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

Originally the provision on economic dependence was, like other anticompetitive practices, subject to the discovery of a real or potential anticompetitive effect. As the abuse of economic dependence usually occurs in relationships between undertakings by definition it undermines a specific undertaking, often not a very large one. Therefore, establishing proof of a general effect on the market was  …

Anticompetitive object or effect

An undertaking's conduct towards a dependent undertaking is only prohibited if “on the one hand it restricts competition on a market and if, on the other hand, it is abusive, i.e. it is behavior that would not have been possible were it not for the undertaking's domination of another” . Thus, only behavior that is abnormal from the viewpoint of competition can fall within Article L. 420-2(2). The open-ended list of prohibited behavior found in the last paragraph of Article L. 420-2 includes in particular refusal to sell, tied sales and discriminatory practices and, since the entry into force of the Dutreil law , range agreements. The imposition of a discount system may also allow an operator who maintains an undertaking in a situation of economic dependence to perpetuate a situation of uncertainty that further reduces its commercial autonomy in relation to the operator, whereas the undertaking is already restricted by the situation of dependence itself . In practice, abuse takes different forms depending on whether the dependent undertaking is a distributor or supplier. In the first case, it generally involves refusal to supply or to deliver , discriminatory practices , or breach of contract . In the latter, the dependent supplier frequently claims to be the victim of discrimination, delisting or the threat of delisting. For example, a distributor who takes advantage of the greater bargaining power gained from a merger by attempting to renegotiate prices and advantages (the so-called "wedding-basket") may be regarded as abusively exploiting a situation of economic dependence . Similarly, it is an abuse for a central purchasing body to impose a most favored customer provision on undertakings dependent on it: it limits competition between central purchasing bodies, as its beneficiary is assured of obtaining the best commercial terms, and prevents prices from decreasing .  Denial of access to an essential facility also constitutes an abuse of economic dependence when the monopolistic operator sets an unjustified or discriminatory price for such access even though the facility is essential to its potential competitors .

In the distribution network context, distributors often complain of specific abusive behavior. The competition authorities hold that network reorganization is not in itself an abuse of economic dependence. Only if discriminatory practices are put in place as part of the reorganization can it fall under the scope of Article L 420-2 of the Commercial Code . It has also been claimed that the unilateral modification of contract terms could be an abusive exploitation of a state of economic dependence where the distributor has no access to any alternative supply, due to the commercial policies of the supplier and the need to maintain sufficient stock to meet the needs of customers . To be unlawful, the modification of contract terms must have an anticompetitive object or effect . This is not the case when it is the inevitable consequence of the opening of the market imposed by a European directive . Finally, interference by the supplier in the running of the distributor's business is interpreted as an abuse of economic dependence where the latter has no access to an alternative supply source .

Competition Council Report for 1988, XXXVI. 

CA Rennes, 13 May 1992, LawLex200200002519JBJ.

Cass. com., 22 May 2001, LawLex200200002385JBJ.

Cass. com., 10 May 2011, LawLex201100000931JBJ, on the evolution of the status of individual floor traders, which has become inevitable since the adoption of the ISD Directive of 10 May 1993 and the adoption of electronic trading, and which has been the subject of warnings in public reports and discussions with the undertakings responsible for ensuring the proper functioning of the regulated financial instruments market.

Cass. com., 16 December 1997, LawLex200200002617JBJ; CA Paris, 3 October 2018, LawLex201800001482JBJ, holding that the franchisor does not abuse the economic dependence of its franchisee by imposing below-cost selling practices on it simply because the transfer prices of the goods are higher than the recommended selling prices, since it has not been shown that they are actually imposed, insofar as the franchisee had neither the desire nor the technical ability to amend the prices.

Competition Authority decision No 20-D-04 of 16 March 2020, LawLex202000000542JBJ, specifying that the criteria for abuse of a dominant position in terms of discounts defined in the Michelin ruling can be extended to abuses of economic dependence, even if competition is not affected in the same way, as the discount policy may, in the first case, enable an operator in a dominant position to exert strong pressure on a reseller not to buy from its competitor, while in the second case, it accentuates the economic dependence in which the supplier already holds its reseller by further reducing its commercial autonomy.

A supplier who repeatedly and continuously delays deliveries or refuses to supply its resellers and puts them at a disadvantage compared to its integrated network, preventing them from developing their business under normal conditions, engages in abusive behavior,  see Competition Authority decision No 20-D-04 of 16 March 2020, LawLex202000000542JBJ, specifying that a manufacturer who ensures the quasi-exclusivity of the supply of a reseller in a situation of economic dependence with respect to it, must justify its delays and refusals to deliver by objective reasons, the distributor having no other supply options.   For other examples, see Competition Council decision No 87-MC-03 of 25 March 1987, LawLex200002379JBJ: refusal to sell to a discount distributor; CA Paris, 22 January 1992, LawLex200002744JBJ, refusing to classify as abusive a refusal to sell in the absence of proof that the product is indispensable for the distributor's activity.

For applications, see CA Paris, 17 June 1992, LawLex200002809JBJ; Competition Council decision No 04-D-44 of 15 September 2004, LawLex200400002151JBJ. Also see CA Paris, 3 October 2018, LawLex201800001482JBJ, holding that a franchisor does not abuse the economic dependence of its franchisee because another member of the network, located several hundred kilometers away, benefits from different pricing terms, in the absence of a competitive situation between the points of sale.

See, in particular, for cases rejecting abuse resulting from the termination of contractual relations when an alternative solution is quickly found: Competition Council decision No 90-D-36 of 30 October 1990, LawLex200002470JBJ; CA Paris, 30 March 1992, LawLex200002569JBJ; CA Paris, 4 November 2010, LawLex201000001274JBJ, in the case of a trading partner having been warned about the termination of its contractual relationship nine months before the end of the term, and unable to show that it was impossible to do business with any other operator on the market.

Competition Council decision No 93-D-21 of 8 June 1993, LawLex200200003056JBJ; upheld in CA Paris, 25 May1994, LawLex200200002730JBJ.

Competition Council decision No 93-D-59 of 15 December 1993, LawLex200200002516JBJ.

CA Paris, 9 September 1997, LawLex200200002466JBJ.

On this point, see Cass. com., 16 June 1992, LawLex200200002359JBJ; Competition Council decision No 06-D-26 of 15 September 2006, LawLex200600001971JBJ.

Abusive conduct

Originally the provision on economic dependence was, like other anticompetitive practices, subject to the discovery of a real or potential anticompetitive effect. As the abuse of economic dependence usually occurs in relationships between undertakings by definition it undermines a specific undertaking, often not a very large one. Therefore, establishing proof of a general effect on the market was frequently very difficult, as the harm sustained by a single undertaking was generally not sufficient to fulfill this requirement. Would the victimized firm have to be eliminated for the behavior to count as an abuse? At first authorities seemed to lean that way, but such an interpretation emptied the provision of its content.

There was an alternative interpretation whereby only abuses of dependence producing perceptible effects, i.e. emanating from sizeable undertakings, should attract liability under the prohibition. The NRE Law seems to have opted for this second interpretation, as the indirect reference (through cross-referenced provisions) to the overall market effect has been deleted. Henceforth abuse of economic dependence is only banned if it is “likely to affect the operation or structure of competition” . Thus, even if franchised undertakings in a food chain are in a state of economic dependence with regard to the franchisor and the latter exploits that situation by imposing abusive payment terms, and such behavior is likely to exclude the complainants from the market, no abuse of economic dependence can be established since that circumstance has little or no impact on the competitive situation on the market given the existence of numerous substitutes, the large number of restaurants and the low barriers to entry, which, on the contrary, contribute to the intensification of intra-sectoral competition . A change of brand of a part of the network is no longer capable, in itself, of fulfilling the conditions of absence of alternative solution and effect on the structure of competition which are required by law .

For the requirement of an anticompetitive object or effect to find abuse of economic dependence, see Cass. com., 22 May 2001, LawLex200200002385JBJ; CA Versailles, 27 March 1997, LawLex200200002378JBJ; Cass. com., 8 March 2016, LawLex201600000541JBJ, stating the condition of effect on the operation or structure of competition "on a market"; 13 September 2017, LawLex201700001451JBJ; Competition Authority decision No 17-D-15 of 9 August 2017, LawLex201700001357JBJ; No 20-D-04 of 16 March 2020, LawLex202000000542JBJ, holding that the manufacturer, which maintained its resellers in a state of uncertainty as to the quantities that would be delivered to them and the discounts that would be applied to them, treated them in a discriminatory manner in relation to its internal distribution channels, retained a competitive advantage and reduced their ability to compete effectively in the distribution of its products, and limited the competitive drive to develop new local services for consumers (advice on purchases, product demonstrations, home delivery, pre-installation of software), has engaged in conduct contrary to Article L. 420-2, paragraph 2, of the Commercial Code.

Competition Authority decision No 18-D-25 of 6 December 2018, LawLex201900002050JBJ.

Competition Authority decision No 18-D-22 of 17 October 2018, LawLex201800001604JBJ. In this case, the franchisees claimed that they were in a state of collective dependence on the franchisor but the Competition Authority considered that this state of collective dependence could not be established because of their different contractual arrangements within the franchise network.

French Competition Law

372. Anticompetitive object or effect

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372. Anticompetitive object or effect

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