Trade Negotiations for 2020

In April 2019, Ordinance no. 2019-359 amended Title IV of Book IV of the French Commercial Code, and in particular the rules of negotiation and formalization of commercial relations by inserting a new Article L.441-4, which establishes specific requirements for annual commercial agreements (conventions uniques) between suppliers and distributors (except for wholesalers) relating to fast-moving consumer goods (FMCG).

However, the scope of this article remained uncertain, despite a definition of FMCG as single-use, fast-moving and widely consumed goods.

Adopted on Dec. 19, 2019, Decree no. 2019-1413 now sets out the detailed list of FMCG, which includes food products, alcoholic and nonalcoholic beverages, electric batteries, washing and maintenance products, cleaning articles, paper articles, animal feed, personal hygiene articles and beauty products, etc.

For annual commercial agreements concerning FMCG, suppliers must comply with the three-month period before the deadline of March 1 each year to communicate their general terms and conditions to distributors.

These specific annual commercial agreements must indicate the scale of unit prices used as a basis for negotiation and the forecast turnover and include the business plan for the commercial relation. In addition, obligations relating to the terms of the sale and other obligations intended to promote the commercial relations (referred to in 1° and 3° of III of Article L.441-3 of the French Commercial Code) must apply at the same time as the effective date of the agreed price, which shall apply no later than March 1. 

Infringements of these specific rules relating to the annual negotiation between suppliers and resellers are sanctioned by fines up to €75,000 for an individual and €375,000 for a legal entity. This amount can be doubled in the event of repeat infringement.