Pre-emption of National Prohibitions of Sale Below Cost: Some Reflections on EU Law between the Past and the Future
In some Member States, sales below costs are prohibited. These national prohibitions aim to establish a certain threshold price under which undertakings are not allowed to sell except in a limited set of circumstances. However, the nature and scope of these national prohibitions vary widely (e.g., application of the prohibition to all retail sectors or only to certain firms or products; circumstances under which a sale below cost would be allowed even if the practice is generally prohibited; elements included in the calculation of 'costs', etc.).
In France, for example, Article L. 420-5 of the Commercial Code prohibits abusively low pricing as an 'anticompetitive practice', where the object or effect of such offers or practices is to exclude an undertaking from the market. The conditions of application of this prohibition are similar to those concerning predatory pricing under competition law, but its scope is limited to sales to final consumers, and it does not require proof of a dominant position. In addition, Article L. 442-2 of the Commercial Code, as amended by the 2008 Loi Chatel, prohibits resale below cost as a 'practice restricting competition'. The threshold was lowered in 2008 in order to allow deeper discounting by resellers without breaching Article L. 420-5 (abusively low pricing). In Belgium, Article 101 of the 2010 Market Practices and Consumer Protection Act contains a per se prohibition of sales below cost (retaking ex Article 41 of the 1991 Commercial Practices and
Consumer Protection Act). Likewise, Spain and Portugal have certain unfair trade rules prohibiting sales below cost. However, several Member States, including Ireland, Italy and the United Kingdom, have removed their rules concerning resale below cost in recent years.
The purpose of this chapter is to discuss whether EU law precludes national prohibitions of sales below cost. In the first section, the focus will be on the Keck and Mithouard judgment of the European Court of Justice (ECJ) and on the withdrawn Amended Commission Proposal for a Sales Promotions Regulation. In the second section, it will be argued that the Unfair Commercial Practices Directive 2005/29 has a pre-emptive effect on national prohibitions of business-to-consumer sales below cost that pursue consumer protection objectives. Subsequently, the chapter will discuss whether EU antitrust law, which has recently been interpreted as 'living apart together' with the Unfair Commercial Practices Directive 2005/29, precludes the application of national prohibitions of sales below cost to practices which are not incompatible with EU antitrust law. Finally, this chapter will open up new avenues for further research on whether EU law should preclude national prohibitions of sales below cost. In any case, there is an urgent need for the Union to take an unequivocal position on this matter.
-  This chapter is an amended, extended and updated version of a paper which was published in the online journal Erasmus Law Review in 2012. See B Keirsbilck, 'Does EU Economic Law Preclude National Prohibitions of Sales Below Cost?' (2012) Erasmus Law Review 253-266. The Erasmus Law Review kindly accepted the publication of the new version of this paper in this edited volume.
-  The Attali report called for the removal of the prohibition of resale at loss (as amended by the 1996 'Loi Galland'). See 'Rapport de la Commission pour la libération de la croissance française, sous la présidence de Jacques Attali', 23 January 2008, 245, available at lesrapports.ladocumentationfrancaise.fr/BRP/084000041/0000.pdf.
-  B Keirsbilck, The New European Law of Unfair Commercial Practices and Competition Law (Oxford: Hart Publishing, 2011).