Chatel Act : Resale price may now be purchase price less discounts and post margins !

This Act, namely for the development of the competition to the benefit of end-consumers, is a first step of French distribution regulation implemented by French Government. The « Chatel » Act was voted on December 20, 2007. Next step is the reform of the rules applicable to supermarket and hypermarket creation and extension.

In this Act, main issue for supplier/distributor relations is the bottom resale price calculation. Bottom resale price is now the unit purchase price less all « financial advantages » (discounts granted by supplier and remuneration from supplier to distributor) plus specific taxes related to the resale and transportation costs. The financial advantages shall be expressed in percentage of the unit price purchase. For wholesaler working with independent distributor meaning neither subsidiary not affiliated, bottom resale price, an additional 10 % less is granted for calculation.

Any specific condition of sale and conditions for services rendered by the distributor to the supplier shall be given in an annual agreement, either a single contract or a master agreement. The annual agreement shall be made between the parties by March 1 of each calendar year.

Second step of the reform is to hold supplier liable when not having communicated his general terms and conditions of sales to distributor having asked for.

Frédéric Fournier – Partner