Non-French companies need to pay attention to the French Payment Terms Regulations when paying (or being paid by) any French company. On December 2, 2021, the French regulator in charge of investigating and sanctioning noncompliance with the French payment terms regulation, the “DGCCRF,” published a “Review of the sanctions taken by the DGCCRF in the first half of 2021 and publication of guidelines relating to the determination of sanctions“.
This Review demonstrates the importance the government places on compliance with the French Payment Terms Regulation to preserve the cash flow of business, and of its determination to sanction businesses that do not comply.
Why is this important to non-French companies? For the purpose of creating an equal level playing field, French authorities consider that the French Payment Terms Regulation applies not only to payments between two French companies, but also to payment by a French company to a non-French company or from a non-French company to a French company.
Administrative sanctions since 2014
Since the entry into force of the administrative sanctions in 2014, there have been:
- 1452 administrative fines notified by the DGCCRF,
- for nearly 98.8 million euros in total.
As a reminder, the Sapin 2 Law of December 9, 2016 increased the maximum amount of administrative fines incurred by a legal person from 375,000 to 2 million euros.
Review of the first half of 2021
For investigations carried out in 2020 following breaches prior to the health crisis, there were:
- 95 administrative fine procedures,
- for a total of more than 16.3 million euros (77 sanction decisions already notified for a total amount of fines of more than 7.5 million euros and 18 pending proceedings for a not yet final amount of more of € 8.8 million),
- with 10 penalties above € 600,000 and 4 penalties of € 1 million (or a little more).
- covered 690 establishments, including 13 public enterprises and 426 enterprises having benefited from a loan guaranteed by the State (“PGE”);
- have shown that nearly 30% of companies pay a significant fraction of their invoices beyond the payment terms regulation.
- 56% of the follow up actions by the DGCCRF consisted of warnings, 7% of injunctions – so-called educational and corrective consequences – and 37% of administrative fine procedures.
Additionally, the proportion of penalties has fallen, with the DGCCRF taking into account the financial difficulties of certain companies in the context of the health crisis, except in the event of significant overruns.
Publication of sanctions
For the purposes of deterrence, penalties for late payments are systematically published on the DGCCRF’s website.
If you have any doubts about your practices in terms of payment terms in relation to France, you can contact the author or your usual contact in the firm’s Paris office.