COMPETITION • FRENCH LAW • RESTRICTIVE PRACTICES
Article L. 442-6 (formerly Article L. 442-5) of the Commercial Code prohibits any person from imposing, directly or indirectly, a minimum requirement on the resale price of a product or service, or on a commercial margin, under penalty of a fine of EUR 15,000. This principle applies to any person, supplier, wholesaler, importer, State, and applies to all contracts, sales or provision of services. The law thus enacts a general prohibition also applicable to foreign sellers operating on the French territory. However, like any rule that is punishable under criminal law, it must be interpreted strictly. Thus, maximum prices or margins, and recommended or indicative prices are excluded from the scope of the prohibition as long as the reseller has a margin of discretion and is not under pressure from the supplier to apply them effectively.
In fact, a supplier may not impose compliance with supposedly recommended prices by threatening retaliatory measures of a commercial nature, such as refusal to sell, or exclusion from the benefit of bonuses. The delivery of pre-labelled products, the price of which cannot be changed, is also likely to dissuade the distributor from charging different prices. Article L. 442-6 does not require the supplier to set a minimum price for its distributor, but aims at imposing a minimum character on the resale price. Thus, the refusal to supply a distributor practising a low-price policy or the refusal to sell in order to maintain a certain price range are sanctioned, since they constitute indirect means of imposing prices. Similarly, if a maximum price is set at such a low level that the distributor cannot, without seeing his profit margin considerably reduced, sell below the set price, it constitutes illegal resale price maintenance.
In addition, a contract that contains a RPM clause that is contrary to the rules of competition may be voided. A RPM clause is a stipulation that prohibits distributors from offering promotional discounts on branded products and from engaging in a discount policy, requires them to comply with a floor price or organizes strict monitoring of compliance with the supplier’s price guidelines.
Finally, the distributor and victim of resale price maintenance can also obtain civil damages. The Criminal Chamber of the Court of Cassation has ruled that distributors can obtain compensation for non-pecuniary loss suffered as a result of the practice by the supplier, despite their participation in the infringement. However, compensation for the harm suffered as a result of the imposition of a minimum price requires the distributor concerned to establish that it actually complied with the prices fixed.
The legitimacy of the per se prohibition of the practice of minimum price maintenance has been challenged by legal commentators. In some cases, RPM could be justified from an economic point of view, particularly in the case of new product launches. In addition, the per se prohibition of imposed minimum prices as a result of restrictive practices seems difficult to uphold since the law on anticompetitive practices does not prohibit them when the distributors on which such prices are imposed are not located in the same catchment area. Finally, case law relating to the criminal sanction of minimum prices is generally quite dated. It applies criteria that today appear to be out of step with the triple test, applied by competition authorities, which requires, to classify the practice as RPM, that prices are recommended or discussed, that they are applied in a significant manner and that they are the subject of price monitoring or intervention with a view to enforcing them. In practice, the criminal liability of RPM has virtually fallen into disuse. However, it is still enshrined in the texts and its application in individual cases still appears possible.