Unfair commercial practices: the DGCCRF can now attach a penalty to its injunctions

French law prohibits a series of B to B unfair commercial practices such as the abrupt termination of well-established business relationships or the fact of imposing significantly imbalanced obligations to a business partner. These unfair practices are called “restrictive practices”.

On December 4, 2020, the legislature adopted a new law called DDADUE for the transposition into French law of various European Union rules in various economic areas.

The government took the occasion of this law to add a new restrictive practice to Article L.442-1, III of the Commercial Code, which relates to online intermediation services. During the legislative process, the Senate has also included provisions granting new coercive powers to the DGCCRF (the department of the Ministry of the Economy in charge of monitoring B to B and B to C relationships) with respect to restrictive practices.

The new powers granted to the DGCCRF (ministry of the economy)

Pursuant to new Article L.470-1 of the Commercial Code, the agents of the DGCCRF will now be entitled to:

• attach to their injunctions a daily penalty of up to 0.1% of the worldwide turnover (excluding taxes) achieved by the company concerned during the last financial year, when they observe a conduct which, in their opinion, is a restrictive practice that is sanctioned by a fine provided for in Article L.442-4 of the Commercial Code (see list below in § 2).
  
  This daily penalty, which must be proportionate "to the seriousness of the infringement observed" and take into account "notably the importance of the disturbance resulting thereof", will run from the day following the expiry of the period of time given to the professional to comply with the injunction notified.

• liquidate the daily penalty (in the event of total or partial non-performance or late performance), it being specified that the total sums requested cannot exceed 1% in total of the worldwide turnover excluding taxes achieved by the company concerned during the last financial year
  
  the injunction, the penalty and the decision to liquidate the penalty can be challenged before the administrative courts, which can, in summary proceedings, order the suspension of the enforcement of the decision if "urgency justifies it and if there are circumstances which could create (…) a serious doubt as to the legality of the decision", in accordance with the provisions of Article L.521-1 of the Code of Administrative Courts

• publish its decision, notably on the DGCCRF website, in the event of non-performance or late performance by the company concerned.

The commercial practices concerned

The following unfair commercial practices are concerned by the reform:

• obtaining or attempting to obtain an advantage without consideration or an advantage that is manifestly disproportionate to the value of the consideration granted (Article L.442-1, I, 1° of the Commercial Code)

• submitting or attempting to submit the other party to obligations that create a significant imbalance in the rights and obligations of the parties (Article L.442-1, I, 2° of the Commercial Code)

• abruptly terminating, fully or partially, an established business relationship (Article L.442-1, II of the Commercial Code)

• failing to comply with the provisions promoting fairness and transparency for business users of online intermediation services within the meaning of Regulation (EU) 2019/1150 (Article L.442-1, III of the Commercial Code)

• violating, as a third party to a selective distribution system, the prohibition to resell outside the network (Article L.442-2 of the Commercial Code)

• benefiting retroactively from discounts, rebates or commercial cooperation agreements (Article L.442-3 a) of the Commercial Code)

• benefiting automatically from the most favourable conditions granted to competitors ("most favoured nation" clause - Article L.442-3 b) of the Commercial Code)

• applying abusively a low sale price in the agricultural sector (Article L.442-7 of the Commercial Code)

• undertaking reverse auctions when certain conditions are not met (Article L.442-8 of the Commercial Code).

The new rules provide the DGCCRF with a powerful instrument to exert pressure on companies so they comply with its injunctions, whereas it previously had to refer the matter to judicial courts when it faced resistance.

The disputes related to these penalties must be brought before the administrative courts, which we can regret knowing that, on the other hand, judicial courts have jurisdiction to order the fines that sanction the unfair commercial practices and usually considered as more “business friendly”.

In any case, these new repressive provisions are a new invitation from the legislature to all stakeholders to adopt a moderate and balanced stance in B to B relationships.