Can Your French Supplier Dictate Your Resale Prices? (Usually Not)

Among the surprises French commercial law holds for foreign suppliers and their in-house counsel, few are as sharp as the discovery that a supplier cannot fix the price at which its own products will be resold. The instinct of a US, UK or Australian brand owner is that price is a term of its commercial policy — that it may set a floor to protect brand image, to reward service, or to discipline a discounting distributor. French law rejects that instinct at the root. Every autonomous operator, whether supplier or distributor, must remain free to fix its own prices, and each undertaking is entitled to remain in uncertainty as to the pricing decisions of its resellers and its competitors. The freedom to propose a price survives; the power to impose one does not.

The rule has two faces, and the confusion of foreign operators usually comes from seeing only one of them. On the first face, the imposition of a minimum resale price is a pratique restrictive de concurrence — a restrictive practice sanctioned by Article L 442-6 of the Commercial Code (the former Article L 442-5) regardless of whether competition on the market is in fact affected at all. It is a criminal contravention, punishable by a fine, and the offending clause is void. On the second face, the same conduct is a pratique anticoncurrentielle — an anticompetitive practice, in the shape of a vertical price-fixing agreement, or entente, caught by Article L 420-1 of the Commercial Code and Article 101 of the Treaty on the Functioning of the European Union. On this footing it is a "hardcore" restriction that strips the distribution arrangement of the benefit of the Vertical Block Exemption Regulation, exposing the parties to the enforcement machinery of the Competition Authority and the European Commission.

The practical significance is that a supplier can be caught even where its market share is trivial, that a distributor forced to hold a price line has an actionable grievance, and that the label a supplier attaches to its price list — "recommended", "advised", "indicative" — decides nothing. What decides the matter is whether, in fact, the distributor retained a genuine freedom to price below the figure communicated to it. What follows is organised as a sequence of questions, each answered as a self-contained analysis with the governing text and the controlling authorities, and accompanied by an interactive tool that screens a pricing practice for the features French law treats as decisive.

Can a French supplier set the price at which you resell? (No)

No. The supplier cannot itself fix the resale prices at which the distributor markets the products or services. The point was historically contested: imposing resale prices was once tolerated as a means of letting a producer protect its brand against the "spoiling" (gâchage) that flowed from destructively low prices, and of pushing distributors to compete on the services they render to consumers rather than on price alone. French and European law now take the opposite view, and treat the imposition of a commercialisation price as an unacceptable interference with competition in all circumstances: every autonomous operator must be free to set its prices, and each firm — supplier or distributor — is entitled to face uncertainty as to the pricing choices of its resellers and rivals.

Article L 442-6 of the Commercial Code states the prohibition in the broadest terms. It sanctions "the fact, by any person, of imposing, directly or indirectly, a minimum character on the resale price of a product or a good, on the price of a service or on a commercial margin." The word "imposing" is the hinge of the whole regime. A supplier remains entirely free to sell its products to a distributor at whatever wholesale price the parties agree; what it may not do is dictate the downstream price at which the distributor, now the owner of the goods, will resell them. The distributor, having bought, is an independent trader whose margin is its own to set.

Because the prohibition is a matter of economic public order, it cannot be neutralised by drafting. A clause by which the distributor "undertakes to respect the resale prices fixed by the supplier" is not merely unenforceable; it is an unlawful stipulation that renders its author liable to a criminal fine and, as developed below, exposes the arrangement to attack under competition law. The reflex, familiar from common-law systems, of building a resale-price schedule into a distribution agreement and enforcing it as a contractual covenant is precisely the reflex that French law penalises.

The two overlapping regimes: restrictive practice and anticompetitive entente

Resale price maintenance is caught by two distinct bodies of law that operate on different premises, and a supplier assessing its exposure must reckon with both. The first is the law of restrictive practices; the second is the law of anticompetitive practices. They differ above all in whether an effect on the market must be shown.

The restrictive-practice regime — Article L 442-6

Article L 442-6 of the Commercial Code sanctions the imposition of a minimum resale price as a restrictive practice even where competition on the market is not affected at all. No market power, no market share, no measurable foreclosure need be established. The imposition is wrongful in itself. This is what practitioners mean when they describe the prohibition as operating per se: it is prohibited independently of any harm to the play of competition (Cass. com., 7 Oct. 1997, JurisData no. 1997-003951). The sanction is criminal — a fine — and the offending clause is void.

The anticompetitive-practice regime — the entente

The same imposition of prices becomes an anticompetitive practice when the play of competition on the market is affected. Article L 420-1, 2° of the Commercial Code targets the entente — the agreement or concerted action — that tends "to obstruct the fixing of prices by the free play of the market". Imposing prices on a reseller thereby obstructs the free formation of prices and impedes competition; supplier and distributor may both be sanctioned for having agreed to apply given resale prices, to align their resale prices, or to exchange information on resale prices (Cass. com., 18 May 1993). Article L 420-2, while it does not formally list resale-price imposition among abuses of dominance, permits the requirement to apply a resale price to be treated as abusive where a dominant position is in play.

The two regimes may apply cumulatively and simultaneously. A single imposition of resale prices can attract both Article L 420-1 and Article L 442-6 at once. There is a superficial paradox in reproaching parties both with imposing — that is, coercing — and with agreeing — that is, consenting; yet the courts have condemned a supplier for both an entente and the imposition of resale prices, inferring the arrangement from the homogeneity of the prices its distributors applied, without needing to sort those who conspired from those who were coerced.

What does "imposing a minimum" actually mean?

The offence is built of three elements: an imposition, direct or indirect; that the imposition bears a minimum character; and that it concerns a resale price or the price of a service. This card addresses the second element — the minimum character — because it marks the boundary between the prohibited and the permitted with unusual precision.

To be sanctionable, the imposition must fix a minimum resale price or a minimum profit margin for the reseller. That is the case where the reseller must apply the price indicated, or must respect a price floor (prix plancher), or must observe a price bracket (fourchette de prix), or must choose among several prescribed prices. In each of these situations the distributor is deprived of the liberty to go below a threshold set by the supplier, and it is that deprivation — not the existence of a suggested figure — that the law condemns.

The prohibition reaches not only the resale price of a good but also the price of a service and the commercial margin. A supplier that leaves the headline price nominally free but dictates the margin the reseller must preserve has imposed a minimum just as surely as one that fixes the price itself, because a floor on margin is a floor on price by another route. The courts have occasionally strained the concept — treating as an imposition of price a prohibition on the reseller charging prices "too low" in view of the brand image of the products, even though no minimum price had in fact been fixed — a reading generally regarded as excessive, but instructive as to how sensitively the courts police anything resembling a floor.

By contrast, a ceiling is not a floor. The imposition of a maximum price or a maximum margin is not caught by Article L 442-6 and is in principle lawful: the supplier may fix the price above which the product or service must not be offered to the end user. The lawful and unlawful zones, and the trap by which a maximum can collapse into a minimum, are examined in the dedicated card below.

Direct and indirect imposition: the disguised techniques

The first element of the offence — imposition, "directly or indirectly" — is deliberately wide, and it is where sophisticated suppliers most often come to grief. The imposition by a supplier of a resale price is condemnable whatever its form. The incrimination reaches direct actions on price and margin, but it does not stop there: it equally covers the fact of imposing the minimum resale price indirectly and in disguised fashion.

Sometimes the imposition is stated in the contract itself, bluntly or naively: an obligation on the distributor to respect resale prices fixed by the supplier, or — less flagrantly — to respect "so far as possible" (autant que faire se peut) the margins the supplier fixes, or not to operate any price reduction, or to let the supplier buy back any products the distributor puts on price promotion. More often the supplier is careful to stipulate no clause that would betray the imposition, and instead adopts conduct that leads the distributor to fall into line. The techniques, in ascending order of subtlety, are catalogued in the case law.

The lesson of the table is that intention counts for little and mechanism for everything. A supplier that never utters the words "you must charge X" can still impose X — by declining to ship to those who undercut it, by threatening the relationship, or by engineering the reseller's cost base so that undercutting means selling at a loss. The Court of Cassation confirmed the point in its starkest form: a refusal to deliver merchandise, opposed to a distributor because its price was judged too low, constitutes the offence of imposing a minimum resale price without its being necessary to indicate any minimum price at all (Cass. crim., 31 Oct. 2000; CA Paris, 22 Sept. 1999).

When does a "recommended" price become an imposed one?

This is the question on which most disputes turn, because most suppliers do not purport to impose anything — they "recommend". Nothing prevents a supplier from communicating price scales to a distributor for information, or from advising a relevant resale price, or from warning the distributor against resale prices below the legal loss-resale threshold. The recommendation is lawful. But the label is worthless in itself: it matters not at all whether the figure is called a "recommended price" (prix conseillé), a "recommended retail price" (prix recommandé), or an "indicative price" (prix indicatif). What is essential is that the price carries no binding character, directly or indirectly, for the distributor (CA Paris, 5 May 1994).

Two symmetrical propositions follow. First, the absence of the words "recommended price" does not by itself convert a figure into an imposed one: a purchasing central's failure to mark a catalogue price as a maximum or recommended price is an insufficient indicium to characterise it as imposed (CA Paris, 13 Dec. 2001). Second, and more dangerous for suppliers, a price presented as recommended must not conceal an imposed one. A price the grantor presents as merely advised may in reality be an imposed price — as to both goods sold and services rendered — where, by reason of the reseller's status, the reseller finds itself in a state of economic dependence such that it is bound to respect the figure (CA Paris, 17 Jan. 1995). The recommendation, in other words, is lawful only so long as the reseller genuinely remains free to depart from it.

The triple test and the "police des prix"

How do the competition authorities prove that a "recommendation" was really an imposition operating through an entente? Ordinarily by a body of concordant indicia in three branches — the "triple test": (i) the diffusion of prices by the supplier; (ii) the implementation of a price policing (police des prix) through monitoring, pressure or threat; and (iii) the significant application by distributors of the prices diffused. An invitation to respect prices is not, in itself, an agreement; but the generalised application by resellers of prices indicated or advised by the supplier reveals the entente where a price policing enforces it. The policing is no contradiction of the agreement — it is its necessary complement, the mechanism that ensures a few deviants do not compromise the arrangement.

The authorities have applied this analysis repeatedly: to a network conditioning the referencing of suppliers on respect for "recommended public prices" (Cons. conc., 7 Dec. 2006, no. 06-D-37, cycles sector), and in the luxury-perfumery sector where "recommended" prices functioned as a floor (Cons. conc., 13 Mar. 2006, no. 06-D-04). The signals the authorities look for are concrete: catalogues of recommended prices coupled with agreement clauses over the distributor's advertising and its discount announcements; suppliers advising pharmacists resale prices, exploiting a professional habit of respecting legally fixed medicine prices; and referencing conditioned on adherence to the advised figure. In each, the recommendation had ceased to be optional in fact.

Recommended and maximum prices: the lawful zone

Not everything is forbidden. French and European law leave a supplier a genuine, if narrow, zone in which to influence downstream pricing without imposing a minimum. Two instruments occupy that zone: the genuinely non-binding recommendation and the maximum resale price. Both are lawful; both can be mishandled into unlawfulness.

The maximum resale price is expressly permitted. The imposition of a maximum price or a maximum margin is not covered by Article L 442-6 and must be considered lawful; the supplier may fix the price above which the product or service must not be offered to the end user. European competition law is to the same effect: the Vertical Block Exemption Regulation validates distribution agreements that fix a maximum resale price. Article 4(a) of Regulation (EU) 2022/720 confines the hardcore restriction to the buyer's ability to determine its sale price "without prejudice to the possibility for the supplier to impose a maximum sale price", provided that the maximum does not amount, under pressure or incentives from either party, to a fixed or minimum price. The rationale is that a ceiling helps discipline downstream mark-ups in the consumer's interest, whereas the prohibition targets only the minimum.

The maximum, however, harbours a trap. A ceiling set so low that a reseller wishing to charge less would have to sell at a loss is treated as an imposition of a minimum; so too is a promotion diffused by the supplier bearing maximum resale prices that correspond to the distributor's resale-below-cost threshold. In both, the "maximum" has been engineered to function as a floor, and the law looks through the form. The reseller must retain a real freedom in the determination of its resale price for the maximum to remain lawful.

Is my resale-pricing practice lawful?

These propositions describe an arrangement that risks being treated as an imposed minimum resale price. It is an orientation aid, not a legal opinion, and does not substitute for a lawyer's review of the facts.

• The distributor is told a price and is not free, in fact, to charge less.
• A price floor, a minimum margin or a price bracket applies to resale.
• Deliveries have been slowed or refused to a reseller that discounted.
• The relationship was, or could be, threatened over resale prices.
• Resale prices are monitored and departures are followed up.
• Rebates or referencing depend on holding the resale price.
• A "maximum" price is set so low that going lower means selling at a loss.

Any single item present points toward an imposed minimum; the more that apply, the graver the exposure under Article L 442-6 and, where the market is affected, under the law of anticompetitive agreements. Indicative only; not legal advice.

Resale price maintenance under EU competition law and the block exemption

The competition-law dimension is not confined to French domestic law. Vertical price-fixing engages Article 101 of the Treaty on the Functioning of the European Union, which prohibits agreements between undertakings that have as their object or effect the restriction of competition — a category that expressly captures the direct or indirect fixing of prices. A distribution agreement between a supplier and its distributors is a vertical agreement; resale price maintenance is the paradigm vertical price restraint.

Vertical agreements ordinarily benefit from a safe harbour. The Vertical Block Exemption Regulation — Regulation (EU) 2022/720 of 10 May 2022, read with the Vertical Guidelines of 30 June 2022 — exempts a category of vertical agreements from the Article 101(1) prohibition where the parties' market shares fall below the relevant thresholds. That shelter is the ordinary means by which selective and exclusive distribution networks operate lawfully across the Union.

Resale price maintenance forfeits the shelter. Article 4(a) of Regulation (EU) 2022/720 lists among the "hardcore" restrictions — the so-called black clauses — the restriction of the buyer's ability to determine its sale price, which includes agreements that fix a minimum or fixed resale price directly or indirectly. A vertical agreement containing such a restriction loses the benefit of the block exemption in its entirety, and the restriction is treated as a restriction by object requiring no demonstration of anticompetitive effect. Only the possibility for the supplier to impose a genuine maximum resale price, or to recommend a resale price, survives — again on the condition that neither operates, through pressure or incentive, as a fixed or minimum price.

The consequence for an international brand is that a resale-price clause does not merely fail as a matter of French criminal and restrictive-practice law; it also poisons the distribution agreement's competition-law standing across the EU, removing the block-exemption cover on which the whole network relies and inviting scrutiny by the French Competition Authority and, in a cross-border network, the European Commission. What is a fifth-class contravention on one axis is a hardcore Article 101 infringement on the other, and the second carries the far heavier fining regime of European competition enforcement.

What are the consequences: nullity, criminal fine, competition sanctions?

The consequences track the two regimes, and they stack.

Nullity of the clause and, sometimes, of the contract

The clause imposing a minimum resale price is void. Although Article L 442-6 does not itself mention the sanction, an imposed-price clause may be struck with nullity (CA Paris, 28 Apr. 1966). The contract as a whole falls where the void clause was a determining element of the parties' engagement (Civil Code, Arts. 6 and 1184); some decisions annul the contract without explaining whether the clause was determining, while others go no further than resolution where the breach constituted by the unlawful pricing clause is grave enough. For a distributor, this means the offending obligation cannot be enforced against it; for a supplier, it means the pricing architecture it built into the agreement may be excised or may bring the agreement down with it.

Criminal fine

The imposition of a minimum resale price is a criminal contravention. It is punished by a fine of €15,000, a fifth-class penalty that may be doubled on a repeat offence and may be accompanied, under Article 131-10 of the Criminal Code, by complementary penalties such as the posting or publication of the judgment. In practice the rigour of the sanction is tempered by recourse to negotiated procedures — the criminal transaction, the composition pénale and the ordonnance pénale — regarded as better suited to this type of offence; but the characterisation as a criminal contravention, sanctioned independently of any harm to competition, is the feature that most surprises foreign suppliers accustomed to treating RPM as a purely regulatory or civil matter.

Civil liability — but proof of causation is required

The author of the practice may also incur civil liability, provided the classic conditions are met, and in particular a sufficient causal link between the fault and the economic loss for which reparation is sought. The point is not academic: the Criminal Chamber of the Court of Cassation approved trial judges who declined to award damages against the directors of a franchise network, though convicted of imposed prices, for want of a direct causal link between the offence retained and the economic loss invoked — the loss being rooted not in the criminal offence but in the performance of contractual undertakings (Cass. crim., 19 Feb. 2003, no. 02-81.422). A distributor seeking damages must therefore connect its loss to the imposition itself.

Competition sanctions

Where the imposition also constitutes an entente affecting the market, the competition-law sanctions apply in addition: the administrative fines of the French Competition Authority under Articles L 420-1 and, in cross-border cases, the enforcement of Article 101 TFEU, together with the loss of block-exemption cover examined above. The two tracks are cumulative, not alternative.

Are there exceptions — books, regulated goods, sales on behalf?

The prohibition admits a small number of genuine exceptions and one structural situation that falls outside it altogether. A supplier tempted to assume its case is exceptional should treat these as narrow and, save for the structural point, sector-specific.

Books — the Loi Lang

The most important statutory exception concerns the price of books. By Law no. 81-766 of 10 August 1981 (the loi Lang), any person who publishes or imports books must fix a public sale price for them, and the reseller may not depart below it by more than a capped discount. The Court of Justice confirmed that Community law does not preclude national legislation obliging publishers to impose a fixed resale price on booksellers (CJCE, 3 Oct. 2000, C-9/99). The regime has since been extended, by the law of 26 May 2011, to the digital book. The exception is applied with vigour and interpreted strictly, as a derogation from the principle of price freedom.

Regulated sectors

Certain products are subject to rules that limit intermediaries' freedom over margins or prices — medicines and tobacco among them. These derogations from price freedom must, however, remain compatible with the European framework and with price competition; French legislation imposing a minimum price and prohibiting promotional prices on manufactured tobacco was held contrary to EU law for impairing competitive relations by preventing operators from passing on lower cost prices.

Sales on behalf of the supplier — the structural exclusion

The decisive structural point is that the offence bites only on a resale. The incrimination cannot be retained where the operator does not resell but sells on behalf of the supplier — as a branch manager (gérant de succursale), an agent (mandataire) or a commission agent (commissionnaire). In those structures the goods remain the property of the parent, the principal or the commettant, who may accordingly validly impose a sale price on the distributor. This explains the recourse to such arrangements in sectors where the supplier genuinely needs to master the level of resale prices — motor fuels are the classic example.

The reverse question: as a supplier, how much can I control my distributor's prices?

Suppliers who have absorbed the prohibition often ask the mirror question: if I cannot stop my distributor pricing too low, am I defenceless against a discounter who devalues my brand or turns my products into loss-leaders? The answer is that the supplier is not powerless, but its levers lie outside the imposition of a minimum price.

French law itself recognises the supplier's legitimate concern. While the supplier cannot, on pain of criminal sanction, impose a minimum resale price, the distributor for its part may not resell at a price so low as to devalue the supplier's brand or to expose its products to serve as bait for the sale of competing goods — the practice known as the loss-leader and the "drift of sales" (prix d'appel et dérive des ventes). To that end, resale at a loss (revente à perte) — the resale of an unprocessed product below the purchase price shown on the invoice — has long been criminally sanctioned. That prohibition protects the supplier and competing distributors, not, on the internal French view, consumers; and it supplies a floor the supplier need not, and may not, set for itself, because the legislature has set it.

Beyond the resale-below-cost floor, the supplier's legitimate instruments are qualitative rather than price-based: a properly constructed selective distribution system with objective qualitative criteria; genuine maximum prices; genuinely non-binding recommended prices; controls on the manner of resale that protect brand image without dictating price; and, where the supplier truly needs to master the end price, the agency or commission structures described above. What the supplier may not do is reach the same result by the back door — by monitoring, by pressure, by refusing to resupply the discounter, or by dressing a floor as a maximum.

Practical guidance for both sides

The regime rewards discipline on the supplier's side and vigilance on the distributor's. The two playbooks are mirror images.

For the supplier, the discipline is to influence without imposing; for the distributor, the vigilance is to recognise imposition dressed as recommendation. Both benefit from the same clarity: in France, the resale price belongs to the reseller.