Draft Act for competition development for the consumers’ benefit of October 31, 2007

This reform is a improved sequel of Act dated August 2, 2005, which according to French Council of ministers had given the opportunity to increase consumers’ purchase capacity of 2.5 Meuros per year and created 20 000 employments a year. Private labels price reduced of 3.4% in two years (Luc Chatel). According to Parliament opposition, one may note a price increase of 2 to 6.7 %.

The reform is being examined before French Parliament and supposed to be adopted by the beginning of January 2008.

According to State Secretary Luc Chatel, the post margins (back discounts) increased from 35 to 36 %; price index in France among European countries is 105 in lieu of 100.

All statements encouraging further steps to liberalization of bottom resale price, as known in France

Major purposes are:

– reduce the bottom resale price with permitting deduction of any discount for the purchase of product or remuneration granted to distributors for services rendered to supplier in order to favor the sale of the products;

– decriminalize the violation of non-communication of general terms of sales or services.

– create a unique agreement for general terms, discounts and commercial cooperation, 35 000 suppliers in front of 5 purchase organizations.

Risk is that the possibility to negotiate general terms of sale and the to-date formalized commercial cooperation collapse makes the supplier pay for a non effective commercial promotion (Michel Raison, reporting representative of the draft act).

Commission of Parliament examining the draft Act (the « Commission ») turned down a proposal to prohibit the payment of referencing fees by a supplier.

Frédéric Fournier,

Partner