Carrefour said it 'vigorously contests' the French finance ministry's decision to fine it over allegedly unbalanced contracts the French supermarket chain made with some franchisee stores.
'The group has full confidence in its ability to demonstrate the validity of its contracts and the balance of its relationships with its partners,' Carrefour said in a statement.
French daily newsletter La Lettre published a legal complaint from the ministry on Monday (17 June), including a recommended €200-million fine, which the newsletter said would be a 'record civil fine'.
Shares in Carrefour sank 7% on Tuesday (18 June) to €13.53 per share in morning trading, after earlier falling as much as 9.6%.
French Watchdog Asks Court To Fine Carrefour
France's finance ministry has asked a court to fine retailer Carrefour over contracts with franchisee stores that it says were unbalanced in its favour.
The ministry's General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) said in a statement that its investigations had found several companies in the group engaging in practices contrary to the French Commercial Code.
The watchdog asked the Commercial Court in Rennes to declare several clauses of the contracts binding the franchisees and the Carrefour Group null and void, and to impose a financial penalty on the group, it said.
Carrefour contested the ministry's 'grievances', saying it was intervening in a dispute that began several months ago without providing new information on the merits.
The company called the amount of the fine unfounded.
The ministry's complaint is part of the proceedings brought by nearly 170 franchisees at the end of 2023, DGCCRF said.
Exaggerated Reaction: Analysts
Bernstein analysts said investors' reaction to the report was exaggerated.
'We think this court case pertains to a very small number of franchisees and only 200 members of the more than 2,000 franchisees,' Bernstein said.
It was also unclear whether any changes to the franchisee contracts would erode Carrefour's profitability to the tune of €200 million per year – the amount of the proposed fine, the brokerage added.
News by Reuters, edited by ESM.
