Presentación realizada por Rachel Blumel, Directora del Departamento Legar en ANIA (Federación Francesa de Industrias Alimentarias) sobre las relaciones comerciales en la cadena agroalimentaria en Francia en el marco del Seminario "Las relaciones comerciales en la cadena agroalimentaria: buscando soluciones en España y la UE" de FIAB y Cajamar. 8 de marzo de 2012

1. Commercial relations
French case
Seminar
« Trade relations in the food chain :
looking for solutions in Spain and the
European Union »
Madrid, 8 March 2012
1

2. Outline of the presentation
 French food industry and French retailers’ market
 Long process to develop our specific law to ensure fair commercial relations
 The specific French law
 Legal tools to enforce the specific law
 Assessment of the law’s application
Madrid, 8 March 2012 2

3. French food industry
 1st French industry with a turnover of € 143.6 billion in 2010
 More than 10,000 companies of which 90% are SMEs
 Second national employer with 477,000 jobs
 1st partner of French farmers using 70% of French agricultural resources (raw
materials)
 4th world exporter after the U.S., Germany and the Netherlands
 80 % of food products consumed in France are produced locally (the only industry in
this case at the national level)
Madrid, 8 March 2012 3

4. French retailers’ market
 Food trade is dominated by retailers (hypermarkets and supermarkets) which represent
around 70% of the market.
Source : panorama des IAA du MAAP
 In 2010, French families bought 66.6 % of their food products in hypermarkets (more than
2500 m²) and in supermarkets (more than 400 m²) [compared to 67.2 % in 2009].
Source INSEE
Madrid, 8 March 2012 4

5. French retailers’ market
Retailers market shares for food products
Groupe Carrefour 21,8 %
Galec / Leclerc 17,6 %
Groupe Intermarché 13,3 %
Groupe Casino 12,9 %
Groupe Auchan 11,1 %
Système U 9,3 %
Lidl 4,7 %
Cora / Provera 3,1 %
Aldi 2,4 %
Dia 2,2 %
Source : Kantar Worldpanel (consolidation Linéraires) Cumul annuel mobile au
27/11/11 PGC + frais LS – En valeur – Hypers + supers + supérettes + hard
discount
Madrid, 8 March 2012 5

6. French retailers’ market
 The French retailer’s market is organized around integrated and independent
retailers. The consequences are very important in terms of liability and agreements
 Integrated retailers such as Carrefour, Auchan, Cora, Casino negotiate at the
national level and have the same range of products in each supermarket.
 Independent retailers such as Leclerc, Système U and Intermarché : the
producers have to negotiate at national level and at regional level before
negotiating with each supermarket. Each supermarket’s manager can choose
his range of products.
 The French food market’s characteristic is an imbalance of economic relations
between 7 retailers and 10 000 producers. This imbalance creates difficulties for
producers and farmers and facilitates the occurrence of unfair practices.
Madrid, 8 March 2012 6

7. Long process for a specific law
5 laws in 20 years to progressively develop and adapt our legislation to
stakeholders’ practices :
 Loi Galland in 1996 : beginning of specific legislation for commercial
negotiations to take into account the unbalanced relations between retailers
and producers
 Loi NRE in 2001 : identification of several unfair practices with penalties
(fines)
 Loi Dutreil in 2005 : disconnecting the loss leading threshold from the invoice
price, taking into account the payment of services such as end of aisle display,
catalogue …
 Loi Chatel in January 2008 : finalizing this evolution initiated by the Dutreil
law
 Loi LME in August 2008 : to facilitating negotiation and competition among
retailers by eliminating the discrimination ban.
Madrid, 8 March 2012 7

8. Specific French law
 A
 A negotiation based on the producer’s offer
 An annual written agreement before 1st March
 A list of prohibited unfair commercial practices
Madrid, 8 March 2012 8

9. Specific French law
A negotiation based on the producer’s offer
 General sales conditions must be communicated to all retailers
General sales conditions remain the base of negotiation with the compulsory
minimum content: sales conditions (delivery conditions, transfer of risk,
retention clause), price list, discounts and payment terms. Suppliers can
develop their General Sales Conditions in particular for logistic issues….
 General sales conditions must be organized by category and
communicated to all retailers in the same category
Differentiating General sales conditions for each category of clients (retail,
cash and carry, distance selling, export…) is possible. Each producer can
organize his own general sales conditions by category of clients if he can
justify them. A retailer as Carrefour or Leclerc cannot be considered as a
category of client.
 Special conditions of sales negotiated and communicated only to the
retailer concerned
Possibility to negotiate special conditions of sales, which must be justified
by true counterparts. It is the only way to differentiate between clients.
Madrid, 8 March 2012 9

10. Specific French law
An annual written agreement before 1st March
 This annual written agreement has to formalize the results of the negotiation to
ensure real controls of its balance. Each commitment must be clearly exposed
in this agreement : price reductions granted by the producers and counterparts
given by the retailers.
 The compulsory content of the annual agreement is :
- Sale conditions negotiated on the base of the general sale conditions
- Special sale conditions such as rebates, discounts or year-end
bonuses
- Sales cooperation or trade services which are provided by the retailer
and paid by the supplier such as end of aisle display, product
highlighting...The object, the date and the conditions of the agreement as
well as the price and the list of products concerned.
- Other obligations to develop the commercial relation such as
statistics, trade shows…
 Penalties
Joint obligation to sign this annual agreement before 1st March : € 75,000
and € 375,000 for legal entities
Madrid, 8 March 2012 10

11. Specific French law
List of prohibited unfair commercial practices
 The French legislation prohibits several unfair commercial practices, for
example:
- Submitting (Imposing) or trying to submit (impose) a commercial partner to
obligations which create a significant imbalance between contractual rights
and obligations.
- Obtaining or trying to obtain an advantage, prerequisite or condition in
order to place an order, without written commitment about a proportional
volume of products.
- Obtaining or trying to obtain under threat the total or partial delisting of
products, unfair conditions concerning prices, payment deadlines or
services.
- Submitting or trying to submit a partner to abusive payment conditions.
- Refusing to indicate the supplier’s name and address on private label
products if the supplier requires it.
- Asking for an alignment of the contract terms with the best commercial
conditions obtained by the competitors.
- Stopping commercial relations without observing a notice period which is
the double for private labels etc ….
Madrid, 8 March 2012 11

12. Specific French law
List of prohibited unfair commercial practices
 Penalties
₋ Refund of unduly paid sums
- Civil fine (limited to € 2 millions) can represent three times the amount of
sums unduly paid.
- Publication, distribution or display of the Court’s decision.
Madrid, 8 March 2012 12

13. Legal tools to enforce the specific law
 Investigations and legal actions by public authorities
 A commission in charge of analysing commercial practices
Madrid, 8 March 2012 13

14. Legal tools to enforce the specific law
Investigations and legal actions by public authorities
 The French Ministry of Economy :
₋ has investigation powers and organizes each year, 2 investigations of
both suppliers and retailers to check commercial practices (content of
annual written agreement, invoices, documentary evidences ….)
₋ In case of unfair practices, the French Ministry of Economy can file
claims on behalf of the producers who fear being delisted.
₋ Case laws increase each year and the most dissuasive tool for
retailers is the publication of Court’s decisions.
 A few examples of case laws
₋ 9/02/2010: Condemnation of Carrefour for an imprecise written agreement
concerning services invoiced to suppliers.
₋ 22/11/2011: Condemnation of Leclerc to refund € 23 millions unduly paid to
28 suppliers.
₋ 24/01/2012: Condemnation of Casino for abusive contractual commitments
(return of unsold products to suppliers) to a fine of € 400,000.
Madrid, 8 March 2012 14

15. Legal tools to enforce the specific law
A commission in charge of analysing commercial practices
 This public authority was created in 2001 to give recommendations about
unfair or fair practices between suppliers and retailers.
 The president of this Commission is a member of Parliament.
 Members of this Commission represent equally retailers, suppliers, the
Minister of Economy, experts, members of Courts.
 All stakeholders or members of government can report a matter to this
Commission which writes and publishes positions. The Commission can
also investigate a matter on its own initiative.
 Judges can refer to this doctrine for their judgment
 Stakeholders can also refer to it in their relationships
 The difficulty is to obtain a consensus for important issues and, sometimes,
some topics cannot be resolved.
Madrid, 8 March 2012 15

16. Assessment of our specific law
 We are fortunate and proud to have a specific and useful legislation justified by
our national context.
 Unfortunately, commercial relations are always difficult and become more and
more strained particularly since the entry into force of the last law in 2008 and
the beginning of the increase of raw materials prices in 2007: retailers continue
to refuse price conditions, to negotiate advantages without real counterparts,
to impose abusive contracts and transfer costs and liabilities to suppliers.
 Anyway, each condemnation is very useful to remind retailers about their
obligations even if, often, they find solutions to get round legal obligations.
 For French suppliers, our law has 3 weaknesses :
₋ Contradictory interpretations by retailers and suppliers
₋ Slowness of Court’s decisions
₋ Increase of settlements made outside courts with the assistance of public
authorities but which are not made public (no Name and shame
disincentive)
 We hope that our government will be very attentive and reaffirm its will to apply
our legislation.
Madrid, 8 March 2012 16