Business-to-business contractual payment periods come under significant scrutiny

France

The latest report by the Banque de France's Payment Periods Observatory ("Observatoire des délais de paiement"), the purpose of which is to carry out in-depth analysis of statistical observations of the behaviour of companies in this area, covers the situation in France in 2014/2015. The report notes that many companies are yet to comply with the payment period limits, in particular companies in the construction industry.

However, ensuring compliance with payment periods is one of the DGCCRF's priorities. It conducted some 2,000 inspections in 2015 and issued 135 administrative fines totalling 4.3 million Euros, including four maximum fines of 375,000 Euros (2015 DGCCRF activity report presented in March 2016).

Furthermore, in order to strengthen the effectiveness of the penalties, the authorities published details of these fines as part of their report. The number of publications of names of offending companies has thus increased significantly, with 16 released on the DGCCRF website since 1 January 2016, compared with six in 2015.

The authorities have no intention of stopping at that, however, as the bill on transparency and economic life currently under debate in the French Parliament (Sapin II bill) proposes to raise the maximum fine for a legal entity from 375,000 Euros to two million Euros. It also aims to introduce the systematic publication of the name of the company, as well as the amount of the administrative penalty imposed upon it. Furthermore, the proposed legislation wishes to allow the DGCCRF to impose and carry out multiple cumulative fines against companies that commit multiple offences.

Although these highly dissuasive measures are about to be introduced, the authorities are yet to indicate their position regarding the capping of payment periods in an international context.

However, the topic is a major concern for French companies, whether exporters or importers, as shown by the requests for advice on this topic sent to the Commercial Practices Review Panel (CEPC, advisory note no. 15-08, advisory note no. 16-1, advisory note no. 16-12).

In its last advisory note no. 16-12, the CEPC attempted to provide an answer which is likely to leave many experts perplexed, as it stated that companies signing agreements covered by the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 11 April 1980) would not be subject to the payment period limits. Indeed, by combined application of the convention, the general principles on which it is based and the directive 2011/7/EU of 16 February 2011 on combating late payment in commercial transactions, the payment periods agreed between the parties should not be grossly unfair to the creditor, i.e. form a gross deviation from good commercial practice, contrary to good faith and fair dealing, given the nature of the product or the service.

Link to the report (in French): https://www.banque-france.fr/fileadmin/user_upload/banque_de_france/publications/Observatoire-Delais-de-Paiement-Rapport_2015.pdf

2015 DGCCRF report (in French): http://www.economie.gouv.fr/files/files/directions_services/dgccrf/dgccrf/rapports_activite/2015/dgccrf-resultats2015.pdf

CEPC advisory note 15-08 (in French): http://www.economie.gouv.fr/cepc/avis-ndeg15-08-relatif-a-demande-davis-dune-entreprise-sur-place-des-conditions-generales-vente

CEPC advisory note 16-1 (in French): http://www.economie.gouv.fr/cepc/avis-ndeg-16-1-relatif-a-demande-davis-dun-avocat-sur-caractere-imperatif-des-delais-paiement

CEPC advisory note 16-12 (in French): http://www.economie.gouv.fr/cepc/avis-ndeg16-12-relatif-a-demande-davis-dun-avocat-portant-sur-lapplication-plafond-legal-des

Directive IP/11/7: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:048:0001:0010:fr:PDF