News & positions

France clarifies rules on retail trade relationships to prevent supermarkets from circumventing law on unfair trading practices

Brussels, 23 March 2023 – AIM, the European Brands Association, welcomes yesterday’s adoption by the French Parliament of the “Law to strengthen the balance in the commercial relations between suppliers and distributors”. The new law clarifies the rules governing trade relationships between retailers and their suppliers to prevent supermarkets from circumventing French law on unfair trading practices.

For many years, French supermarkets have been able to bypass these rules by creating or joining pan-European retail alliances in a foreign jurisdiction to negotiate agreements with consumer goods manufacturers. Some of these alliances, known as “gatekeeper alliances”, oblige manufacturers to pay market access fees under threat of retaliatory measures if they refuse, such as coordinated removal of their products from the shelves of the alliance’s retailer members.

The new law clarifies that the rules on unfair trading practices are overriding mandatory provisions that must apply to all agreements and decisions affecting the marketing of products in France to ensure that all actors in the French value chain benefit from a fair trading environment. All fast-moving consumer goods are covered by this law, including food, personal care and homecare products. This law, colloquially known as Egalim 3, will help ensure a better and fairer balance in the commercial relations between the handful of European retail alliances on which French supermarket chains rely, and the tens of thousands of suppliers and hundreds of thousands of agricultural producers operating in France.

“Until now, French supermarket chains have been able to ‘forum shop’ and engage in various forms of dumping. If well enforced, this new law could be a turning point in bringing about a much-needed evolution in mindsets throughout the French value chain,” said Michelle Gibbons, Director General of AIM. “The message is crystal clear: unfair trading practices will not be tolerated in France, even if they stem from contracts signed abroad.”

The new French law implements the provisions of the EU Unfair Trading Practices Directive, which makes clear that all actors in the supply chain should be protected, no matter where they are based or where the harm comes from:

“Suppliers in the Union should be protected not only against unfair trading practices by buyers that are established in the same Member State as the supplier or in a different Member State than the supplier, but also against unfair trading practices by buyers established outside the Union. Such protection would avoid possible unintended consequences, such as choosing the place of establishment on the basis of applicable rules.”