Reform of business and competition law : Act Chatel II (Sales T&Cs, competition authorities, commercial lease)

Reform of business and competition law : Act Chatel II (Sales T&Cs, competition authorities, commercial lease)

Three months after the Chatel Act, which purpose was the reduction of the bottom sales price, and the creation of a Unique Agreement for all sales conditions and services rendered by the distributor, French Government has consulted all operators on French market and is up to issue a draft Act which will critically modify distribution law and market practices. 

1. T&Cs to be reviewed for payment terms.

Further to Mr. Novelli’s project, payement terms should be reduced to 45 days end of month or 60 days from invoice date, unless otherwise provided. Shall be abusive – and thus one may be held liable in such case, any payment term granted over these periods.

Interest rate for late payment shall increase from 1,5 time French legal interest to 3 times or from 7 to 10 points over the ECB latest refinancing rate.

2. Commercial tenant lease to be reviewed

The rent increase reference rate shall be no longer construction costs index but consumption index.

3. T&Cs variation.

Back to the roots : French case law and Dutreil administative notes always admitted that supplier or service provided uses different T&Cs depending on the various categories of its clients (subject to non-discrimination rules). 2005 Dutreil Act had provided that a Government decree would indicate the criteria to be used for defining each client categories. French administration failed in trying so. Such project will be deleted. Sales or Service T&Cs remains the « basis » of commercial negotiation but particular provisions should now deal with specific conditions of sales or services, which may remain confidential between the parties..

4. Discrimination without abuse.

Deletion of Article L.442-6 I 1° of French Commercial Code (re : civil liability of any party having discriminatory purchase or sales practices, with no effective consideration and creating an advantage or disadvantage for a competitor in the competition) is now contemplated in the draft Act.

Paragraphs 2° a) et b) of this Article should be turned into 1° et 2°. Any professional operator could then liable for obtaining or requiring an advantage with no consideration or manifestly disproportionate, or for abusing of its purchase or sale power (for instance in particular by requiring disproportionate penalties).

More aggressive, the draft Act contemplates to provide that any « most preferred » client or supplier provision would be null and void. One should note that in the same Article, any provision (i) which causes retroactive price reduction or retroactive commercial cooperation (with French meaning) or (ii) under which referencing of products or supplier or client is subject to upfront payment, (iii) prohibiting receivable transfer.

One may consider that the draft Act has been inspired by the recent Irish similar reform.

5. National Competition Authority will replace current Council of the Competition , with more powers and an improving organization.

French Government will not use the National Assembly process but modify current rules by means of Government ordinance…

Frédéric Fournier

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