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Hamon Act : B2B aspects, what changes in the commercial relationships between professional partners ?
Article IT and Data Protection Intellectual Property, Media, and Art Law Competition, Retail and Consumer Law Commercial and International Contracts | 20/03/14 | 7 min. | Mahasti Razavi Alexandra Berg-Moussa
The Loi relative à la Consommation dated March 17, 2014 (aka « Hamon Act ») has just been enacted, further to the decision of the Conseil Constitutionnel dated last March 13. The Hamon Act includes important B2B aspects, which impact inter alia the commercial relationships between professional partners. Continuing the trend initiated a few years ago with the Dutreil and Chatel regulations and more recently with the Loi de Modernisation de l’Economie of 2008, the legislator intends to increase supervision and control of the commercial relationships between professional partners (including between suppliers and distributors), with a view that consumers will benefit from a reduction of the imbalance in this field (more competition, more favorable pricing policies etc.).
Certain provisions of the commercial code are substantially modified. We will not address the numerous modifications on provisions dealing with certain specific sectors only (such as food/fruits and vegetables), but only those pertaining to provisions having a more general scope.
First, the legislator confirms its intent to have the supplier’s general terms of sale (GTS) being not only the starting point but also the « sole basis » of the commercial negotiations. This « sole basis » concept is introduced in article L. 441-6 of the commercial code. Its interpretation will have to be clarified taking into account that, in the framework of the negotiations, including inter alia the annual negotiations between suppliers and distributors, other to- pics which are rarely dealt with in the GTS need to be addressed (logistics, after sale conditions etc.). In addition, this does not prevent the parties to negotiate the terms of their agreement, and therefore to diverge from the set terms of the GTS, including for example to come close to the general terms and conditions of the buyer. However, the introduction of this provision reiterates the legislator’s and the authorities’ readiness, as expressed for many years, that the seller’s GTS prevail over the buyer’s general terms of purchase, which is in line with the recent Paris Court of Appeal decision on the ground of the significant imbalance (Paris Court of Appeal, December 18, 2013). According to the pro- visions of article L. 441-7 of the commercial code as modified, and except for products submitted to a specific commercialization cycle, the GTS have to be communicated to the distributor at the latest three months before the annual March 1 deadline (which is the date when the annual single agreement of article L. 441-7 of the commercial code has to be finalized). Supplier’s standard price list shall also be communicated to the distributor at the same time.
The maximum payment terms authorized under article L. 441-6 of the commercial code have not been modified. The legislator clarified the case of aggregate or summary invoices, for which the maximum payment terms are of 45 days from invoice date. Certain clarifications have also been made on provisions or practices consisting in delaying the starting point of payment terms (including contractual clauses providing for verification or acceptance processes of products and services), which are prohibited if they delay abusively the starting point of payment terms, and in such case can be sanctioned by an administrative fine under the new power of sanction granted to the DGCCRF (see below).
The content of the annual single agreement of article L. 441-7 of the commercial code has been completed. This agreement shall now indicate:
• Supplier’s standard price scheme (or the way the version taken as a basis for the negotiation can be consulted);
• The applicable price reductions resulting from the negotiation; and
• The remuneration of the « other obligations » (former services distincts) or the global price reduction corresponding to such obligations.
Concerning the control of the remunerations granted for commercial cooperation services and other obligations (or price reductions for the latest), the prohibition of their clear disproportion compared to the value of the relevant services and obligations is now incorporated in article L. 441-7 of the commercial code as modified, which in addition provides that the various remunerations and price reductions set forth in the business plan as well as the price deriving from the negotiation shall enter into force at the same moment.
Failure to conclude an annual single agreement compliant with the law within the deadline may now give rise to an administrative fine, deriving from the new power of sanction of the DGCCRF (see below).
Additionally, the promotional ad- vantages granted by the sup- plier to the consumers (the Nouveaux Instruments Promotionnels or NIP) do not have to be included in the annual business plan and single agreement, as it was initially contemplated in former draft versions of the Hamon Act. However, article L. 441-7 of the commercial code as modified, indicates that such advantages shall be subject to agency/mandate agreements with the distributor or service provider, and that such agreements shall precise inter alia the amount and nature of such promotional ad- vantages, the period during which they are granted as well as the conditions under which the distributor shall implement the promotion and report the same to the supplier.
A new obligation is borne by the distributor: provide a detailed answer to any written and precise inquiry from the supplier on the performance of the single agreement, within a timeline that cannot exceed 2 months. Article L.441-7 of the commercial code as modified indicates in this respect that “if the answer reveals an incorrect application of the agreement or if the distributor does not provide any answer, the supplier may inform the administrative authority in charge of the competition and consumer issues of the same”. This provision was most likely elaborated and inserted in the commercial code with a view of facilitating the handling of claims that may arise during the year between a supplier and its distributor. However, one may question the practical impact of this provision on the relationships of the relevant parties, including inter alia in the case there will be no answer or an unsatisfactory answer from the distributor.
The list of practices subject to a sanction on the basis of article L. 442- 6 of the commercial code is also modified. The practice consisting in placing, paying or invoicing an order at a price diverging from the agreed price resulting from (i) the implementation of the standard price list included in the GTS, when the same have been accepted by the buyer without negotiation or (ii) the price resulting from the negotiation and subject to the annual single agreement as further amended, as the case may be, is added as a new practice under article L. 442- 6-I-12° of the commercial code (former paragraphs 12 et 13 have been suppressed, as well as the former paragraph 7). The list of advantages entering into the scope of article L. 442-6-I-1°of the commercial code is completed by “any additional request, during contract performance, aiming at maintaining or increasing abusively its margins or profitability”. The wording is general and wide enough to include potentially an important number of practices and trigger interpretation issues.
The abovementioned modifications of articles L. 441-7 and L. 442-6 of the commercial code will enter into effect the first day of the fourth month following the enactment of the Hamon Act. This means that in practice and from a general standpoint, they will apply to the 2015 commercial agreements.
Finally, and this is a substantial change, the DGCCRF’s powers of action concerning the violations of Title IV of Book IV of the commercial code are strengthened with inter alia the introduction of the new articles L. 465-1 and L. 465-2 of the commercial code: possibility to investigate and ascertain violations of the law and to issue injunctions. DGCCRF now has its own power to impose sanctions, namely administrative fines further to certain violations of the law. As a way of example, non-compliance with maximum authorized payment terms under article L. 441-6, 9th paragraph of the commercial code, or with the requirement to conclude the annual single agreement in compliance with and within the timeline set forth by the law, can now give rise to an administrative fine up to €75,000 for an individual and €375,000 for a company (the fine can be doubled in case the violation is reiterated within 2 years following the first sanction).
The procedure set forth in the abovementioned new articles would be a priori fast, and would allow the person/company involved to access the case file, to be assisted by an attorney and to submit its written and/or oral observations.
In addition, the DGCCRF could decide that its decisions be public.
The DGCCRF’s new powers of actions have been validated by the Conseil Constitutionnel, in most cases. The Conseil Constitutionnel however indicated that when an administrative sanction may possibly be cumulated with a criminal sanction, the global amount of the sanctions pronounced shall not be higher than the highest amount of one of the possible sanctions, principle that the administrative and judicial authorities will have to comply with./.
Mahasti Razavi, Partner
Alexandra Berg-Moussa, Counsel