French Competition Law provides a comprehensive review of the French rules relating to competition: restrictive agreements, commercial negotiation, abuses of a dominant position, procedure and merger control.

French Competition Law

It is unlawful to obtain or attempt to obtain any advantage that does not correspond to any consideration, or is manifestly disproportionate to the consideration given (Commercial Code, Article L. 442-1, I, 1°). Commercial cooperation is the favorite arena for this abusive practice, even if the legislation is regularly relied on in areas other than mass distribution, such as subcontracting , brokerage , or the organization of fairs and exhibitions .

Taking into account the case law, which has applied this provision, beyond commercial cooperation, to price reductions  and to any benefits , the Ordinance of 24 April 2019 afforded new Article L. 442-1, I, 1°  a wider scope than previous Article L. 442-6 , by substituting the concept of consideration for the concept of service rendered. Nevertheless, an increasingly consistent line of case law opposed the assessment of the lawfulness of a price reduction outside of Article L. 442-1, I, 2°, emphasizing the need to compensate for the infringement of contractual freedom that price control constitutes through the additional requirement of proof of a state of being “subjected  to”, as required by this provision .  Following a review of its constitutionality  and then its legality , the validity of Article L. 442-1, I, 1° was not called into question.

According to the Constitutional Council, it does not disproportionately infringe contractual freedom and entrepreneurial freedom, insofar as its provisions, which aim to preserve economic public order, to repress certain practices that restrict competition and to ensure balanced commercial relations, pursue an objective of general interest. According to the Council of State, it cannot be interpreted as permitting the characterization of a breach solely on the basis of a significant imbalance in the rights and obligations of the parties. As a result, the Court of Cassation put an end to the controversy by formally stating, in another case, that Article L. 442-1, I, 1° of the Commercial Code, which requires only that it be established that an advantage of some kind has been obtained, applies regardless of the nature of this advantage, and in particular in the case of a price reduction . As the courts have pointed out, the review only concerns disproportion, and not whether the consideration is strictly in line with the price agreed by the parties .

In order to be regarded as real consideration, the service rendered must have a a genuine value for the supplier  and not just the distributor , and must not have already been invoiced . If its is found to be in the common interest of the parties, the court has to ensure that each party has financially contributed to it . The distributor has to show that the service has actually been carried out  ,which does not result from the mere payment of invoices by the supplier or his failure to contest the practices . Proof of the contrary may be constituted from the lack of any definition  or the inaccurate definition thereof . Since the advantage granted no longer necessarily has to remunerate a commercial cooperation service, Article L. 442-1, I, 1° can be used to review the lawfulness of a specific discount, known as the “Lidl” tax, which remunerates the continued listing of certain suppliers' products in the stores of the distributor in question , or credits granted in return for the guaranteed continuation of the relationship with the distributor for one year and the maintenance of guaranteed rates for six months, or in return for a minimum number of orders . In this context, it was held that a credit granted by a supplier must be analyzed as an advantage obtained without consideration, since the supplier was never in a position to ascertain the alleged non-conformities of the products, to provide explanations or to contest them, whereas the distributor did not express any reservations when receiving the goods, only evoked these defects in internal exchanges and did not inform the supplier of them until one year after receiving the products .  On the other hand, rebates corresponding to price reductions contingent upon levels of sales volume, based on actual sales achieved at the end of the year, were not without a quid pro quo but, on the contrary, constituted an incentive for the customer to purchase equipment from the service provider .

If, instead of relying on the absence of consideration, the supplier relies on the manifest disproportion between the interest of the service or benefit provided and its remuneration, evidence of this must be provided . The Court of Cassation has ruled, under the former Article L. 442-6 of the Commercial Code, that the provision defines the behavior it refers to in a clear, precise and unambiguous manner, without it being possible to argue that it does not allow the parties to know in advance when the remuneration for the service would be considered manifestly disproportionate . The low level of remuneration for commercial cooperation services may rule out the obtaining of an advantage without consideration . Although the low turnover achieved by the distributor for the product(s) concerned by a commercial cooperation action or absence of any significant growth of sales in the period of reference can constitute factors to be considered, they cannot alone constitute proof of a manifest disproportion as distributors are not, in commercial agreements, bound by an obligation to achieve a specific result (result-based obligation) . Conversely, even an increase in the turnovers of the suppliers concerned would not be sufficient to demonstrate the reality of the service invoiced by the distributor . The assessment must be a comprehensive one: it is not possible to point out that the remuneration for a service is disproportionate when the service is not representative of all the services invoiced . The disproportion can be established by comparing the remuneration paid to the distributor with that invoiced by third parties for similar services  or with regard to the difference in the rates applied for the same service according to the supplier . 

The pursuit of action that seeks to penalize the obtaining of an advantage without consideration is not contingent on proof of a transfer of funds from the supplier to the distributor: the advantage may be granted in kind . Similarly, it is not necessary to prove vitiated consent or any pressure exerted on the supplier , even if the absence of dependence of one partner on the other and proof of genuine negotiation are likely to exclude the application of the legislation .

A distributor having obtained manifestly disproportionate payments from its supplier is obliged to reimburse the excess amount , i.e. those over and above the true value of the services rendered .

CA Paris, 4 November 2020, LawLex202000003828JBJ, upheld on this point by Cass. com. 11 January 2023, LawLex202300000524JB; 15 April 2021, LawLex202100001234JBJ.

CA Paris, 3 June 2021, LawLex202100003501JBJ and 1 September 2021, LawLex202100005135JBJ

CA Paris, 3 July 2024, LawLex202400005313JBJ.

T. com. Créteil, 24 October 2006, LawLex200600002293JBJ: for a service of no benefit to the suppliers and less effective than their direct intervention in store; T. com. Evry, 14 October 2009, LawLex200900003234JBJ, upheld by CA Paris, 2 February 2012, LawLex201200000189JBJ, finding a service consisting of informing the supplier of the placement of its products and those of its competitors in a typical store of no interest for the supplier insofar as the latter has no influence over the distributor's choice and can acquire the same level of information by merely visiting one of the stores; see also CA Paris, 18 November 2009, LawLex201000000128JBJ, according to which the proof of the disproportionate nature of the remuneration in relation to the service stems from their rapid suppression following legislative intervention concerning back margins;  T. com. Romans-sur-Isère, 28 March 2012, LawLex201400002241JBJ, supply of general, cursory and non-personalized statistical data; T. com. Paris, 17 June 2014, LawLex201400000762JBJ, finding that the centralization by a central referencing agency of services that could be provided to the supplier by its members but a lot less flexibly and efficiently, constitutes real consideration; CA Paris, 8 February 2017, LawLex201700000291JBJ, according to which services that correspond to obligations normally incumbent on a central purchasing unit cannot be billed to the supplier, even if they may have been useful to it; Cass. com., 26 September 2018, LawLex201800001414JBJ, holding that services with an unclear definition that amount to having the suppliers pay for services they perform themselves are fictitious.Cf. CA Paris, 13 September 2017, LawLex201700001459JBJ, holding that a rebate that compensates not a specific service but the size of the purchasing volumes made by the members of a central referencing body and encourages them to obtain all or almost all of their needs from the supplier, is not contrary to former Article L. 442-6, I, 1° of the Commercial Code; 6 May 2021, LawLex202100002874JBJ, holding that the invoicing of administrative charges for participation in a call for tenders relating to the selection of suppliers of caretaking services, amounting to 1.5% of the supplier's turnover over the first year, does not constitute an unjustified advantage that does not correspond to any commercial service actually rendered; 1 September  2021, LawLex202100005135JBJ, considering that the contribution of customers, because of its essential commercial interest for the partner, constitutes an effective counterpart to the remuneration obtained by the service provider.

Cass. com., 18 October 2011, LawLex201100001646JBJ, and CA Poitiers, 29 January 2013, LawLex201300000152JBJ: carrying out an inventory in store; CA Paris, 4 October 2012, LawLex201200002106JBJ, finding the fact of making the carrier bear the risks related to fluctuations in diesel prices manifestly disproportionate to the service rendered.

CA Angers, 29 May 2007, LawLex200700000843JBJ.

T. com. Aubenas, LawLex200600000618JBJ; T. com. Nanterre, 28 March 2007, LawLex200700000430JBJ, upheld by CA Versailles, 24 September 2009, LawLex201000000127JBJ

CA Douai, 13 October 2005, LawLex200600000490JBJ; CA Paris, 20 December 2006, LawLex200700000225JBJ; CA Nîmes, 10 March 2011, LawLex201100000689JBJ; CA Paris, 15 January 2015, LawLex201500000060JBJ: a wholesaler obtains an unfair advantage when, having invoiced  the setting up of a “reserved, organized and identified space, for the enhancement and individualization [of products from certain suppliers] compared to other products”, it continues to place the products in the same spot as before although on the front row with the products of non-signatories to the agreement having their products placed behind. In this case, the evidence that the promotion service was fictitious also stemmed from the fact that it was stipulated continuously throughout the year whereas the products of some suppliers were seasonal, or it  was allegedly intended to allow easy identification of products of the supplier's brand whereas suppliers of non-branded products were also invoiced.

CA Paris, 6 September 2023, LawLex202300012023JBJ.

CA Paris, 29 November 2023, LawLex202300014222JBJ, considering that obtaining a conditional rebate, even if the condition in question has not been defined or fixed quantitatively by the parties, will expose the distributor to the obligation to repay the sums unduly received.

CA Paris, 24 March 2011, LawLex201100000775JBJ, which deems void for lack of cause or unlawful cause the commercial cooperation agreements relative to services with vague titles or only provide in detail for the distributor's remuneration arrangements; Cass. com., 11 September 2012, LawLex201200002023JBJ; CA Poitiers, 29 January 2013, LawLex201300000152JBJ, framework contracts which only stipulate the method of calculating the distributor's remuneration for promotional operations, without providing for any promotion of the supplier's products; CA Paris, 8 February 2017, LawLex201700000291JBJ; 6 September 2023, LawLex202300012023JBJ; But see CA Paris 13 September 2017, LawLex201700001459JBJ.

CA Paris, 25 October 2023, LawLex202300012891JBJ, emphasizing that the negotiation of a specific discount, known as the “Lidl” tax, with suppliers who also supply the hard discount chain, does not constitute the obtaining of an advantage without consideration, since its purpose is not to remunerate a commercial cooperation service, but to maintain the listing of their products in the retailer's stores.

CA Paris, 7 January 2022, LawLex202200000296JBJ, ruling that the reservation of exhibition space constitutes a service effectively rendered to the event organizer, within the meaning of Article L. 442-1, I, 1° of the Commercial Code, even if the latter is forced to cancel the event.

CA Paris, 10 May 2023, LawLex202300007759JBJ, clarifying that Article L. 442-1, I, 1° does not prohibit the issue of credit notes or the granting of tariff reductions unconnected with any commercial service.

CA Paris, 19 June 2024, LawLex202400004676JBJ.

CA Paris, 29 May 2024, LawLex202400004008JBJ.

Cf. CA Paris, 18 November 2020, LawLex202000003310JBJ, holding that unlike Article L. 442-1, I, 2° (formerly Art. L. 442-6, I, 2°) of the Commercial Code, Article L. 442-1, I, 1° (formerly Art. L. 442-6, I, 1°) cannot be invoked to denounce the inadequacy of the price to the service. 

Cass. com., 12 July 2011, LawLex201100001253JBJ.

Cass. com., 8 February 2005, LawLex200500004421JBJ.

Cass. com., 27 April 2011, LawLex201100000849JBJ; CA Orléans, 12 April 2012, LawLex201200000568JBJ; CA Versailles, 24 September 2009, LawLex201000000127JBJ. See also CA Rennes, 20 January 2009, LawLex200900002923JBJ, considering that the fact that a commercialization service produced very few concrete results constitutes an indication, which by itself is not sufficient, of its fictitious character. See also CA Nîmes, 17 January 2008, LawLex200800000348JBJ; CA Angers, 10 June 2008, LawLex200800001991JBJ; CA Bourges, 10 December 2009, LawLex201100000854JBJ.

CA Paris, 15 January 2015, LawLex201500000060JBJ. See also Cass. com, 26 September 2018, LawLex201800001414JBJ. Cf. in sectors other than mass-market retailing , T. com. CA Paris, 13 April 2022, LawLex202300003562JBJ, holding that remuneration equal to 4% of the turnover achieved would not be disproportionate to the advantage of tripling sales in the first year of the relationship and increasing them by 43% in the second.

CA Paris, 28 November 2012, LawLex201200002396JBJ; 15 October 2020, LawLex202000002750JBJ.

CA Paris, 4 October 2017, LawLex201700001611JBJ; 14 February 2018, LawLex201800000294JBJ; 9 January 2019, LawLex201900000017JBJ; 1 September 2021, LawLex202100005135JBJ, 10 February 2022, LawLex202200000977JBJ, holding that the invoicing of a service provider is not disproportionate simply because the new operator chosen after the termination of relations charges lower prices, provided that it has not been established that the services offered are identical; 12 May 2022, LawLex202200002509JBJ, holding that digital and offset printing rates cannot be compared.

For an application to discounts see CA Paris, 13 September 2017, LawLex201700001459JBJ; 28 March 2018, LawLex201800000543JBJ; CEPC, Opinion No 18-2 of 12 April 2018.

T. com. Evry, 14 October 2009, LawLex200900003234JBJ, upheld by CA Paris, 2 February 2012, LawLex201200000189JBJ, cited above and on referral from the Court of Cassation, CA Paris, 1 July 2015, LawLex201500000875JBJ; CA Nîmes, 25 February 2010, LawLex201000000396JBJ; T. com. Romans-sur-Isère, 28 March 2012, LawLex201400002241JBJ, remuneration 31 times higher than the amount invoiced for the same service by an independent statistical institute; CA Paris, 15 May 2024, LawLex202400005692JBJ, emphasizing that a request to increase the rates charged by 84% does not constitute an attempt to obtain a disproportionate advantage since its excessive nature is not established with regard to either the value of the service or that of competing offers.

Cass. com., 18 October 2011, LawLex201100001646JBJ; overruling CA Douai, 17 December 2009, LawLex201100001701JBJ.

CA Rennes, 20 January 2009, LawLex200900002923JBJ and LawLex200900003104JBJ.

CA Paris, 12 May 2016, LawLex201600000960JBJ; 13 September 2017, LawLex201700001459JBJ, holding that the supplier who succeeded in renegotiating certain terms of the contract while accepting the rate of remuneration proposed by the distributor cannot claim that the rate is disproportionate.

Cass. com., 11 September 2012, LawLex201200002023JBJ. Also see CA Paris, 27 February 2020, LawLex202000000284JBJ, requiring full refunds when the agency does not substantiate any service rendered ; 29 November 2023, LawLex202300014222JBJ

Cass. com., 10 September 2013, LawLex201300001297JBJ, which considers that the distributor cannot be required to reimburse all the sums collected; on referral, CA Paris, 1 July 2015, LawLex201500000875JBJ, estimating the over-payment at more than EUR 16 million.

On this concept, see CA Paris, 11 May 2023, LawLex202300007229JBJ, ruling that Article L. 442-1, I, 1° cannot be invoked in the context of a contract to find collaborators to challenge the remuneration of the service provider, which does not constitute an “benefit” within the meaning of the text.

See also CA Paris, 31 July 2019, LawLex201900000961JBJ, applying the provision to end-of-year discounts, and considering that when they are based on quantities actually ordered, they do not constitute the obtaining of an advantage without consideration.

T. com. Paris, 11 May 2021, LawLex202100002834JBJ; CA Paris, 4 November 2020, LawLex202000003828JBJ; 18 November 2020, LawLex202000003310JBJ, considering that contrary to Article L. 442-1, I, 2° of the Commercial Code, Article L. 442-1, I, 1° cannot be invoked to denounce the inadequacy of the price for the service.

Cons. constit., 6 October 2022, LawLex202200008242JBJ.

Cons. d'Et., 21 December 2022, LawLex202300000057JBJ,

Cass. com. 11 January 2023, LawLex202300000524JBJ, overruling on this point CA Paris, 4 November 2020, LawLex202000003828JBJ, aforementioned. See also. CA Paris, 10 May 2023, LawLex202300007759JBJ, emphasizing that Article L. 442-1, I, 1° allows control of the proportionate nature of pricing advantages, such as price credits or reductions, without leading to a generalized review of the loss due to imbalance in consideration or strict appropriateness of the price to a service, which would be in breach of contractual freedom.

184. What constitutes the offense ?