France Impact of LME – Loi Hamon L`ILEC

France Impact of LME – Loi Hamon L’ILEC Présenta+on 1
Ilec Thanks to Pedro Pimentel and Centromarca invita>on 2
Ilec stands for « Ins>tute of studies on consump>on » Ilec’s Missions ! Mainly focused on in-­‐trade rela+onships !  to represent and defend members interests (Ministers, representa+ves, Bruxelles…) ! 
Members ! 75companies specialized in branded consumer goods 45% of branded business in mass retail (food, sta+oneries, personal care, paper products, cosme+cs, toys…) ! 33% are French companies, 12 na+onali+es ! Major companies, but also mid size ones : Coca Cola, Unilever, Danone, P&G, Henkel…. ! 
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Exemple of brands 4
French in-­‐trade Legisla+ons A long tradi>on and experience in legisla>ng… 5
Ongoing conflictual rela+onships Ruled by Compe>>on law (abuse of dominant posi>on, economic dependency, cartel, concentra>on…), ruled by the compe>>on authority restric>ve and abusive prac>ces (the « small » compe>>on law) ruled by Frauds (Minister of economy) many reforms! 6
New government = new legisla+on! "  40 years , 5 presidents, 17 prime ministers, X commissions : 12 laws ! 1996 2001 2004 1986 Loi Galland Loi NRE Accords 2005 Ordonnan
François Patriat Sarkozy Loi 1993 ce Dutreuil Eric Besson Balladur Loi Raffarin 2005 / 2006 2008 Circulaire Loi Dutreil Chatel 1&2 2008 2014 2009 Commission Loi Hamon La L
ME Agali 7
Nego+a+on scheme before 2008 8
Modernisa+on of economy regula+on Another French Revolu>on… 9
Goals and expected consequences # To allow retailers to nego>ate rates # To decrease back margins and to fight against fictuous services or dispropor>onate fees vs services #  increase of compe>>on between retailers # Lower purchase prices for consumers Ilec -­‐ octobre 2014 10
How? 11
On the other hand… A new concept called “significant imbalance” to avoid abuse in rates deteriora>on (difference between suppliers rates and purchasing price) “the contract must not contain obliga1ons crea1ng a significant imbalance between the rights and obliga1ons of the par1es” A reinforcement of sanc>ons: up to two millions euros fine for abusive prac>ces 12
A new way of nego+a+ons Ilec -­‐ octobre 2014 13
A context of price war since 2012 # 
economic context/ rise of raw materials rates # 
Casino aligned its consumers prices to Leclerc’s prices # 
No one wants to be the first to stop price war, only way to develop by taking market shares to compe>tors # 
Permanent renego>a>on a\er the 28th february # 
compensa>on of margins becomes the “cancer” of rela>onship 14
Loi Hamon 2014 Main goals #  To maintain LME structura>on of nego>a>on #  But to re-­‐equilibrate Supplier – retailers rela>onships #  To reinforce the powers of control and sanc>ons of Frauds (minister of economy) #  More formalisa>on of pre contractual nego>a>ons for more transparency on mutual demands #  To define compensa>on of margins as a new restric>ve prac>ce Ilec -­‐ octobre 2014 15
The surprising concentra+on fever of retailers From 7 to 4 main clients within 6 months! 16
Retailers market shares June 2014 17
Retailers market shares February 2015 18
New alliances expected consequences 19
MACRON Legisla+on : a new deal? 20
What lessons from French experience? ! 
(too) many legisla>ons demonstrated the inefficiency of law to rule unbalanced rela>onships ! 
Inability to pacify nego>a>ons and to avoid restric>ve prac>ces genera>ng and infla>on of rules ! 
French compe>>on authority in favour of buying alliances -­‐ so far-­‐ as it is supposed to benefit to consumers ! 
The deficiency of frauds in controlling and punishing illegal prac>ces ! 
Importance of external economic factors (infla>on/
defla>on/recession) 21
Legisla+on vs som law? ! 
« why would such codes be more efficient as law itself is not fully respected in the first place? » ! 
European code of supply : complicated to implement, which efficiency? Suppliers fear that it is used to avoid the applica>on of legal provisions But recognize the role of Commission of Examina>on of trade prac>ces) as a source of inspira>on for jurisdic>ons Which role for in-­‐trade mediator created in 2010 ? ! 
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Thank you for your +me and agen+on Ques>ons are welcome…if I didn’t take too much >me !!! 23