[Parole d’expert] Very often, the franchisee, licensee or dealer is subject, in his contract, to a standard clause indicating that he is an independent trader, but that the brand implements a recommended price policy, so that the consumer can be found in the brand, the marketing mix being a determining element for customers.
In practice, sometimes the price is not only recommended, but actually imposed. Analysis by Fanny Roy, associate lawyer.
What rules apply?
Firstly, this practice is sanctioned by article L.442-6 of the Commercial Code which recalls that: “The fact by any person of imposing, directly or indirectly, a minimal character to the resale price of a product or good, to the price of a service or to a commercial margin. »
It is therefore a criminal offense, but also a civil one, and this practice can still be condemned on the basis of anti-competitive practices: the imposed price is then sanctioned through the agreement or abuse of a dominant position. .
A recommended price will remain legal if the distributor retains his freedom to sell at a different price
In a recent case (Competition Authority, n°24-D-07, July 17, 2024), a company specializing in the marketing of wines was sanctioned by the Competition Authority, for having distributed recommended prices to distributors which turned out to be obligatory.
Thus, it appears from the investigation that in practice resellers were obliged not to set resale prices below the recommended prices communicated.
For example, it was mentioned in various documents that: The prices “correspond to minimum prices to be applied to the bottle” or that the sale had to be made “in compliance with the minimum recommended sales prices”.
The Competition Authority was also able to note that these imposed prices were accompanied by surveillance by the company itself, but also by other resellers who thus participated in “policing the network”.
The Competition Authority judges, in accordance with its consistent case law, that the prices imposed constituted a restriction of competition and sentences the company to a fine of €500,000.
Network heads, franchisors, licensors, pay attention to your recommended prices: these must really be “recommended” while leaving a margin of appreciation to your distributors who must remain truly independent.
Our summary in 5 key points by L’Express Connect IA
(verified by our editorial team)
Here is a summary in five key points of the article on the subject: the franchisor’s recommended prices.
Regulations and sanctions: Imposing a minimum selling price directly or indirectly is punishable by article L.442-6 of the Commercial Code, with criminal and civil penalties for anti-competitive practices.
Recommended prices vs imposed prices: A recommended price is legal if the distributor remains free to set a different price. The problem arises when resellers must adhere to minimum prices disguised as recommended prices.
Case of a wine company: A company was condemned by the Competition Authority for imposing sales prices under the guise of recommended prices, harming competition with internal and external monitoring.
Fine for restriction of competition: In a recent verdict, the company involved was fined €500,000 for violating free competition rules by imposing abusive prices.
Advice for franchisors: Franchisors and network heads must ensure that their prices remain truly recommended, ensuring distributors true independence in setting prices.
