Bordeaux Grower Takes Merchants to Court Over Excess Profit. Where Might This Lead?

Following our coverage of the plight of Bordeaux producers looking to uproot vines, we have news of a Médoc chateau owner using recent and untried French legislation to sue two negociants for over €1m in what he claims are excessive profits on the wine he sold them. If he wins, what might this mean for others in the sector?

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Scales full of wine
Scales full of wine

In Bordeaux, the worms are turning. On December 6th, vignerons from the region protested against the French government’s tardiness in agreeing to pay €15,000/ha to cover the uprooting of 10,000 hectares of vines. Now, the French newspaper le Point and Vitisphere bring news of a legal case being brought by a winegrower against a pair of - unnamed - negociants, who he accuses of making exorbitant profits on his wine. In June and July 2022, Rémi Lacombe, owner of château Bessan-Ségur and 138 hectares of Médoc vineyards in Civrac sold significant volumes of his 2019, 2020 and 2021 vintages to the two negociants for €1,150-1,200 per 900-litre tonneau. Recently-published official figures from the CEGARA (Centre de Gestion Agricole et Rural d'Aquitaine) reveal that, at the time, the going rate for 2019 and 2020 was €2,000, while the 2021 - a short harvest - was selling for €2,500.

Lacombe’s lawyer, Louis Lacamp, is seeking €574,000 from one of the merchants and €536,000 from the other, setting the ‘correct’ price for the wine at 10% above what they paid the grower. 

In most countries, ‘excessive profits’ are rarely the business of civil courts. After all, it is up to buyers and sellers to negotiate prices amongst themselves and, once agreed, unless one side or the other breaks their contract (by supplying a product that is different to the one on which the sale was agreed, for example), the matter stops there.
 

Fair Remuneration

In October 2018, however, Law number 2018-938, ‘Besson-Moreau’, or ‘EGalim 2’ was passed in Paris with the aim of providing “fair remuneration to farmers”. As the German-based consultants Rödl & Partners noted in a June 2022 newsletter one of its key provisions is the introduction of price renegotiation.

The Rödl authors noted in June that “compliance of legal documents with EGalim 2 has been unanimously judged as com­plex” and that “it should be noted that some implementing decrees are still pending. In the same way, an adaptation of this law cannot be excluded.” 
 

First Shot at Goal

This is relevant because, as Lacamp, the lawyer, notes, four years after being passed, the law has never actually been applied. If this case is successful, he and his client hope that it will open the door for other producers to follow their example.

Another aspect of EGalim 2 is included in a highly detailed analysis, provided by Concurrences.com. Under the new law, “written contracts [are] compulsory in principle for [almost] all sectors”. In other words, handshake deals will no longer be allowed. 

If applied more generally, and outside France, this provision, like the constraint on profit margins, might come as quite a shock to many winemakers and merchants. There are many producers and customers who've never imagined having to set down anything on paper, and huge numbers of bottles on retail shelves at prices that are considerably higher than a cooperative was paid for the bulk wine they contain.

 

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