Promotion of the Egalim Law

The “Egalim” law, also known as the “Food” law, is a text adopted by Parliament on October 2, 2018 and promulgated on November 1, 2018.

This law, resulting from the Estates General on Food, has three objectives:

• Pay the fair price to producers, to allow them to live with dignity from their work;
• Strengthen the health, environmental and nutritional quality of products;
• Promoting healthy, safe and sustainable food for all.

To achieve the first of these objectives, it empowered the government to regulate promotions by way of ordinance.

The promotions are capped twice: on the one hand, in value (cap of 34%) and on the other hand, in volume (cap of 25%).

All foodstuffs are concerned, whether they are processed or not, whether they are sold under a national brand or private label.

The regulations provide that the promotional advantages granted to the consumer for a specific product are not greater than 34 % of the sale price to the consumer or an increase in the equivalent quantity sold.

According to the DGCCRF, are expressly included in the device:

“Offers with an announcement of a quantified price reduction (eg: “minus X%”);
Offers accompanied by an increase in the quantity offered (of the type “including X% offered” or “plus X% offered” or “2 +1”);
Loyalty or jackpot benefits allocated to a product: the purchase of a specific product gives the right to obtain a determined and quantified amount (accumulated on a loyalty card or subject to a reduction), which the consumer can use later either for a purchase, of the same product or a different product, or as a deduction from the total amount of his purchases, in an establishment of the same brand (e.g.: "X% of the price of the prized product on the store's loyalty card”);
Reduction coupons granted by suppliers on a specific product (printable vouchers, coupons, or refunds after sending proof of purchase to the supplier - eg: "X cents deducted" or "X cents refunded"). In the case of a product bearing a deferred reduction voucher allocated to a specific product, the verification of the ceiling in value of the promotions will be carried out on the price of the product to which the reduction relates”.

According to the administration, the following practices are not concerned:

• "Cagnottage not allocated to a product: obtaining a kitty (on the loyalty card or through a reduction voucher), which the consumer can use later, is not linked to the purchase of a given product but, for example, on the purchase of a given amount over a certain period and on all or a category of products offered for sale by the store; this is for example obtaining an amount of 10 euros on the loyalty card if the total amount of products purchased on a particular date in the store or on a given department is greater than 50 euros;
• Pricing practices presented as advantageous for the consumer without announcements of quantified price reductions but with literary advertisements such as “shock price”, “low price”;
• The offer of a different product, including food, for one or more identical products purchased (sale with premium);
• Promotional advantages relating to perishable products when they are threatened with rapid deterioration, provided that the promotional advantage is not the subject of any advertising or announcement outside the point of sale”.

No. The regulations expressly forbid it. On the other hand, the term “offered” can always be used.

In addition to the value framework, the regulations also provide that the benefits, granted by the supplier or by the distributor, must relate to a quantity of products not representing more than 25 % of a volume or a figure of business determined in advance by the parties to the contract.

This threshold of 25% is assessed in relation to:

• The forecast turnover provided for in the single agreement;
• The projected volume agreed by the parties under a contract for the supply of products manufactured under a private label;
• The volume commitments made by the parties for perishable agricultural products or from short production cycles, live animals, carcasses or for fishery and aquaculture products.

Non-compliance with the framework of promotions is liable, for a legal person, to an administrative fine of a maximum amount of €375,000 or half of the advertising expenses incurred under the promotional advantage.

Being assisted by counsel and approaching the administration so that it takes a formal position on the validity of their price reductions makes it possible, if not to avoid, at least to limit this type of risk.
Indeed, if there is no codified ruling procedure in this area, the administration has, on the other hand, invited operators to contact it in the actual text of the guidelines. The administration even specifies that the guidelines will be supplemented in order to integrate promotional practices not initially listed.

No

The ADLC does not have to demonstrate the anti-competitive effects of a restriction which is considered to have an anti-competitive object (policy of imposed prices for example). In other cases, the anti-competitive effects must be demonstrated.

As mentioned in question 3 of the “Procedural aspects” section, the ADLC will determine whether the four conditions, in particular productivity gains, are met for an individual exemption to apply.

See questions 3, 5 and 10 under the heading “Procedural aspects”.

The ADLC is based on the guidelines of the European Commission concerning the application of block exemptions.

The imposition of resale prices is considered as a restriction of competition by object and therefore as a serious restriction of competition preventing the benefit of a block exemption and the provisions of article L. 464-6-1 of the Code of trade.

Exclusivity clauses in vertical agreements are not prohibited per se. The ADLC and the courts examine whether these clauses have an anti-competitive effect by referring to several criteria: the market power of the parties, the nature and proportion of the products concerned by the clause, the duration of the exclusivity, the presence or not of similar contracts, the existence of justifications and the consideration obtained by the party bound by the exclusivity, etc.

If the agreement contains an exclusive supply obligation, the duration of the contract must be limited to 10 years pursuant to Article L. 330-1 of the Commercial Code.

Tied selling is only considered from the perspective of a potential abuse of a dominant position.

They are analyzed from the angle of abuse of a dominant position.

The ADLC analyzes all vertical restraints which have the purpose or effect of making it possible to monitor (i) resale prices to consumers, (ii) the various distribution methods (including the Internet) and (iii) market sharing.

In accordance with Article L. 442-6 II d of the Commercial Code, clauses or contracts authorizing a party to automatically benefit from the most advantageous rates granted to competitors are void. MFN clauses are prohibited under French law.