"Lidl Tax": dismissal of the Minister's appeal

The Court of Appeal identifies the existence of a counterparty in “maintaining the flow of cases between the parties“.

For the Court of Appeal of Paris, “the disputed discount was clearly not intended to remunerate a commercial service or” any other obligations “but was an integral part of the negotiation related to the terms of the sale transaction that could result in price reductions on the price of suppliers, and whose consideration expected by the latter was none other than the maintenance of the flow of business between the parties in a context of competitive tension between distributors E. Leclerc and Lidl.

It follows that the disputed remission does not constitute an advantage without consideration within the meaning of the provisions of Article L. 442-6, I, 1° of the Commercial Code. 

The Minister of the Economy lodged an appeal in cassation, considering that the Court of Appeal had violated Articles L. 441-6, L. 441-7 and L. 442-6, I, 1°, of the Commercial Code, in their versions applicable between 2013 and 2015:

• Bearing in mind that the discount did not remunerate a commercial service or any other obligation, but “was an integral part of the negotiation related to the terms of the sale transaction”;
• Bearing in mind that the maintenance of business relations would characterize a counterpart to the advantage granted by the suppliers to Galec when the referencing is inherent to the commercial relationship and therefore does not represent a specific advantage for the suppliers;
• Considering that the consideration for this discount, consisting of “the maintenance of the flow of business between the parties”, had to be assessed in light of the “context of competitive tension between the distributors E. Leclerc and Lidl”; since this reason demonstrated on the contrary that it was intended to protect the competitive position of the E. Leclerc group in the large retail market and thus benefited Galec and not the suppliers.

The Court of Cassation dismisses the application of former Article L.442-6, I, 1° of the Commercial Code for lack of commercial service.

In its judgment of 25 June 2025, the Court of Cassation began by recalling the drafts of Articles L.441-6, I, L.442-6, I, 1° and L.441-7, I of the Commercial Code in their versions applicable at the time of the facts, namely the following provisions:

• “the general conditions of sale communicated by a producer, a service provider, a wholesaler or an importer to a buyer of products […] constitute the sole basis of commercial negotiation.” (former Article L.441-6, I of the Commercial Code);

• “a written agreement concluded between the supplier and the distributor or service provider indicates the obligations to which the parties have committed themselves, in compliance with Articles L. 441-6 and L. 442-6, with a view to fixing the price at the end of the commercial negotiation. It sets:
  

1° the conditions of the sale of products or services as they result from commercial negotiation in accordance with Article L. 441-6, including price reductions;

2° the conditions under which the distributor or service provider renders to the supplier, on the occasion of the resale of its products or services to consumers or with a view to their resale to professionals, any service likely to promote their marketing that does not fall under the obligations of purchase and sale, specifying the purpose, the expected date, the methods of execution, the remuneration of the obligations as well as the products or services to which they relate;

3° the other obligations intended to promote the commercial relationship between the supplier and the distributor or service provider, specifying for each the purpose, the expected date and the methods of execution, as well as the remuneration or the overall price reduction relating to these obligations. “(former Article L.441-7, I of the French Commercial Code);

• “engages the responsibility of its author and obliges him to repair the damage caused by the fact, by any producer, trader, industrialist or person registered in the directory of trades to obtain or attempt to obtain from a commercial partner any advantage not corresponding to any commercial service actually rendered” (former article L. 442-6, I, 1° of the Commercial Code).

It then deduces from a combined reading of former Articles L.442-6, I, 1° and L.441-7, I “that only the advantage not falling under the purchase and sale obligations granted by the supplier to the distributor must have as counterpart a commercial service actually rendered“.

However, in the present case, the “Lidl tax” was provided for under the conditions of the sale of products within the meaning of 1° of Article L. 441-7, I, of the Commercial Code, and not under the remuneration of a commercial service or any other obligation, within the meaning of 2° and 3° of the same article; therefore, the disputed discount did not constitute an advantage to be paid for a commercial service, within the meaning of Article L. 442-6, I, 1°, of the Commercial Code.

In the end, the Court of Cassation dismissed the appeal of the Minister of the Economy.

This solution is based on the texts applicable at the time of the events, that is to say from 2013 to 2015.

However, the wording of the prohibition of the benefit without consideration was modified by the order of 26 April 2019 and reference is no longer made to a “commercial service actually rendered” in return for the benefit.

Logically, the solution given by the present judgment under the previous law should not survive the rewriting of the text by the 2019 order.