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Sales Season In France : Winter is coming - (News Distribution January 2021)

Published on : 29/01/2021 29 January Jan 01 2021

Publications et Séminaires

Winter and Summer Sales (“les soldes” in French) are the two periods of the year where merchants can sell their unsold products at the lowest prices. This kind of sales promotions, subject to reforms over the last decade, is defined and ruled by Article L. 310-3 of the French Commercial Code.
Because of the pandemic crisis, it is vital for companies to sell as many products as possible and gain treasury. Nevertheless, organizing Sales still presents risks while the applicable regulation is complex and uncertain. Here are below the key points of Sales regulations in France.

• Exceptional postponement of 2021 Winter Sales

With the enactment of May 22, 2019 Act on growth and transformation of companies it is up to the Minister for Economic Affairs to set the Sales legal periods that can vary from three to six weeks. As per the May 27, 2019 Ministerial Order the French government laid down the start of 2021 Winter Sales on January 6, 2021 for four weeks. Then (and except some departments and overseas territories) the December 23, 2020 Ministerial Order postponed it to January 20 until February 16. Organizing Sales outside this period in 2021 is illegal (except during Summer Sales).

• Advertising Sales operation

Sales operations must be accompanied or preceded by an advertisement, relayed on any communication channel, which mentions (a) the starting date of the campaign and (b) the nature of products concerned by discounts (art. R.310-17 French Commercial Code). Failing to comply with this rule could result in being fined 1,500 euros (art. R. 310-19 French Commercial Code).

• A clear price reduction announcement

Sales operations represent the opportunity for merchants to grant significant discounts: during Sales the latter is authorized to make resale-below-costs (that means at a lower price than its purchase price) (art. L.442-5 II 7° French Commercial Code). Within the sales area – no matter its nature – customers must be able to know, for each product its reference price and its reduced prices. By way of exception, indicating reduced prices is not mandatory when merchants apply a uniform promotional rate to some identified products (March 11, 2015 Ministerial Order).
In France, the “Directorate General for Competition Policy, Consumer Affairs and Fraud Control” Authority (DGCCRF) controls the truthfulness of discounts granted with regard to unfair commercial practices. That is why, in case of control, merchants have to present any document justifying the reality of references prices (March 11, 2015 Ministerial Order). For instance, increasing reference prices just before Sales operations in order to create appearance of significant discounts is misleading consumers.

• A sale for the purpose of fast disposal of the stock

Merchants intend to organize Sales operations to sell their products easier, to save space in stock and to recover treasury. So, in principle, any restocking of products on Sale during the legal period is prohibited. Precisely, only products purchased and held for more than one month can be sold on Sale. Merchants could be asked by DGCCRF to provide any document justifying it (art. R. 310-16 Commercial Code).

Sometimes, stock is located outside the stores: for instance, in a multi-branch network, a branch's stock is made up of all the stocks held by all the branches in the network. On the contrary, when suppliers and sellers are distinct legal entities, the above principle applies, even in a franchisor to franchisee supply. Nevertheless a ruling stated that restocking intervening between companies "closely linked" is authorized during Sales (Cass. Com., June 2, 2004, 02-21.394). It is reasonable to believe that this solution could be generalized to intra-group supplies (between mother company and subsidiaries) given that the Sales ultimate purpose is to allow the one who assumes risks of slump in its activity, to sell its products during Sales.

Key takeaway

- It is mandatory to advertise Sales operations and to inform customers (about Sales period and, sometimes the nature of discounted products) ;
- Each discounted product must indicates "on sale", reference price and reduced price (except exception) ;
- Stock depletion’ purpose prevents any restocking of discounted products during Sales period (except exception) ;
- Excluding the two annual Sales periods, it remains possible to organize promotional actions regardless rules above.

By Christophe Héry and Claire Burlin

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