Emergency Act on Agriculture and Trade Negotiations 2027
- Flash newsEmergency Act on Agriculture and Trade Negotiations 2027
- Act No. 2026-796 of 18 August 2026 on emergency measures for agricultural protection and sovereignty
The new legislative framework for the 2027 trade negotiations sets out the constraints that suppliers and distributors will need to take into account. Once again, it is in the wake of a crisis in the agricultural sector that this reform has been introduced, the scope of which once again extends into other sectors. The Emergency Act on Agricultural Protection and Sovereignty, which came into force on 20 August 2026, introduces several new provisions regarding commercial relations.
A separate negotiation timetable
On a trial basis, agreements concluded with suppliers whose global annual turnover excluding VAT for the last financial year ended is less than 350 million euros must now be concluded by 31 January 2027 at the latest, rather than by the deadline of 1st of March. This measure aims to take account of the organisational constraints faced by businesses with more limited resources, for which a three-month negotiation period may represent an excessive burden.
This provision applies until 31 December 2029 and covers all annual agreements, regardless of the product category concerned.
However, this reform treats different types of companies in different ways. Where the supplier belongs to a group, the €350 million threshold is assessed on the basis of the highest global annual turnover excluding VAT as shown in the consolidated or combined accounts.
For example, a company with an annual turnover of €60 million that does not belong to a group whose consolidated turnover exceeds €350 million will be subject to the 31 January 2027 deadline. Conversely, a company with the same turnover but belonging to a group whose consolidated turnover exceeds this threshold will remain subject to the 1st of March deadline.
It should be noted that wholesalers are exempt from this provision. A wholesaler is defined as any professional who purchases products from suppliers and resells them, as their main business activity, to other traders, wholesalers or retailers, to processors or to any other professional who procures goods for the purposes of their business. The Commission for the Review of Commercial Practices (CEPC) recently reiterated in its Opinion No. 25-5 that the status of a wholesaler implies dual negotiation with both suppliers and distributors. Consequently, a subsidiary that sources supplies within its group for resale to distributors cannot be classified as a wholesaler within the meaning of Article L. 441-1-2 of the Commercial Code.
As regards suppliers subject to this accelerated timetable, the terms and conditions of sale relating to foodstuffs and fast-moving consumer goods must be provided by December 2026 at the latest. For other products, the terms and conditions of sale must be provided within a reasonable timeframe to allow the agreement to be concluded before 31 January 2027.
Two new restrictive practices
The Emergency Agricultural Act supplements Article L. 442-1 of the Commercial Code by incorporating two new practices that restrict competition. While such conduct could already be addressed, at least in part, on the basis of existing provisions, it is now expressly targeted by the legislator.
On the one hand, it is prohibited to subject a business partner to repeated competitive tendering procedures or calls for tenders where their frequency or terms are such as to create a significant imbalance in the rights and obligations of the parties. However, the practical significance of this new provision is open to debate, given that such conduct was already liable to be sanctioned on the basis of the rules relating to significant imbalance or the abrupt termination of established commercial relationships.
Furthermore, a substantial reduction in the volume of orders placed with a trading partner in the context of contractual negotiations is now punishable, even where such a reduction is temporary, provided that its scale, its unusual nature or the circumstances in which it occurs are likely to undermine the balance of an established commercial relationship. This provision is aimed, in particular, at combating the use of a reduction in order volumes as a bargaining tool.
Previously, reductions in order volumes could be treated as a partial termination of an established commercial relationship. However, this legal basis did not allow for the effective sanctioning of temporary and targeted reductions in volumes occurring during the negotiation of the annual agreement, followed by a return to normal levels. The new provision is therefore intended to address this shortcoming, which was discussed during parliamentary debates.
Automatic review clause in terms and conditions of sale
The new Article L.441-1-1 of the Commercial Code allows suppliers of foodstuffs or animal feed to include in their terms and conditions of sale a clause providing for the automatic adjustment of unit prices (price list) in line with any increase or decrease in the cost of the agricultural raw materials used in the composition of the food product sold.
Where an automatic adjustment clause is included, suppliers must demonstrate transparency by providing certain information on the composition of their products. The Terms and Conditions must therefore specify the agricultural raw materials concerned, their geographical origin, and the proportion they represent in terms of value and volume. This mechanism applies using identical calculation methods in the event of both price increases and decreases.
The agreement must incorporate this clause where it appears in the supplier’s Terms and Conditions; the distributor may neither reject nor negotiate it.
However, where objective economic data demonstrate that the link established by the supplier between the variation in the cost of the agricultural raw materials concerned and its impact on the price is manifestly incorrect, the distributor may object to the price adjustment by providing the supplier with this data.
This measure is based on the observation that, despite their mandatory nature, these automatic revision clauses are often ineffective, negotiated at a late stage and under conditions that limit their effectiveness, which hinders the proper passing-on of cost variations throughout the value chain and undermines the logic of forward-looking price setting.
Regulation of distributors’ requests for price reductions
The new wording of Article L. 443-8 of the Commercial Code strengthens the obligations placed on distributors of food and pet food products.
From now on, the distributor has one month from receipt of the supplier’s terms and conditions and price list to notify the supplier of their acceptance or, failing that, to justify in writing, explicitly and in detail, their refusal or to specify the provisions of the general terms and conditions and the pricing elements they wish to negotiate.
Furthermore, when requesting a reduction in the price proposed by the supplier, the distributor must support their request with objective evidence capable of justifying it.
This new measure requires the distributor to adopt a proactive approach, involving an analysis of the pricing terms submitted to them, the precise identification of the points they intend to contest, and the substantiation of their claims with objective evidence. In practice, this change is intended to significantly limit the use of standardised rejection letters.
Any breach of these obligations is liable to an administrative fine imposed by the French Directorate General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) of up to 75,000 euros for a natural person and 375,000 euros for a legal person.
Failure of negotiations
In the event of unsuccessful negotiations, the the pilot scheme introduced by the Descrozaille Act has been extended until 15 April 2028 for agreements relating to fast-moving consumer goods (FMCG) and until 15 April 2029 for agreements concerning foodstuffs and pet food (Article 56 of Law No. 2026-796). The legislator opted for a narrower scope than that of the previous mechanism, reducing both the categories of products covered and the operators concerned, with wholesalers being excluded from its application.
Where no agreement has been reached by the statutory deadline, the mechanism offers suppliers two alternatives: either to terminate the commercial relationship without the distributor being entitled to invoke the rules governing the sudden termination of an established commercial relationship, or to request the application of a notice period consistent with the regime applicable to such termination.
The parties nevertheless retain the option, before 1 April and under the auspices of either the Agricultural Commercial Relations Mediator or the Business Mediator, to conclude an agreement setting the terms of such notice period, particularly in light of prevailing market conditions.
Where the parties agree on a notice period, the agreed price applies retroactively to all orders placed from 1 March onwards.
While the trend towards concentration in the food retail sector continues to grow, the reform as a whole reflects the legislator’s desire to shift the balance of power in commercial negotiations in favour of suppliers. In doing so, the desire for simplification that had once prevailed is fading as reforms expand the list of practices that restrict competition. The practical effectiveness of some of these measures remains to be seen. Only time will tell whether this umpteenth reform was the right response, given that our European neighbours – despite facing the same balance of power – have adopted less interventionist frameworks.