Belgium’s new law regarding B2B relationships

In
recent years, the Belgian government and the EU have been concerned with the rise
of unfair commercial practices between undertakings and the failure of existing
mechanisms like competition law and general contract law to remedy these
situations. This is especially an issue in the agricultural sector and in the contractual
relationships between small and large undertakings. The Belgian parliament
passed the act of 4 April 2019 which will introduce into the Belgian Code of
Economic Law (BCEL) three new sets of rules governing the relationships between
undertakings (B2B):

1. Rules regarding unlawful contractual
   terms and conditions,
2. Rules regarding the abuse of economic
   dependence,
3. Rules regarding unfair market practices
   between undertakings.

Most
of these new provisions will enter into force in the course of 2020, while the
new rules on unfair B2B market practices are already in force today.

Unlawful terms and conditions

The most
significant and far-reaching of the newly adopted changes is the introduction
of unlawful contract clauses in B2B relationships. Until now, Belgian law had
only addressed unlawful clauses in contracts between companies and consumers
(B2C). The Belgian courts will now also be allowed to exercise control over and
evaluate contractual clauses in B2B relationships.

The new
provisions include a black list, a grey list and a catch-all provision. The
black list contains four clauses which are illegal per se, while the grey list contains eight clauses which will be
presumed unlawful in the absence of evidence to the contrary. These black and
grey lists can be extended by Royal Decree for certain sectors or categories of
products. In addition, the Belgian legislator also introduces a new catch-all provision
that invalidates any contractual term or condition concluded between
undertakings which, alone or in conjunction with one or more other terms,
creates a ‘manifest’ imbalance between the rights and obligations of the
parties. Since freedom of contract is still the fundamental principle in
Belgian contract law and the catch-all provision is only meant to target ‘manifest’
imbalances, this catch-all provision should be interpreted restrictively.

Any contractual provisions
that are contrary to the new rules are null and void. The rest of the agreement
remains binding on the parties if it can continue to exist without the unlawful
clauses. It is therefore recommended that parties include a severability clause
in their agreement.

In the interest
of legal certainty, the Belgian legislator has clarified that the new rules governing
unlawful contractual terms and conditions in B2B relationships will only apply to
agreements concluded, renewed or amended after the entry into force on 1 December
2020. Agreements concluded before this date are not affected by the new
legislation, unless they are renewed or amended thereafter.

Abuse of economic dependence

In addition to
anti-competitive agreements and concerted practices between undertakings (Art.
IV. 1 BCEL) and abuse of dominance (Art. IV. 2 BCEL), the Belgian legislator has
now introduced abuse of economic dependence as a third category of anti-competitive
conduct. These new rules will enter into force on 1 June 2020 and will be
enforced by the Belgian Competition Authority (BCA).

Abuse a position
of economic dependence requires all of the following three elements:

1. One of the companies is in a position of economic
   dependence, and
2. The other company abuses that position, and
3. The abuse is liable to affect competition on the
   relevant Belgian market or a substantial part thereof.

With regard to
the first condition, economic dependence is defined by a two-step test. A
company is in a position of economic dependence if:

1. it does not dispose over a reasonable equivalent
   alternative within a reasonable time, on reasonable terms and at a reasonable
   cost, and
2. it allows the other party to impose for its own
   benefit advantages or conditions which cannot be obtained under normal market
   conditions.

It follows that
an abuse of economic dependence requires one company abusing the weaker
position of another company in a way that affects Belgian competition. The
existence of a situation of economic dependence alone is not enough. In an
attempt to provide some clarity, the Belgian legislator has provided a list of
5 examples of what can be considered an abuse under the new act, including a) directly
or indirectly imposing unfair purchase or selling prices or other unfair
trading conditions and b) applying dissimilar conditions to equivalent
transactions with economic partners, thereby placing them at a competitive
disadvantage.

If an abuse of the
economic dependence of another undertaking is established, the BCA may impose
fines of up to 2% of the turnover of the abusing undertaking, as well as
periodic penalties for failure to comply with its decision. A party that is
confronted with an abuse of economic dependence can also bring a
cease-and-desist action before the Belgian courts to put an end to the
infringements.

Unfair market practices between undertakings

Finally, the new
act introduces a new general prohibition on misleading and aggressive B2B
commercial practices. In a B2C context, the distinction between misleading and
aggressive market practices has existed for some time under Belgian law, while
in the B2B context, the act only used to provide a general prohibition on
unfair market practices (Art. VI.104 BCEL). With the entry into force of
the new act, this distinction now also applies to B2B relationships. What is
considered “misleading” or “aggressive” will be decided on a case-by-case basis
and will largely depend on the factual circumstances of each case. The
legislator provides a number of criteria to be taken into account, including
for example a) the omission or provision of misleading information about the
need for a service, part, replacement or repair and b) the use of threatening
or abusive language or conduct. Similar rules that apply to B2C relationships
can also provide guidance.

The new rules
regarding misleading and aggressive B2B practices already entered into force on
1 September 2019.

Conclusion

As
was already the case for B2C agreements, the Belgian legislator has opted to
subject B2B agreements to new requirements which restrict the entrepreneurial
freedom and the freedom of contract. On the one hand, these changes provide
welcome solutions for existing imbalances and provide extra protection for the
weakest party in a B2B relationship. On the other hand, one might wonder
whether all companies need such a protection and whether these new requirements
are not unduly restrictive. This is especially the case with regard to the newly
adopted grey list and unlawful contractual clauses in general. It will be up to
the courts to decide to what extent these new rules should be applied. In any
event, it is recommended that undertakings review their existing and upcoming
B2B agreements and where necessary modify them, to ensure that they comply with
this new legislation and provide personnel with training to increase awareness
of these new rules.