Carrefour guilty of illegal labour practices

By Anita Awbi

- Last updated on GMT

Related tags Hypermarket

French retailer Carrefour has been found guilty of allowing
hypermarket staff to be paid directly by suppliers, depriving the
employees of payroll benefits and collective bargaining agreements.

A criminal court in Perpignan ruled Monday that by allowing some staff to be paid directly by suppliers in 2001, the retailer had broken employment regulations with regards to universal pay-and-benefit scheme access and bargaining rights for all its employees.

The suppliers were not implicated in the case, having been deemed not in a position to dispute the arrangement considering the retailer's clout in domestic and international grocery markets.

Meanwhile several Carrefour managers including Noel Prioux, the former director of Carrefour Hypermarches France, have been ordered to pay fines in connection with the offences.

The hypermarket division faces a €20,000 (£13,797) penalty and its central purchasing centre Interdis must pay €20,000 for its involvement.

Carrefour intends to appeal against the court's ruling.

A few months ago German discounter Lidl bore the brunt of French legislation when a court in Strasbourg fined the retailer €500,000 and ordered it to refund €480,000 to beleaguered suppliers, after it was found guilty of asking suppliers to fund a new warehouse near Montpellier, France, in exchange for exclusive contracts that were not honoured.

The French supermarket group E Leclerc was ordered to refund €23m to suppliers only weeks previously in a similar incident.

The latest crackdown on illegal practices in the supermarket sector comes as major amendments have been made to France's retail law, as the government works to divert supermarket dominance.

The legal amendments, which came into effect on January 1 under the Dutreil Law, have updated the French Commerce Code to redress the balance of power between manufacturers and distributors, while attempting to lower retail prices.

The law confirms the supremacy of the manufacturers' terms of sale, rather than the supermarkets' terms of purchase, effectively spinning the old contract system on its head.

The new contract system should lay bare the backroom practice of "marges arrières"​, where supermarket chains demand discounts from suppliers in return for agreeing to stock the manufacturer's goods, provide in-store marketing and offer preferential product positioning.

"This year the game is being closely fought,"​ said Guy Yraeta, Carrefour's head of French hypermarkets, as the company is locked in fierce negotiations with its key suppliers.

He added that the world's second largest retailer aims to cut prices further this year. This puts pressure on the company to strike the best deal possible under the new legislation.

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