Unfair Business Practices in France: A Complete Lawyer's Guide for SME Managers

Introduction

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Unfair commercial practices are a major challenge for SMEs, both economically and legally. Their lack of knowledge exposes them to serious risks: criminal sanctions, reputational damage, nullity of contracts. Faced with the constant evolution of regulations, being informed and vigilant is essential. This article, written by a commercial lawyer, sheds light on each concept to allow you to act wisely in business.

Find my dedicated article on deceptive marketing practices here: complete guide.

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What is an unfair commercial practice?

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Legal and European definition

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According to article L. 121-1 of the Consumer Code, a commercial practice is said to be unfair if it is contrary to the requirements of professional diligence and substantially alters the economic behavior of the consumer who is normally informed and reasonably attentive and prudent, with respect to the good or service.

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At the level of the European Union, Directive 2005/29/EC harmonizes regulations and provides for a black list of practices that are systematically prohibited.

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Educational framework:

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Professional Due Diligence: This is the level of skill and care that a professional is expected to have with respect to their customers and partners.

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The five main types of unfair business practices

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1. Deceptive marketing practices

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• Misleading advertising about the characteristics or price of a product
• Omission of essential information
• Ambiguous presentations or false certifications

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2. Aggressive business practices

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• Telephone or home harassment
• Pressure or threat to close a sale
• Undue influence on the desire to buy

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3. Prohibited sales

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• Sale forced or subject to the purchase of another product
• Fictitious offers, false promise of a gift
• Fraudulent invoices or payment requests

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4. Deceptive quality practices

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• False labels, false membership in a professional organization
• Impersonation or professional impersonation

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5. Behavioral manipulation practices

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• Use of fake customer reviews
• Artificial creation of rarity or emergency

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Concrete examples of unfair commercial practices

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Examples of deceptive practices

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• Display of a crossed out price when the old value was never used
• Highlighting an unrecognized “label of excellence”
• Voluntary omission of additional costs or contractual restrictions
• Use of the term “lifetime warranty” without any legal reality

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Examples of aggressive practices

• Repeated and intrusive phone calls to force a sale
• Unsolicited home visits to put pressure on the customer
• Threats of unwarranted prosecution in case of refusal to purchase

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Unfair commercial practices between professionals

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The legal framework also applies to inter-company relationships.

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Unfair practices between professionals include the embezzlement of customers, denigration, the disorganization of a competitor or parasitism.

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Case law example: a company sanctioned for diverting a competitor's web traffic via “negative SEO” techniques.

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Example of a clause to be inserted in a partnership contract:

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“Each of the parties is prohibited from committing any act that may constitute an unfair commercial practice vis-à-vis the other party, in particular any misleading or aggressive practice within the meaning of articles L. 121-1 and following of the Consumer Code and the Commercial Code.”

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Penalties incurred for unfair commercial practices

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Civil and criminal sanctions

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• Deceptive commercial practice: up to two years in prison and €300,000 fine
• Fine of up to 10% of annual turnover or 50% of expenses incurred for the practice
• Aggressive commercial practice: same penalties and fines proportionate to turnover
• Nullity of the contract concluded as a result of the unfair practice
• Additional penalties: prohibition to practice, posting of the court decision, publication of the judgment

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The Unfair Commercial Practices Directive: 2005/29/EC

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The European directive of 11 May 2005 was transposed in France by the Chatel law, imposing common regulations aimed at protecting consumers against any form of commercial manipulation.
In particular, it draws up a black list of 31 commercial practices prohibited under all circumstances (pyramid selling, false label attribution, fictitious gift promise, etc.).
Unfair commercial practices: framework of the Commercial Code and the Consumer Code

The distinction is fundamental:
• The Consumer Code is mainly aimed at professional/consumer relationships
• The Commercial Code also protects interprofessional relationships through unfair competition action

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Educational framework: how to prove an unfair commercial practice?

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The proof is generally established by a series of clues:
• Emails, photographs, screenshots, customer stories
• Commercial documents (contracts, brochures, invoices, reminder histories)
• Purchase test, phone recordings, complaints

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Actions are brought before the judicial court or commercial courts, depending on the nature of the parties.

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Blacklist of unfair commercial practices

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Non-exhaustive list:
• Pretend to be a consumer (fake reviews)
• Artificially inflate the pre-sales price to simulate a reduction
• Invoice without prior order
• Omit or hide mandatory fees
• Present yourself under a non-existent quality or affiliation
• Promise fictional gifts
• Applying excessive pressure or threats to force a sale

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F.A.Q: unfair commercial practices

What are unfair commercial practices?

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• Any practice that is contrary to professional diligence, substantially altering the consent or behavior of the customer.

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What are the five main types of unfair business practices?

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• Deception, aggression (pressure/harassment), behavioral manipulation, prohibited sale, usurpation of commercial processes.

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What types of sales are prohibited?

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• Forced sale, invoicing without prior order, pyramid selling, fictional gift promise.

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What is the maximum fine for an unfair commercial practice?

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• A fine of €300,000, or even up to 10% of turnover, and up to three years in prison in the event of aggravated circumstances.

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Unfair commercial practices: example?

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• Fake customer reviews, fictional barred prices, false “lifetime warranty” mentions, telephone harassment, non-existent gift promise, workplace pressure.

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Deceptive marketing practices: example?

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• False quality certification, incorrect price display, omission of restrictive conditions, use of false reviews.

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Unfair commercial practices between professionals?

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• Negative SEO, web traffic diversion, economic parasitism, denigration, disorganization of a competing structure.

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Penalties for unfair commercial practices?

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• Heavy fines, prison, nullity of contracts, prohibition to practice, publication of the judgment.

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Unfair Commercial Practices Directive 2005/29 EC?

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• European harmonization, definition of prohibited practices, influence on French law, strengthened legal security for SMEs and consumers.

Unfair commercial practice: commercial code?

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• Unfair competition action before the commercial court, compensation for damage, cessation of practice.

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Blacklist of unfair commercial practices?

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• 31 practices defined by the directive and the Consumer Code (pyramid selling, false membership, fictional crossed out price, etc.)

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Additional explanations and legal advice

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The regulation of unfair commercial practices is a regulated matter with major financial and criminal consequences. To anticipate any risk, it is strongly recommended that each SME manager seek the personalized advice of a specialized lawyer, in order to adapt their contractual tools, commercial media and marketing policy in accordance with constantly evolving legislation.

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Article written by Guillaume Leclerc, lawyer in commercial contracts and commercial litigation in Paris.

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