Collective integration contracts and the move towards economic dependence

The individual integration contract, a direct link between a farmer and a company, is just one aspect of the legislator's desire to organise agro-industrial relations. As early as the 1960s, tools were put in place to encourage a collective approach, via inter-professional agreements and standard contracts. The idea was to redress the balance of power. Yet these mechanisms have struggled to gain acceptance. Faced with this reality, and confronted with situations where the farmer finds himself economically bound hand and foot without the contract respecting the letter of the legal definition, the judges have gradually adapted their interpretation. They have broadened the scope of legal protection by increasingly taking into account the notion of economic dependence. This article explores this twofold dimension: the collective instruments provided for by the law and the case law interpretation which tends to recognise integration beyond the initial formalism. For a more general definition and the basic principles of the integration contract, see our dedicated article.

Organising a contractual economy: collective tools

From the earliest laws governing integration (notably the founding law of 6 July 1964, but also the agricultural policy laws of 1975 and 1980), the aim was not just to protect individual farmers, but also to structure the sector through collective agreements. Several tools were created with this in mind:

• Long-term interprofessional agreements Provided for in Articles L. 631-4 et seq. of the Rural and Maritime Fishing CodeThese agreements may be concluded between organisations representing agricultural production, processing, marketing or distribution. Their aim is to develop outlets, stabilise markets and define general conditions for transactions. To be fully applicable, these agreements must comply with certain substantive conditions, contain specific wording and be approved by the Minister of Agriculture.
• Campaign agreements and standard general contracts To implement interprofessional agreements in practice, the law provides for the possibility of concluding annual "campaign" agreements (article L. 631-13) or to draw up standard contracts applicable to a sector (article L. 631-14).
• Extending agreements In order to give greater weight to these collective approaches, the law allows the authorities, under certain conditions, to extend certain rules resulting from an interprofessional agreement to all operators in a sector, even those who were not signatories (article L. 632-31). However, this extension must, as article L. 632-4This must be done in compliance with competition law, particularly European competition law.

These mechanisms reflect the political will to organise agricultural markets through collective contracts, as a complement or alternative to purely individual relationships. These dynamics are part of a broader framework for regulating the farmer's relationship with the marketdistribution and competition law.

Standard integration contracts: a specific, little-used tool

Within this collective arsenal, one instrument specifically targets integration relations: the standard integration contractgoverned by Article L. 326-5 of the French Rural and Maritime Fishing Code and specified by articles R. 326-1 et seq.. Drawn up at the level of a production branch (for example, poultry farming or veal rearing), this standard contract is intended to establish a balanced framework for relations between producers and integrating companies.

It must precisely define the obligations of the parties, the method for setting prices, payment deadlines, the minimum duration of the individual contracts that will refer to it, production volumes and cycles, as well as the compensation due in the event of non-compliance with the clauses. It must also provide for a conciliation procedure in the event of a dispute. To be binding, this standard contract must be approved by order of the Minister for AgricultureThe approval is granted by the Minister of Agriculture and Food, after receiving the opinion of the Conseil supérieur d'orientation de l'économie agricole et alimentaire. If the Minister does not make a decision within three months of this opinion, approval is deemed to have been granted.

Once approved and published, the standard contract acquires considerable scope: article L. 326-5 provides that one year after its promulgation, it will become applicable to all agricultural, industrial and commercial businesses in the branch concerned. Individual contracts concluded subsequently will have to comply with it, and any clauses to the contrary will be null and void and replaced by those in the standard contract (as seen in the previous article for penalty clauses). Standard contracts were approved, for example, for meat poultry and veal calves in the 1980s and 1990s.

To encourage their adoption, the law even provides for a financial incentive: article L. 326-5 stipulates that only companies that can prove that their contractual policy complies with the provisions of the approved standard contract may claim public investment aid. Despite these proactive provisions, it has to be said that the approved standard integration contract has had a very limited impact on investment. low effectiveness. Few sectors have them, and their updating or practical application seems limited.

Replacing the individual with the collective: an unfulfilled ambition

The legislator had even devised an even more radical mechanism for imposing the collective framework: the quasi-automatic substitution of a collective contract for existing individual contracts. Article L. 326-4 of the French Rural Code provides that this substitution takes place in two cases:

1. When the number of individual contracts concluded between producers and a single company exceeds a threshold set by the Minister (this threshold has apparently never been set).
2. When at least two thirds of the producers bound by individual contracts to the same company so request.

In such cases, a group contract, in accordance with the approved standard contract provided for in article L. 326-5A collective bargaining agreement is to be introduced to replace individual agreements. This measure was clearly intended to shift relations towards collective bargaining once a certain critical mass had been reached. However, this provision is potentially very restrictive for companies, to our knowledge, has never been applied in practice. It remains a legal curiosity that bears witness to the legislator's initial ambitions.

Overall, the collective organisation of integration remains modest. Despite the recurring agricultural crises that periodically bring the issue of contractual balance to the fore, the collective tools specific to integration (standard contracts, substitution) seem to be largely ignored in current debates, with the notable exception of the veal calf sector where the existing standard contract is under discussion.

Developments in case law: from formal reciprocity to economic dependence

While collective tools remained largely a dead letter, the courts were hearing numerous disputes concerning individual contracts. They quickly noticed a discrepancy between the strict legal definition of an integration contract, based on the reciprocity of supply (article L. 326-1), and the economic reality experienced by many farmers. Farmers often found themselves in a situation of economic dependence the contracting company, without the contract formally fulfilling all the conditions of the law (for example, absence of a clear service provision on the part of the company).

Faced with this situation, case law has gradually shifted. Without being able to ignore the statutory text, judges have sought to interpret the concept of reciprocal obligations more broadly and have begun to take account of the following economic criteria to define an integration contract. They sought to determine whether the farmer was in a de facto subordinationif its decision-making and organisational power was virtually unalienated, if there was a economic and financial dependence strong, or if the contract revealed a "leonine preponderance of the integrator. These considerations are in addition to the strict validity conditions for integration contracts and their particularities in breeding.

Long-standing rulings are highly indicative of this trend. For example, in a 1976 ruling, the Dijon Court of Appeal analysed the clauses of a breeding contract and concluded that integration had occurred, noting that the breeder was subject to "particularly draconian" control and that the whole arrangement resulted in "almost total alienation of decision-making and organisational power". Although this approach did not correspond to the exact wording of the law, it did aim to extend legal protection to situations that seemed worthy of it in terms of the law's objective: to protect economically weak farmers.

Examples of recognition of integration through dependency

This trend has been confirmed and refined over time. The Cour de cassation itself has upheld decisions classifying contracts as integration contracts on the basis of criteria revealing strong economic dependence, even if the "reciprocity" of supplies was tenuous:

• It was ruled that the freedom given to a farmer in the technical management of his livestock did not preclude the classification of the contract as an integration contract, as long as he was in economic dependence either for its supply of means of production, or for the marketing of its finished products (Cass. 1re civ., 4 Feb. 1992). The absence of a real economic alternative becomes an indicator.
• One agreement was described as an integration contract because the farm was systematically monitored by a technician from the supplier, and above all because the supplier was authorised to collect the price directly of the poultry from the slaughterhouse and then pay the balance to the farmer after deducting his own supplies. In the Court's view, this system, which deprived the farmer of any freedom in choosing the buyer and discussing the price, reflected a state of economic dependence characterising integration (Cass. 1re civ., 30 Oct. 1995).
• Similarly, the combination of equipment rental (slatted floors), delivery of animals and goods, and a very broad right of termination given to the manufacturer (in the event of cessation of production, direct marketing by the farmer or failure to comply with technical specifications) was considered to place farmers in a situation where they were unable to meet their obligations. situation of economic dependence justifying the classification integration contract (Cass. 1re civ., 16 Jan. 2001).

These examples show that judges examine the overall economy of the contract and the actual conditions under which the activity is carried out to determine whether the farmer is deprived of his essential autonomy, even if the contract does not formally describe a perfect bilateral exchange of "products or services".

The limits of the economic approach

There are limits to this trend in case law towards taking economic dependence into account. The legislator has never formally modified article L. 326-1 to explicitly include the criterion of economic dependence as an alternative to that of reciprocal obligations.

Consequently, the courts, even if they adopt a broad reading, must always motivate their decisions by referring, in one way or another, to the existence of reciprocal obligationsThis means that they have to interpret what constitutes a "supply of service" very broadly. They cannot base their decision only on a finding of economic dependence. A legal link, however tenuous, materialising a reciprocal commitment within the meaning of the law, remains necessary.

If a farmer finds himself in a situation of high economic dependence (for example, a single supplier for an essential input, or a de facto single buyer for his production) but without there being any contractual commitment formalising a reciprocal obligation to supply products or servicesThe case law considers that the protective regime for integration contracts does not apply. Economic dependence alone is not sufficient to requalify the relationship if the contractual framework of article L. 326-1 is not even minimally encountered.

Understanding how collective contracts and judicial interpretation shape integration law is important. If your contractual situation places you in a high degree of dependency, contact us to assess your rights.

Sources

• Code rural et de la pêche maritime, in particular articles L. 326-1, L. 326-4, L. 326-5, L. 631-4 et seq, L. 631-13, L. 631-14, L. 632-4, L. 632-31.
• Law no. 64-678 of 6 July 1964 defining the principles and procedures of the contractual system in agriculture.
• Law no. 75-600 of 10 July 1975 relating to the interprofessional organisation of agriculture.
• Law no. 80-502 of 4 July 1980 on agricultural policy.