French government to sue E. Leclerc over supply issues

The French government plans to take E.Leclerc to court over the latter’s alleged unfair relations wi…

The French government plans to take E.Leclerc to court over the latter’s alleged unfair relations with its suppliers.

The privately owned retailer has made it a priority to stay ahead in a price war between rivals seeking to lure customers in during the credit crunch.

The French Finance Minister Pierre Moscovici said it will sue Leclerc before the Paris commercial court, over claims that the retailer Leclerc had inserted clauses into its contracts that had resulted in a “significant imbalance” with its relations with suppliers.

Leclerc has been heavily pushing on prices over the past few quarters as it looks to gain ground on rivals and consolidate its position in the local retail market. Mr Moscovici claims that the group has forced suppliers to accept a clause that requires the latter to defend the contract in the event of litigation brought by a third party.

The government had already filed a legal complaint against E.Leclerc over its relations with suppliers in 2011, but the claim was dismissed in September by the Paris commercial court.

Last week, Moscovici urged retailers not to pass on a rise in sales tax to shoppers, amid growing public frustration over tax hikes. The call got a frosty reception as retailers say that high labor costs and taxes are squeezing their profits.