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Decision no. 2011-126 QPC of 13 May 2011

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the company Système U Centrale Nationale and another [Action by the Minister against anti-competitive practices]

On 8 March 2011 the Constitutional Council in the conditions provided for by Article 61-1 of the Constitution, received an application for a priority preliminary ruling on the issue of constitutionality raised by the Cour de Cassation (Commercial Chamber, decree no. 338), on behalf of the company Système U Centrale Nationale and the company Carrefour France SAS raising the conformity of the provisions of the second subparagraph of paragraph III of Article L. 4426 of the Commercial Code, as in force prior to Law no. 20083 of 3 January 2008 on the promotion of competition in the interest of consumers with the rights and freedoms guaranteed under the Constitution.

THE CONSTITUTIONAL COUNCIL,

Having regard to the Constitution;

Having regard to Ordinance no. 58-1067 of 7 November 1958 as amended, concerning the basic law on the Constitutional Council;

Having regard to the Commercial Code;

Having regard to the Regulation of 4 February 2010 on the procedure applicable before the Constitutional Council with respect to applications for priority preliminary rulings on the issue of constitutionality;

Having regard to the observations filed on behalf of the company Système U Centrale Nationale by SCP Delaporte, Briard et Trichet, Attorneys at the Conseil d'État and the Cour de Cassation, registered on 23 March, and 7 and 29 April 2011;

Having regard to the observations filed on behalf of the company Carrefour France SAS by SCP B. Odent and L. Poulet, Attorneys at the Conseil d'État and the Cour de Cassation, registered on 22 March 2011;

Having regard to the observations of the Prime Minister, registered on 23 March and 19 April 2011;

Having regard to the observations of the intervener cooperative company Groupements d'achats des Centres Leclerc, aka GALEC, by Laurent Parléani Esq., Attorney to the Paris bar, registered on 18 March and 18 April 2011;

Having regard to the observations of the intervener Union fédérale des consommateursQue choisir by SCP Boré et Salve de Bruneton, Attorneys at the Conseil d'État and the Cour de Cassation, registered on 18 April 2011;

Having regard to the letter of 11 April 2011 by which the Constitutional Council submitted to the parties an objection that it had standing to raise;

Having regard to the documents produced and appended to the case files;

Having heard Richard Renaudier Esq. for the company Système U Centrale nationale, Julien Cheval Esq. for the company Carrefour France SAS, Esq. Parléani for the company GALEC, Louis Boré Esq. for the Union fédérale des consommateursQue choisir and Mr ThierryXavier Girdardot, appointed by the Prime Minister at the public hearing on 3 May 2011;

Having heard the Rapporteur;

1. Considering that Article L. 4426 of the Commercial Code provides that the commission by any producer, trader, manufacturer or person included in the professional register of certain anti-competitive practices engages the liability of the author of such actions and obliges it to compensate the damage caused; that pursuant to the second subparagraph of paragraph III of that Article, as in force prior to Law no. 20083 of 3 January 2008: "The minister responsible for the economy and the Public Prosecution may request the court seised to order the cessation of the practices mentioned under this Article. In respect of all of these practices, they may also obtain a ruling that clauses or contracts are void, request that any amounts that should not have been due be recovered and impose a civil fine which may not exceed 2 million Euros. The application may also request that the damage suffered be compensated. In any case, it shall be for the service provider, producer, trader, manufacturer or person included in a professional register who claims that he is free from any obligation to provide evidence of the fact that resulted in the extinction of his obligation";

2. Considering that, according to the applicants, these provisions violate the freedom of enterprise, the principle of the right to a hearing and the right to a remedy, as well as the right of ownership;

WITH RESPECT TO THE FREEDOM OF ENTERPRISE:

3. Considering that the applicants assert that the contested provisions provide for measures of no utility that are disproportionate with the goal pursued of the protection of the special interests of economic operators in a situation of inferiority compared to their business partners; that accordingly these provisions violate the freedom of enterprise;

4. Considering that the legislator is free to subject the freedom of enterprise, resulting from Article 4 of the 1789 Declaration of the Rights of Man and the Citizen, to limitations associated with constitutional requirements or justified by the general interest, provided that this does not result in harm that is disproportionate to the objective pursued;

5. Considering that by enacting the contested provisions, the legislator granted the public authorities the power to take action in order to ensure that the anti-competitive practices mentioned under that Article were terminated, to rule that clauses or agreements are void, to order the reimbursement of undue payments made under the terms of the clauses annulled, to compensate the damages caused and to impose a civil fine against the author of the said practices; accordingly, it intended to suppress these practices, to re-establish an equilibrium in the relations between commercial partners and to prevent the repetition of these practices; that having regard to the objectives of upholding economic public order that have been assigned to it, the legislator has struck a balance between the principle of freedom of enterprise and the general interest informed by the need to maintain a balance in commercial relations; that the infringement to freedom of enterprise caused by the contested provisions is not disproportionate having regard to the objective pursued;

WITH RESPECT TO THE PRINCIPLE OF A FAIR HEARING AND THE RIGHT TO A REMEDY:

6. Considering that, according to the applicants, the contested provisions permit the public authority to take court action in order to obtain the annulment of unlawful clauses or contracts and the recovery of undue amounts resulting from an anti-competitive practice, without any requirement that the other party harmed by this practice be involved in the proceedings; that consequently, they infringe the right to a defence and the principle of a fair hearing; that in not providing that the other party harmed be in a position to give his consent and the right to retain the freedom to conduct the defence of his interests in person, including to put an end to the action, the contested provisions also violate the right to a remedy;

7. Considering that Article 16 of the Declaration of Man and the Citizen of 1789 provides: "A society in which the observance of the law is not assured, nor the separation of powers defined, has no constitution at all"; that the right of persons who are affected to obtain judicial redress, the right to a fair trial and the principle of a fair hearing are guaranteed by this provision;

8. Considering, first, that the contested provisions do not prevent either the party harmed by the anti-competitive practice from initiating court action himself to annul to obtain the annulment of unlawful clauses or contracts, the recovery of amounts not due and the payment of damages and interest, or also to join proceedings initiated by the public authority as a joinder party, or the undertaking being prosecuted from summoning the other party to the agreement, requesting that it be heard or obtaining from the latter the submission of the documents necessary for his defence; that, consequently, they do not violate the principle of a fair hearing;

9. Considering, secondly, that the legislator is free to grant a public authority the power to initiate court action in order to defend a general interest seeking the termination of a contractual practice contrary to public order; that neither the freedom of contract nor the right to effective judicial redress prevent the authority, when exercising this power, from seeking the annulment of unlawful agreements, the recovery of sums unduly received and the compensation of the damages which these practices caused, since the parties to the agreement have been informed of the initiation of that action; that, subject to this reservation, the contested provisions do not violate any interests protected under the Constitution;

WITH RESPECT TO THE RIGHT OF OWNERSHIP:

10. Considering that the applicants aver that the contested provisions do not permit commercial partners to obtain the recovery of sums unduly paid from the public authorities; that accordingly, the contested provisions violate both the ownership rights of the company ordered to return the amounts unduly paid as well as the rights of the company that unduly paid these amounts;

11. Considering that property is included under the human rights enshrined by Articles 2 and 17 of the 1789 Declaration; that pursuant to Article 17: "Since property is an inviolable and sacred right, no one shall be deprived thereof except where public necessity, legally determined, shall clearly demand it, and then only on condition that the owner shall have been previously and equitably indemnified"; that even if there is no violation of the right to property, it nonetheless follows from Article 2 of the 1789 Declaration that the limits placed on its exercise must be justified by a reason of general interest and be proportionate with the objective pursued;

12. Considering, on the one hand, that the repayment orders and, depending on the circumstances, the orders to pay damages and interest will be issued by judgment as a consequence of the annulment of unlawful clauses; that, consequently, the complaint alleging the violation of the ownership rights of the addressee of the order must be rejected as inoperative;

13. Considering, on the other hand, that pursuant to the contested provisions, the sums unduly received and the indemnities paid are to be paid to the party whose rights have been violated, or made available to it; that, accordingly, there is no violation of the latter's ownership rights;

14. Considering that the contested provisions are not contrary to any other right or freedom guaranteed by the Constitution;

HELD:

Article 1. Subject to the reservation contained in recital 9, the second subparagraph of paragraph III of Article L. 4426 of the Commercial Code, as in force prior to Law no. 20083 of 3 January 2008 on the promotion of competition in the interest of consumers, is constitutional.

Article 2 This decision shall be published in the Journal officiel of the French Republic and notified in the conditions provided for under Article 23-11 of the Ordinance of 7 November 1958 referred to hereinabove.

Deliberated by the Constitutional Council in its session on 12 May 2011, sat on by: Mr JeanLouis DEBRÉ, President, Mr Jacques BARROT, Mrs Claire BAZY MALAURIE, Mr. Guy CANIVET, Mr. Michel CHARASSE, Mr. Renaud DENOIX de SAINT MARC, Mrs Jacqueline de GUILLENCHMIDT, Mr. Hubert HAENEL and Mr. Pierre STEINMETZ.

Announced on 13 May 2011.

Journal officiel of 13 May 2011, p 8400 (@ 71)