sudden termination of an established commercial relationship, the Commercial Code now provides in Article L442-1-II that " the perpetrator of the termination cannot be held liable for a period insufficient once he has given eighteen months' notice ". This addition is intended to stop the abuses related to the notice periods and comes here to legally secure the device.
In procedural matters, the procedures for implementing legal action now appear in Article L442-4 of the Commercial Code. The article now indicates that any person proving an interest, the public prosecutor and the minister responsible for the economy may ask the court to order the cessation of practices, to declare the nullity of illegal clauses or contracts and to request the return of undue benefits. According to the report to the President of the Republic, this new wording would thus clarify provisions which suggested that “ only the minister and the public prosecutor were admissible to request the nullity of the disputed clauses ”.
The upper limit of the civil fine in the event of a restrictive practice is specified, with article L442-4 now indicating that the amount of the civil fine cannot exceed the highest of the following three:
- €5 million;
- triple the amount of benefits unduly received or obtained;
- 5% of the turnover excluding VAT achieved in France by the author of the practices during the last financial year closed since the financial year preceding that during which the practices were implemented.
The order also creates a specific article relating to the violation of the ban on resale outside the network made to the distributor bound by a selective or exclusive distribution agreement. Previously in article L442-6-I, 6°, this provision now appears in article L442-2 of the Commercial Code and extends liability to any person participating in this violation, even third parties to the network .
Finally, of the five prohibited clauses or agreements of Article L442-6-II of the Commercial Code, the order retains only two relating to the possibility of benefiting:
- retroactively from discounts, rebates or commercial cooperation agreements;
- automatically more favorable conditions granted to competing companies by the contracting party.
[1] Ordinance No. 2019-359 of April 24, 2019 revising Title IV of Book IV of the Commercial Code relating to transparency, practices that restrict competition and other prohibited practices.
[2] Law n°2018-938 of October 30, 2018 for the balance of trade relations in the agricultural and food sector and healthy, sustainable and accessible food for all.
[3] Report to the President of the Republic on Ordinance No. 2019-359 of April 24, 2019 revising Title IV of Book IV of the Commercial Code relating to transparency, practices that restrict competition and other prohibited practices.
[4] Ordinance no. 2019-359 of April 24, 2019, article 5. The ordinance does not, however, specify the conditions for its entry into force with regard to practices that restrict competition.
[5] Law n°2005-882 of August 2, 2005 in favor of small and medium-sized enterprises, law n°2008-3 of January 3, 2008 for the development of competition in the service of consumers, law n°2008-776 of August 4, 2008 modernization of the economy, law n°2014-344 of March 17, 2014 relating to consumption, law n°2015-990 of August 6, 2015 for growth, activity and equal economic opportunities and finally law n° 2016-1691 of December 9, 2016 relating to transparency, the fight against corruption and the modernization of economic life.
[6] Report to the President of the Republic relating to Ordinance No. 2019-359 of April 24, 2019.
[7] Report to the President of the Republic relating to Ordinance No. 2019-359 of April 24, 2019.
[8] Law n°2014-344 of March 17, 2014 relating to consumption.
