On 8 November 2016, the French parliament finally adopted the Law on transparency, the fight against corruption and to the modernization of economic life (« Sapin II »). The text provides adjustments to mechanisms regulating the commercial relations between traders in general and further amends the rules applicable to the agricultural sector. It also reforms Article L. 442-6 of the Commercial Code and toughens administrative sanctions.
1. Recapitulative agreements every year, two years or three years.
The Sapin II Law relaxes the rules concerning the Single Commercial Agreement (“convention unique”), which rubberstamps the outcome of commercial negotiations between suppliers and distributors (Art. L. 441-7 Commercial Code) and between suppliers and wholesalers (Art. L. 441-7-1). In order to make prices visible in the longer term, it will now be possible to conclude recapitulative agreements for a period of one, two or three years. The text thus specifies that “When [the agreement] is concluded for a period of two or three years, it must set out the condition according to which the agreed price is revised. These arrangements may provide for account to be taken of one or several public indices reflecting the change of the price of factors of production”. While the date of the conclusion of single commercial agreements was initially supposed to be brought forward to 1 February, in the end the provision did not amend the provisions currently in force: the deadline therefore is still 1 March. On the other hand, whereas originally those amendments were intended to apply only to agreements concluded from 1 January 2018, the definitive text fixes their entry into force at 1 January 2017.
2. Tougher sanctions and a new derogation for payment periods.
To better combat abusive payment periods, the Sapin II Law II has increased administrative fines. The maximum fine applicable to legal persons is raised from EUR 375 000 to EUR 2 million. Article L. 441-6 introduces a new maximum contractual payment period of 90 days from the date of issue of the invoice for the payment of purchases made before VAT, in application of Article 275 of the General Tax Code, for goods intended to be supplied “as is” outside the European Union, i.e., in the context of long-distance export activities (“grand export”). This derogation, which will have to be expressly stipulated in contracts, must not constitute a manifest abuse in respect of the creditor and may not be used for purchases made by large companies i.e. those which by virtue of Decree No 2008-1354, employ at least 5 000 staff or achieve more than EUR 1.5 billion turnover and more than EUR 2 billion total balance sheet).
3. New restrictive practices.
The text extends the scope of those practices consisting in obtaining a benefit from a partner which does not correspond to a commercial service actually rendered or which is manifestly disproportionate to the service rendered (Art. L. 442-6, I, 1° Commercial Code), to commercial promotional activities and to any “payment for services rendered by an international centralized body bringing together distributors”. It also introduces new restrictive practices: i) requiring a price revision clause (for the single commercial agreements referred to in Articles L. 441-7 and L. 441-7-1) or a price re-negotiation clause (for the contracts referred to in Article L. 441-8), which makes reference to one or several indices public without any direct relation to the products or services being the subject matter of the single commercial agreement or the contract concerned (new paragraph 7° of Art. 442-6); ii) the imposition of a clause allowing a commercial partner to be made subject or attempting to make a commercial partner subject to late delivery penalties in the event of circumstances amounting to force majeure (new point 13° of Art. L. 442-6).
4. Tougher sanctions.
The civil fine pursuant to Article L. 442-6, III is increased from EUR 2 to 5 million in the case of actions instituted by the Minister. It can still be increased to three times the amount of unduly paid sums or, « in a manner proportionate to the benefit derived from the breach » to 5% of the pre-tax turnover achieved in France by the offending company. Article L. 465-2, V now requires the systematic publication of the sanction imposed in application of Articles L. 441-6, IV and L. 443-1 on payment periods.
5. New provisions specific to the agricultural sector.
Noteworthy provisions include: i) the obligation to indicate in the general terms of sale for certain food products composed of non-processed agricultural products, the « average provisional price » proposed by the seller to the producer of those agricultural products; ii) the limitation of the amount of NIPs (nouveaux instruments promotionnels – new promotional instruments) to 30% of the value of the unit price scale, including administration costs for the agricultural products referred to in Article L. 441-2-1, as well as for milk and dairy products; iii) the obligation to include in certain contracts for the sale of agricultural products, within the criteria and procedures for determining price, a reference to one or several indicators or public indices designated by the Law; iv) prohibition on transferring obligations arising from contracts between producers and buyers on the purchase of cow’s milk for a period of seven years from the date of publication of the Law; and v) the obligation to state, in contracts of a duration of less than one year between suppliers and distributors, the price or the criteria and procedures for determining the purchase price of non-processed agricultural products incorporated into food products.