Resale Price Maintenance (RPM) in France
In the context of a business relationship whose object is the resale of products, the supplier cannot impose a resale price to the distributor. The distributor – which is independent – must be entirely free to set its prices.
Regarding the French commercial code, RPM is prohibited on the basis of articles L. 442-6 and L. 420-1-2°.
Article L. 442-6 of the commercial code:
- “If any person imposes, directly or indirectly, a minimum on the resale price of a product or good, on the price of a service provision or on a trading margin, this shall be punished by a fine of 15,000 Euros.”
In other words, whether or not free play of competition is affected, illegal RPM imposed by a manufacturer or a supplier on a distributor constitutes a restrictive practice.
Article L. 420-1-2° of the commercial code:
- “Common actions, agreements, express or tacit undertakings or coalitions, particularly when they are intended to : (…)
2° Prevent price fixing by the free play of the market, by artificially encouraging the increase or reduction of prices ; (…)
shall be prohibited, even through the direct or indirect intermediation of a company in the group established outside France, when they have the aim or may have the effect of
preventing, restricting or distorting the free play of competition in a market.
Meaning, illegal RPM achieved through an agreement or concerted practice between the supplier and its distributor constitutes an anti-competitive practice when free play of competition is affected in the market.
Thus, on the basis of article L. 442-6 of the commercial code, the direct or indirect imposition of resale price by the supplier to the distributor is prohibited and punished by the French courts.
For example, the following has been condemned:
- The fact, for a supplier, to refuse to supply a distributor because of non-sufficient resale prices (Crim., 31 October 2000, n° 99-86.588).
- The fact, for a supplier, to impose a minimum resale price for its product to the distributor which partially applied it (CA Aix-en-Provence, 23rd janvier 2014, n° 13/04493).
- The fact, for a franchisor, to unilaterally determine resale prices and compel the franchisee to apply them (Com., 7th October 1997, n° 95-19.158).
Also, on the basis of article L. 420-1-2° of the commercial code, the supplier and the distributor can both be punished by the French Competition Authority as RPM constitutes an anticompetitive practice. For example, the following has been condemned:
- The fact, for a supplier and a distributor, to agree on resale prices in all the retail outlets, monitor the market and set retail pricing policies (Competition Council, 20th December
- The fact, for a supplier, to set its distributors a “recommended retail price” for each of its products, and also indicate the maximum discount they were permitted to practice in order to level up the retail prices of the products concerned (Competition Council, 13rd March 2006, 06-D-04 bis).
- The fact, for a supplier, to communicate “recommended” resale prices to wholesalers and retailers, and also to exercise controls and pressure over them to get them to apply those prices (Competition Council, 5th December 2005, 05-D-66).