France’s Finance Ministry has called on the commercial court in Paris to fine E.Leclerc €117.3m – an unprecedented penalty in the distribution sector.
The retail group has been accused of ‘improper business practices’ that obliged 27 of its suppliers – including food and beverage giants Danone and PepsiCo – to lower their prices without recompense.
According to the Ministry’s statement published 22 July 2019 (available here in French), an investigation conducted by the General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) revealed the E.Leclerc group used a central purchasing office abroad to skirt French law.
Central purchasing departments are responsible for making procurements within a business. E.Leclerc’s purchasing office, ‘Eurelec Trading’, is located in Belgium.
In an interview with French radio station Radio Télé Luxembourg (RTL), also dated 22 July, the secretary of state for economy and finance Agnès Pannier-Runacher told listeners the record €117.3m was calculated according to suppliers’ financial loss.
“…It is completely illegal to ask a supplier to lower their prices without recompense…without being able to impose a law, today we have decided to enforce a fine that represents three times the sum that E.Leclerc owes its suppliers, by using Belgian operations to circumvent French law.”
Group president, Michel-Edouard Leclerc refuted the allegations in a press statement, suggesting that politics, rather than illegal practice, is at play. “The [accusation] clearly aims to put pressure on E.Leclerc, so that it gives up its low price policy for consumers.”
The retail giant plans to bring the dispute to the European Court of Justice.