The New B2B legislation put into practice: Are you ready?

There have been some major changes in the B2B landscape recently. On May 24, 2019, two new acts bringing some major changes to Belgian competition law and the legal framework of B2B relationships were published in the Belgian Official Journal. Firstly, the Act of April 4, 2019, which introduced new rules for B2B relationships relating to unfair market practices, abuse of economic dependence and unlawful contractual terms. Secondly, the Act of May 2, 2019, which introduced a number of changes to the competition rules (i.e., in Book IV of the Code of Economic Law). All of these changes are now in effect. The new rules on unfair market practices entered into force on September 1, 2019, the rules prohibiting abuse of economic dependence on August 22, 2020. And more recently, on December 1, 2020, the new rules on unlawful contract terms entered into force.

Changes in the B2B landscape

Unlawful contract terms

The Act of April 4, 2019 prohibits per se certain unlawful contract terms and abusive clauses in B2B contracts. In general, a B2B contractual clause will be prohibited if it is considered unfair because of the “significant imbalance” it creates between the rights and obligations of the parties.

In addition to this general definition, the new rules introduce a black and a grey list of specific categories of clause. Blacklisted clauses are considered abusive and prohibited in all circumstances, without the need for any further evaluation.

These rules entered into force on December 1, 2020, and they will apply only to contracts concluded, renewed or modified after that date. By way of exception, these rules do not cover financial services and public procurement contracts.

Abuse of Economic Dependence

The Act of April 4, 2019 introduced abuse of economic dependence as an additional category of restrictive practice in Book IV of the Code of Economic Law. The Belgian Act was largely inspired by French law, and partly also by German law. The prohibition entered into force on August 22, 2020.

Three conditions must be met for a practice to qualify as an abuse of economic dependence. First, an undertaking must be in a position of economic dependence. Second, there must be abuse related to this position (the Act does not prohibit economic dependence itself). Third, the abuse must have an effect on competition on the Belgian market, or on a substantial part of the market.

An undertaking is considered to be in a position of economic dependence when its relationship with one or more other undertakings allows the possibility for the other undertaking(s) to require action or impose conditions that would not be possible under normal market conditions. This is the case when the relationship is characterized by the absence of reasonable equivalent alternatives, available in a reasonable period of time, under reasonable conditions and costs. A comparative legal analysis across EU countries shows that the following factors are relevant for a finding of economic dependence:

• the relative market power of the other firm;
• a significant share of the other firm in the weaker firm’s turnover, bearing in mind that the more important this share is, the greater the risk of dependence will be;
• the technology or know-how held by the other firm;
• the wide recognition of a brand, scarcity of the product, the perishable nature of the product, or loyal consumer buying behavior;
• access to key resources or essential infrastructure;
• fear of serious economic harm, retaliation, or the termination of a contractual relationship;
• the regular granting to the firm of special conditions, such as discounts, which are not granted to other firms in a similar situation;
• the firm’s deliberate choice or, on the contrary, its obligation to put itself in a position of economic dependence.

As already mentioned, economic dependence is not in itself prohibited, as it is not as such harmful to the dependent companies. The prohibition only concerns an abuse of the economic dependency. The following practices may be considered as an abuse of economic dependence:

• Refusing a sale or purchase;
• Imposing unfair prices or other unfair trading conditions;
• Limiting production, markets or technical development to the detriment of users;
• Discrimination between trading parties;
• Abusive tying.

Finally, the abuse must, on the basis of factual and legal elements and with a sufficient degree of probability, be capable of having a, direct or indirect, actual or potential, effect on competition on the market.

The Belgian competition authority has been entrusted with the task of sanctioning abuses of economic dependence. Companies that do not comply with these rules can incur fines of up to 2 percent of their annual Belgian turnover or periodic penalty payments of up to 2 percent of their daily Belgian turnover.

Abuses of economic dependence may also give rise to claims before national courts, e.g., a claim for an injunction or a claim for compensation.

Unfair Market Practices

Book VI of the Code of Economic Law already provided for a general prohibition on unfair market practices and on misleading advertising. The Act of April 4, 2019 introduced a more robust prohibition on “misleading” and “aggressive” practices in a B2B context. The definition of both terms was modelled on the existing prohibition of misleading and aggressive practices in B2C relationships.

Conclusion

These legislative changes will undoubtedly affect many Belgian companies in their B2B relationships, both on a national and international level.