Sorgem Evaluation was involved in a case between the Minister for the Economy and Finance (the claimant) and GE Energy Products France (“GEEPF”, the defendant) concerning the participation of GE’s suppliers in a cash discount scheme.
The dispute had two aspects: whether participation in the scheme was compulsory, and the lack of negotiation on the discount terms, which the Minister considered excessive.
An initial decision was handed down by the Nancy Commercial Court on 29 June 2018 (No. 2015007605). The court found that the Minister had not demonstrated that the suppliers were compelled to participate and, furthermore, upheld the defendant’s functional approach, considering that, in practice, the proposed discount did not create a significant imbalance.
The Court of Appeal (Paris Court of Appeal, Chamber 5.4 – Judgment of 12 June 2019 – No. 18/20323, p. 5) set aside the judgment in its entirety, after reiterating that the two constituent elements of significant imbalance are, ‘firstly, subjugation or an attempt at subjugation and, secondly, the existence of obligations creating a significant imbalance”. It concluded that there had been submission based on an analysis of the same facts as the Commercial Court but relying on anonymised witness statements from suppliers, and subsequently ruled on the unbalanced nature of the discount terms in comparison with bank rates, without carrying out or revisiting the defendant’s functional analysis.
This judgment was quashed by the Court of Cassation on 11 May 2022, No. 19–22–242. FS (published in the bulletin), on the grounds that a judge may not base his decision solely or decisively on anonymous statements in order to deem that proof has been provided of a company’s suppliers’ submission to the contractual terms determined by that company and, consequently, declare that this condition for characterising the restrictive practice referred to in Article L.442-6, I, 2 of the Commercial Code has been established. In the present case, the Court does not consider it to have been established that it would be impossible to work with GE in the event of a refusal to join the TPS cash discount scheme.
The referring court will have to re-examine this two-fold issue of subordination and the significant imbalance created, in particular, by the terms of the contract.
Contributor: Maurice Nussenbaum
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