This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

An isolated decision of the Court of Cassation had ruled that the supplier should ensure that the party owing the exclusive purchasing obligation has the means of charging competitive prices . However, the court is reluctant to intervene in the fixing of the price and in assessing whether prices and margins are competitive. As certain courts have emphasized, charging competitive prices is not an e …

Competitive prices.

In a judgment dated 1 December 1995 , the Plenary Assembly of the Court of Cassation accepted that the supplier has the power to unilaterally fix the price provided that it does not abuse that power. New article 1164 of the Civil Code, resulting from the Ordinance of 10 February 2016 for the reform of contract law expressly enshrines this case law by providing that “in master agreements, it may be agreed that the price will be set unilaterally by one of the parties, the onus falling to that party to justify the amount in the event of contestation”. The text also adds that “In the case of abuse in the fixing of the price, the court may be seized of an application for damages and the appropriate resolution of the contract” . In the presence of an exclusive purchase clause to the benefit of the franchisor, abuse is excluded when the franchisee is free to choose its supplier and products and to negotiate prices . Furthermore, in the absence of any exclusive purchase obligation, a franchisor does not commit abuse by fixing the price of goods sold to its franchisees , in particular where the franchisee also has the possibility of termination with a very short notice period . The fact that the franchisor unilaterally fixes the price is not abusive where the franchisee expresses its implicit and unambiguous consent on the price by paying invoices at that price . Lastly, referring to the franchisor's general terms and conditions is not abusive where in the event of modifications, the franchisee may challenge them and have the price fixed by an expert , provided that the implementation of this procedure is practicable in terms of cost and time . A franchisor who invoices the goods delivered to the franchisee at a price higher than their purchase price does not breach his contractual obligations insofar as he has reserved the right to add on the costs incurred for transport and repackaging, plus administrative costs. However, in demanding payment of those costs, the franchisor must break down in its invoices the administrative and repackaging costs it has passed on to the franchisee . Lastly, evidence of abuse by a franchisor in fixing the price for the goods sold to its franchisee cannot result from the comparison of data which are not comparable . Thus, a franchisee does not establish abuse in the setting of the price preventing him from carrying insofar as the reference price was charged almost three years previously and such a report does not make it possible to extrapolate the evolution of the prices of the other products . Similarly, the lower prices charged by branches of the franchisor do not demonstrate the abuse committed against the franchisees .


See, in particular, Cass. Ass. Plén., 1 December 1995, LawLex200200004345JBJ.

CA Paris, 11 December 2019, LawLex201900001535JBJ, holding that the penalty for an abuse committed by the franchisor in the unilateral fixing of the price does not consist in declaring the price clause to be "unwritten", but in awarding contractual compensation to the franchisee or, in the event of significant abuse, in terminating the contract.

CA Paris, 11 December 2019, LawLex201900001535JBJ, cited above

CA Paris, 11 December 2019, LawLex201900001535JBJ

Cass. com., 21 January 1997, LawLex200200005629JBJ, upholding CA Paris, 15 September 1994, LawLex200200005408JBJ.

CA Paris, 2 March 1999, LawLex200200003119JBJ.

CA Paris, 26 June 1997, LawLex200200005028JBJ; CA Paris, 1 October 2014, LawLex201400000996JBJ.

Cass. com., 12 May 2004, LawLex200400001922JBJ, where the franchisor unilaterally fixes the price, the franchisee expresses its implicit and non-ambiguous consent on the price by paying the invoices at that price for three years.

Cass. com., 6 May 2002, LawLex200200004600JBJ.

CA Paris, 26 March 1999, LawLex200200005197JBJ.

CA Paris, 27 September 2019, LawLex201900001137JBJ.

CA Montpellier, 15 May 1996, LawLex200200005566JBJ: "abuse in the fixing of the price, as part of a franchise contract giving benefits and duties to either of the contractual partners, cannot be proven from a mere comparison with the operating accounts of a craftsman having decided to control the manufacturing process as a whole, in a partial reasoning which does not take care of the respective net operating incomes and where there is nothing to indicate that comparable prices are compared, i.e. relating to a same product requiring same finishing costs downstream in terms of hired staff, and in particular baking, and by giving the same facilities in terms of stock management and losses".

Control of abuse.

An isolated decision of the Court of Cassation had ruled that the supplier should ensure that the party owing the exclusive purchasing obligation has the means of charging competitive prices . However, the court is reluctant to intervene in the fixing of the price and in assessing whether prices and margins are competitive. As certain courts have emphasized, charging competitive prices is not an essential obligation of the franchisor . 

A franchisee also cannot bring an action for termination of the franchise agreement solely on the grounds that the franchisor's central purchasing agency does not offer competitive rates, insofar as the obtaining of atttractive prices is only one criterion among many of the efficiency of the franchise . Nevertheless, the franchisor fails to meet his contractual obligations by not creating a central purchasing body but instead by setting up a procurement center which does not offer prices which are any lower than those franchisees can negotiate individually with suppliers . Likewise, the mere comparison between the franchisee's margins and those of other networks does not establish any misconduct by the franchisor where it has made no commitments in terms of gross margin rates and the franchisee has always exceeded the turnover forecasts .  The lack of competitive pricing by the franchisor cannot be established on the basis of a few isolated products . Likewise, the franchisee cannot blame the franchisor for a non-competitive pricing policy where it has not stated any cheaper supply sources as the contract requires it to  or has not used the referencing procedure for new suppliers as stipulated in the contract . The refusal by the franchisor to list a supplier giving prices which are significantly more attractive than those charged to franchisees, but for products of poorer quality, is not abusive . Furthermore, the price positioning of the franchisor cannot be criticized by a franchisee who, having exploited the same establishment under another trade name for several years prior to signing the contract, was perfectly aware of the local competitive environment and remains in control of the fixing of his resale prices . The fact that the preamble of the agreement states that the supplier will put commercial means at the disposal of the distributor in order to give customers competitive terms, does not mean that there is an obligation to achieve a specific result i.e. to offer prices that are below those of competitors, insofar as the distributor is free to obtain its supplies elsewhere . Lastly, where the franchisee receives several types of discounts on a monthly basis, particularly in the context of the store's loyalty scheme, he cannot claim that the activity is not profitable soley on the basis of the practice of zero margins on certain products .

More recent decisions have however adopted an approach which is more favorable to distributors. They have found that the supplier fails to fulfill his obligations where he claims to possess know-how based on his command of the supply logistics enabling competitive purchasing conditions but in practice charges prices higher than those of his competitors . This is also the case where the supplier sells to franchisees products subject to a 4% profit margin when he has promised to charge the supplier's purchase price and pass on the rebates obtained from the latter . Those decisions should give rise to greater care in the drafting of contractual promises.

Cass. com., 3 November 1992, LawLex200200005951JBJ.

Angers, 24 January 2012, LawLex201200000291JBJ

CA Reims, 6 August 2013, LawLex201300001245JBJ.

CA Paris, 3 September 2014, LawLex201400000857JBJ.

CA Paris, 19 March 2014, LawLex201400001746JBJ.

CA Rennes, 8 April 2014, LawLex201400001873JBJ.

CA Bordeaux, 14 December 2011, LawLex201200002009JBJ.

Cass. com., 29 March 2017, LawLex201700000628JBJ.

CA Rennes, 23 March 2004, LawLex200400003329JBJ.

CA Paris, 27 March 2019, LawLex201900000495JBJ.

CA Toulouse, 11 December 2007, LawLex200800000834JBJ.

CA Paris, 1 April 2015, LawLex201500000461JBJ.

CA Paris, 12 January 2016, LawLex201600000076JBJ.

CA Paris, 2 March 2016, LawLex201600000495JBJ.

French Distribution Law

407. Competitive prices.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

407. Competitive prices.

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise