“I don’t understand anything in this case. I understand that this is rather a slap before the negotiation. I think it’s a technocrat thing with Bercy but it doesn’t last“, recently declared Michel-Edouard Leclerc (1). With these flowery words, Michel-Edouard Leclerc responded to the sanction decision which, on August 28, 2020, the DGCCRF imposed on the central purchasing body Eurelec, which resides in Belgium and is common to the brand E . Leclerc and the German distributor Rewe, an administrative fine of 6.34 million euros for a series of 21 violations consisting of non-compliance with the deadline of 1eh March (article L. 441-3 of the French Commercial Code).
We also note that in response to the priority question of constitutionality placed here by Eurelec (and also by Intermarché which, for the occasion, joined the procedure), the Constitutional Council, by decision of March 25, 2022, declared in accordance with the Constitution, the provisions of article L. 470-2 VII of the French Commercial Code, as modified by the law of Article II, namely ” [l]When, on the occasion of a same method or separate methods, some administrative penalties is pronounced against a same author for some competition violations, these penalties run concurrently » (2). In concrete terms, the Elders of the Constitutional Council ruled that, for the purpose of deterrence and due to the mandatory nature of the rules applicable to commercial negotiations, the agents of the DGCCRF were fully authorized to impose certain monetary penalties on the same distributor . which, in the framework of annual negotiations with some and/or all of its suppliers, violated the same mandatory provision (3).
Therefore, it is no real surprise that the Administrative Court of Paris confirmed the penalty imposed on the company Eurelec by judgment of June 23, 2022 which specifically mentions that ” [le] number of violations cited (4) and [le] deliberate nature of these violations [témoignaient] determination [d’Eurelec] to avoid the application of French law ». It is also not surprising, and taking into account the decision of the Constitutional Council, the administrative judge Eurelec believed ” is not justified in claiming the unconstitutionality of the provisions in question “.
More interestingly, the administrative judge recalled that ” the need to conclude an agreement at the beginning of the year to formalize the result of commercial negotiations between the parties is not primarily intended to facilitate administrative checks, to ensure compliance with other provisions of Title IV of the Book IV commercial code, but aims to ensure greater transparency in the commercial relationship between suppliers and distributors and to avoid imbalances in their contractual relationships. These provisions are ongoing so a purpose of
defense of the economic public order and allow, through their dissuasive effect, the balanced functioning of the market as a whole “. According to the administrative court, a contract concluded between a supplier and a distributor and having as its purpose to manage the marketing procedures of the products intended to be sold in France must necessarily respect the mandatory provisions of the Commercial Code in terms of commercial negotiations (eg the deadline of 1eh March, the absence of automatic reduction, the principle of moderation of logistical penalties, the absence of significant imbalance, etc.). In addition, the administrative judge confirms the need to sign a commercial agreement in proper and appropriate form before 1eh March by pointing out, in response to a rather outrageous argument from Eurelec, that ” contrary to what is claimed [Eurelec], only the signature of a single document or the framework contract and the implementing contracts are likely to provide proof of the conclusion of an agreement. As a result, the company cannot rely on “exchange of consent” and “agreements in principle” made by sending e-mails to its suppliers. ».
At this point, this judgment of the Administrative Court of Paris provides a very important clarification regarding the proof of compliance with the provisions of Article L. 441-3 of the Commercial Code. In fact, Eurelec said that the signature was flawed in 1eh March is due to external reasons mainly related to the alleged refusal of some suppliers to enter into a framework agreement here within legal deadlines. This argument, which was not documented, was gently dismissed by the administrative judge according to which “ the applicant company does not provide any evidence to support its allegations, or proof that it has not successfully sought from these suppliers the signing of an agreement within the time limits, as required by the provisions of article L. 441-3 of the Commercial Code “.
Finally, regarding the amount of the penalty, which Eurelec considered disproportionate, the administrative judge recalled that ” the administration does not have to demonstrate the existence of damage caused by the company’s conduct to justify the amount of the fine » and, moreover, that « there is no error in law that the administration took into account the value of the estimated turnover established by each agreement to set the amount of the sanction pronounced “. Likewise, for administrative jurisdiction, the absence of a ceiling on the accumulation of administrative penalties pronounced for competition violations under the terms of Article L. 470-2 VII of the Commercial Code, does not violate principle of proportionality of penalties.
The legal framework has now been usefully clarified (although the judgment of the administrative court is currently the subject of an appeal before the Administrative Court of Appeal of Paris) regarding the annual negotiations carried out in purchasing alliances located elsewhere country (e.g. in Belgium in the case of Eurelec or in Switzerland in the case of Agecore), suppliers whose products are intended to be sold in France will, with the help of their legal advisors, likely have a strong interest in:
- Recommendation 1 : recall in their GCS and in their possible letters of reservation that, in accordance with what the Administrative Court of Paris ruled on June 23, 2022, all the mandatory provisions of the Commercial Code are intended to apply ( even if the contract is proposed the distributor does not mention it);
- Recommendation 2 : document, in writing, the efforts made to reach an agreement before 1eh march. This point is even more important because the negotiations are now taking place by videoconference, where it is important to make a report addressed to the distributor (to return it to him, in case of control, opposable); and
- Recommendation 3 : consider (despite the risks of reprisal this may entail) the ability to voluntarily alert the DGCCRF of any missed deadline (to demonstrate its good faith and guard against any risk of prosecution).
1 – Speech by Michel-Edouard Leclerc at BFM Business on 1eh October 2020.
2 – The law of Layer II removed the ceiling that prevailed in the former article L. 465-2 VII of the Commercial Code (now article L. 470-2 VII), which states that ” [l]When, during the same procedure or separate procedures, several administrative sanctions are pronounced against the same author for competition violations, these sanctions run together, within the limits of the highest legal maximum. “, (emphasized).
3 – See in particular, Y. Puget and R. Maulin, Fines without a ceiling: the Constitutional Council did not accept the argument of Leclerc and IntermarchéLSA, March 30, 2022.
4 – In this case, the lack of signature in 1eh March included 21 suppliers. It should be noted that, for its part, Intermarché was authorized, by decision of January 7, 2022, with a fine of 19.2 million euros for having, through its Agecore purchasing center (based in Geneva), concluded of 61 annual agreements that do not include, contrary to what is required by the mandatory provisions of the Commercial Code, any mention of international agreements concluded by the suppliers in question.
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