Post a Comment Print Share on Facebook
Featured 2015 2016 8100 250000 UMP

Selling fuel at a loss: the questions that arise about Élisabeth Borne’s announcement

It will therefore be a sale at a loss.

- 1 reads.

Selling fuel at a loss: the questions that arise about Élisabeth Borne’s announcement

It will therefore be a sale at a loss. The government came out of the woods on Saturday evening, revealing how it wanted to combat the surge in fuel prices. While diesel jumped by 22 cents in two months, going to 1.95 euros per liter, and gasoline by 12.6 cents over the same period, the Prime Minister spoke in an interview with Le Parisien.

Welcoming the gesture of TotalEnergies, which capped prices in its stations at 1.99 euros per liter, as well as the sales operations at cost price carried out by large retailers, Elisabeth Borne wanted to go further. “As some [brands] have pointed out, they cannot lower their prices any further, because the law has prohibited them from reselling at a loss since 1963. Today, I am announcing to you that, exceptionally, on fuel and a limited period [...], we will lift this ban, which will allow distributors to lower prices further. An “unprecedented measure” which should make it possible to obtain “tangible results” for household wallets.

For the moment, this system remains vague. Le Figaro takes stock of the questions that arise and the details known to date.

In theory, since 1963, reselling at a loss has been prohibited for all traders. Article L442-5 of the Commercial Code provides that “the fact, for any merchant, of reselling or announcing the resale of a product as is at a price lower than its actual purchase price is punishable by 75,000 euros fine. Concretely, the purchase price is considered as the “net unit price appearing on the purchase invoice, reduced by the amount of all other financial advantages granted by the seller expressed as a percentage of the net unit price of the product and increased by turnover taxes, specific taxes relating to this resale and the price of transport.

Some exceptions are allowed, such as sales, which are strongly regulated, “perishable products threatened with rapid deterioration” or even “voluntary or forced sales motivated by the cessation or change of a commercial activity”, specifies the text.

Today, a service station can only sell its fuel at cost, that is to say with no margin on the purchase price. Large retailers regularly carry out this type of operation, which is useful for attracting customers to stores.

This modification will take the form of a bill, the office of the Minister responsible for Energy Transition, Agnès Pannier-Runacher, is informed. It will be included in the bill on commercial renegotiations: this text was announced by Bruno Le Maire last August. It aims in particular to accelerate the reopening of discussions between distributors and manufacturers on product prices, in order to obtain price reductions on the shelves as quickly as possible.

This measure is intended for all players who are constrained by the 1963 ban, whether large retailers, integrated players or independent stations.

In reality, however, not everyone will be able to afford it. It will be easier for large and medium-sized stores to sell at a loss. “We don't have the means to offer it anyway,” notes Francis Pousse, national president of service stations and new energies within the professional union Mobilians, which represents 5,800 stations excluding supermarkets.

For the moment, the bill has not been presented, but Bercy was counting on its adoption in November.

First, the timetable remains uncertain. The Prime Minister announced that this development would apply “for a few months”, a point which will have to be clarified during the examination of the bill in Parliament.

Then, it will also be necessary to determine the new minimum threshold below which distributors will not be able to resell the fuel.

In a nutshell: “the government has done a lot.” By choosing this path, the executive transfers the financial burden to companies, which will have to cut back on their margins. A way for the State to avoid spending billions of euros on a new fuel rebate. At the beginning of September, Bruno Le Maire closed the door to this possibility: a rebate of 15 to 20 cents, put forward in particular by Xavier Bertrand, would have cost “12 billion euros”, according to the boss of Bercy.

Furthermore, a new rebate would have sent the wrong signal, representing a "triple aberration", the minister insisted in recent days: ecological - subsidizing fuel -, budgetary, and diplomatic, while France is trying to wean itself from its dependence on imported hydrocarbons.

Another avenue left aside: the government could have lowered the VAT on fuel, the tax representing almost 60% of the final price paid by the consumer. Here again, however, the burden would have had to be borne by the State, and the cost would have been staggering. “Everyone must do their part. It’s normal to involve large industrialists. The State’s responsibility is also to reduce its deficit and its debt,” Elisabeth Borne explained to Le Parisien.

Not yet, but the government assures that this measure has been discussed in advance with large retailers. “The objective is to allow actors who can to carry out strike operations, to help the French, in an exceptional and temporary manner,” it is said.

Several major retail players have stressed, in recent months, that they cannot lower the price they offer for fuel any further. “The legislation prohibits selling at a loss,” declared Dominique Schelcher, boss of Système U, this week. A reminder also made by Michel-Édouard Leclerc. Today, a distributor sees this new possibility of selling at a loss as “a trap”. These companies regularly state that they earn a tiny margin - a few cents - from fuel sales, which remain a loss leader. It remains to be seen whether they will take advantage of the opportunity offered by the government to go further, once the law has been passed.

The station networks are in shock, worrying about a distortion of competition, since they risk not having the means to sell fuel at a loss. Francis Pousse criticizes a “completely unfair” decision. For the representative, the networks, and especially the independents, risk suffering from this situation: “We are deregulating something that was put in place in 1963. Without that, the market is no longer fair, and that is what is going to happen,” he worries in an interview with Le Figaro.

Francis Pousse will bring the voice of his members to Bruno Le Maire next week. “We won't be able to hold on without state aid, otherwise we're dead, that's for sure,” he already warns. The State also risks losing VAT revenue, but “this will be almost painless”, estimates the national president, who expects that large-scale distribution will be able to lower prices by “a few tens of cents” at liter.

Your Name
Post a Comment
Characters Left:
Your comment has been forwarded to the administrator for approval.×
Warning! Will constitute a criminal offense, illegal, threatening, offensive, insulting and swearing, derogatory, defamatory, vulgar, pornographic, indecent, personality rights, damaging or similar nature in the nature of all kinds of financial content, legal, criminal and administrative responsibility for the content of the sender member / members are belong.