(Bloomberg) -- Carrefour SA said it “vigorously contests” the findings in a government report into contractual relationships with franchisees that recommended the company be fined €200 million ($214 million) for its practices. 

France’s finance and economy ministry made the recommendation in a filing in a court case that pits an association of franchisees against the retailer.

Carrefour engaged in conduct that is “typical of practices that restrict competition, consisting concretely in suffocating franchisees by using its dominant position,” the finance ministry said in the report, which was first reported by French newsletter La Lettre and which was included in the article. 

Franchisees must sign at least a dozen or more contracts to become investors or operators, the government said in the report. Those include agreements requiring that they be supplied first by warehouses controlled by Carrefour, which prevents them from being supplied at lower prices. They can then go to arbitration in case of a dispute over any of the contracts.

“Carrefour vigorously contests the Ministry of the Economy’s grievances relating to the management of its franchise network, as well as the totally disproportionate nature of the fine, which can only be decided by the court,” the company said in an emailed statement. “The group has full confidence in its ability to demonstrate the validity of its contracts and the fairness of its relationships with its partners.”

The government issued the 160-page report to a court in Rennes in its role as the guarantor of fair market relations, it said in the document. The court will issue its ruling in the next 12 to 18 months, La Lettre reported.

Shares in Carrefour fell as much as 9.6% in Paris trading and were down 4.8% as of 3:19 p.m.

The ministry’s antitrust, consumer protection and fraud office DGCCRF said in an emailed statement it started an administrative probe several years ago and that its investigation found practices of several of Carrefour’s units were contrary to French commercial law.

(Updates with finance ministry statement in the last paragraph)

©2024 Bloomberg L.P.