E-commerce platforms heavily sanctioned for unfair commercial practices

Written on 3 Apr 2017

In 2016, the DGCCRF concluded transactions with e-commerce platforms for a total amount of € 2 million as a result of non-compliance with the rules on unfair commercial practices.

What happened?

On 23 February 2017, the French General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) published its annual activity report for 2016. This report details the highlights of the past year, especially in the area of ​​economic protection of consumers and the fight against abusive practices.

The DGCCRF is attached to the French Ministry of Economy and Finance and controls the proper functioning of markets for the benefit of consumers and businesses. It ensures that competition and consumer law are respected. To succeed in its mission, the DGCCRF has a power to investigate and to impose administrative penalties.

Last year the DGCCRF conducted some investigations in the e-commerce sector. It controlled 1,430 websites and identified many unfair commercial practices, such as the practice of “false promotions”, whereby a particularly high promotion rate (50%, 60%, 70%) is set, comparing the selling price to an artificially inflated “reference price”. This practice alters the consumer’s perception of the proposed offer. The consumer purchases a product that he would not have bought under different circumstances or at least not at the same price.

This unfair practice is sanctioned pursuant Article L 121-1 of the French Consumer Code. A practice is unfair if it is contrary to the requirements of professional diligence and it materially distorts or is likely to materially distort the economic behaviour of the normally informed and reasonably observant consumer with regard to a good or a service.

The annual activity report states that in 2016, the DGCCRF drafted 19 reports for false promotions against e-commerce platforms. In accordance with the public prosecutor, transactions have been concluded with these platforms for a total amount of € 2 million. Most of the platforms concerned, such as Amazon, Zalando and H&M, have committed themselves to change their practices, ensure greater transparency for consumers and the loyalty of their price reduction announcements.

Why this matters

Following the publication of the report, Martine Pinville, Secretary of State, Ministry of Economy and Finance, warned that the DGCCRF will continue its investigations in 2017.

E-commerce platform are advised to be particularly vigilant with regard to their pricing practices in France. In fact, pursuant Article L.132-11 of the French Consumer Code, unfair commercial practices can be sanctioned by a fine up to € 1,500,000 or 10% of the annual turnover.