Why European retail federation opposes French commercial law

EuroCommerce is urging the European Commission to take action against a new French law regulating business-to-business commercial relationships. The regulations would prevent retailers from benefiting from European sourcing economies of scale.

Violation of EU rules

EuroCommerce, the defender of the interests of European retailers and wholesalers, has filed a formal complaint with the European Commission against the ‘Loi Descrozaille’ or ‘Egalim 3’ passed by the French parliament earlier this year. “That law prevents retailers and wholesalers from seeking better purchasing conditions in the European single market,” said EuroCommerce Director General Christel Delberghe.

The Descrozaille Act is the third in a series of laws on commercial relations between suppliers and buyers. According to EuroCommerce, it violates not only EU rules on the free movement of goods, services and establishment, but also EU law on choice of law: as it gives exclusive jurisdiction to French courts for all commercial negotiations involving products destined for the French market.

Power of manufacturers is strengthened

This prevents e-commerce companies, European retail alliances and supermarket chains that want to buy at EU level from benefiting from economies of scale in the single market. Consumers therefore miss out on the benefits that pan-European sourcing brings, such as a wider selection of goods at more affordable prices. The power of global manufacturers, who take full advantage of the single market by producing centrally, is further strengthened, the retail federation argues.

EuroCommerce wonders why many sectors in the economy – such as vaccines or energy – are encouraged to seek European economies of scale, while this is not the case for the consumer goods sector. There is a real risk, according to the organisation, that the Descrozaille Act sets a dangerous precedent and reinforces the fragmentation of the single market. The territorial supply constraints used by large manufacturers cost European consumers 14 billion euro every year, a European Commission study previously showed.