to what extent is it possible to block prices, as proposed by the New Popular Front?

A few days before the first round of the legislative elections, a true or false question arises: are the measures that the political parties are proposing applicable? This Thursday, we are interested in the New Popular Front’s proposal to block prices.

In its program for the legislative elections, the New Popular Front, the left-wing alliance, announces that it wishes “block the prices of essential goods in food, energy and fuel”. Since 1986, prices have no longer been decided by the State, but by companies, which determine them based on their competitors. Currently, however, the commercial code allows the State to act on prices under several conditions.

The first, in case of “situations of monopoly or lasting supply difficulties”Or “legislative or regulatory provisions”. This is currently the case in particular in the overseas departments and territories, which are in fact subject to a virtual monopoly of a shipowner, who imports products by boat. To prevent it from taking too much advantage, the State caps certain prices in food, in DIY stores and at gas pumps.

Furthermore, the State can also take temporary measures “against excessive increases or decreases in prices” in case of “crisis situation, exceptional circumstances, public calamity or a manifestly abnormal market situation”, indicates the commercial code. In 1990, the last time the government blocked fuel prices, the price of oil, for example, jumped 160% in two months. During Covid, it was this provision in particular that allowed the government to set a maximum price for hydroalcoholic gel and masks.

The New Popular Front would therefore have to demonstrate a crisis situation in terms of purchasing power to justify an exception to freedom of prices and competition. In 2023, the French economy suffered 5% inflation on average, which is a lot, even if France has already experienced much more. But the text of the commercial code does not precisely define what a “crisis situation” or some “exceptional circumstances”. Freedom of interpretation is left to the administrative judge.

If it comes to power, the New Popular Front can in any case propose to Parliament the modification of the commercial code. But European law ensures the free movement of goods. However, a price freeze in France could slow down imports of other European products into France, and the Court of Justice of the European Union thus considered, in a 1979 decision, that the price freeze was “contrary to the principle of free movement of goods”recalls Jean-Paul Markus, professor of public law, on the Les Surligneurs website.

It is for this reason that France was condemned in 1992, because of the price of tobacco set by decree. Philipps Morris and Rothmans, who had appealed to the Council of State, had won their case. And it is also by relying on European law that the Council of State canceled in 2017 a decree on regulated gas prices. On the other hand, it still exists for electricity.