Négociants Face Fines for Undercutting Winemaker Prices

Two merchants in France were penalized for purchasing bulk wine from producer Rémi Lacombe at prices below the production cost, establishing a significant legal precedent.

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Court ruling with precedent-setting character in France. (Photo: helmutvogler/Fotolia)
Court ruling with precedent-setting character in France. (Photo: helmutvogler/Fotolia)

The French bulk wine industry has occasionally called for minimum prices – and now, the Bordeaux Commercial Court has announced a precedent-setting judgment that could render such demands obsolete in the future. According to the French trade publication Vitisphere, the Société Civile Fermière Rémi Lacombe (with 138 ha of vineyards in Médoc) won a lawsuit against the wine merchants Ginestet (owned by the Merlaut family) and Excell (a subsidiary of Cordier, part of the Invivo group).

The companies had purchased bulk wines from Lacombe in the years 2021 and 2022 for an average of €1,184 per Tonneau (Cordier/Excell) and €1,157 per Tonneau (Ginestet). In Bordeaux, a Tonneau is the volume of four barrique barrels, or about 900 liters – thus, the price per liter was approximately €1.32 and €1.29, respectively.

First application of the EGALIM law

Rémi Lacombe was the first producer to invoke the new EGALIM regulations (Etats Généraux de l‘Alimentation), which govern the relationship between traders and suppliers of agricultural products. These include a clause for automatic price adjustment, "according to the rising or falling costs of the agricultural raw materials from which the food (...) is made" – meaning that the production cost indicators published quarterly by the Price and Margin Observatory must be considered.

Article 442-7 of the French Commercial Code states: "A buyer of agricultural products or food who causes their supplier to calculate an abusively low selling price is liable for the resulting damage" and is obligated to pay compensation.

The company had estimated its production costs at €1,600 per Tonneau, but the court – with assistance from the wine commission Féret – set €1,500 per Tonneau as a reasonable selling price. Cordier was ordered to pay €202,000 in damages, while Ginestet must pay around €153,000. The judgment accuses the merchants of pressuring the producer into calculating ‘abusively low’ prices.

Merchants view judgment and law with skepticism

An appeal is anticipated. An expert from the trading hub La Place de Bordeaux criticizes both the judgment and the legal basis. The (cost) indicators are too unclear, as are the means by which the seller is supposed to have been pressured. There's a risk that signed contracts could become worthless if one could challenge a transaction ‘two years later’ for abusively low prices. He sees the danger that the ‘entire market for agricultural commodities’ could be blocked. VM

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