The Egalim Act: Definition, Objectives, and Impact on Prices
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Are your break-even points recalculated every time the purchase terms change?
Let's plan an exchangeLearn more abour our promotion moduleThe Egalim Act refers to a set of French laws passed since 2018 to rebalance commercial relationships between farmers, manufacturers, and retailers, and to ensure fairer compensation for agricultural production. It has two direct effects on shelf prices: a 10% increase in the threshold for selling food products at a loss, and caps on promotional discounts based on value and volume. These rules remain in effect until April 15, 2028.
The Essentials in 6 Questions
A set of laws governing agricultural and food trade relations.
Distributors, manufacturers, producers, and pricing and promotions teams.
Since 2018, extended through April 15, 2028.
In France, food and consumer goods.
Pay farmers better and curb price wars.
Minimum prices, promotional caps, and standardized contracts.
The Egalim Laws, 2018–2025
People refer to “the” Egalim Act, but the framework was established through a series of successive pieces of legislation.
| Text | What he brought to the table for the price |
|---|---|
| Egalim 1, Act of October 30, 2018 | A 10% increase in the loss-sale threshold for food products and promotional caps, in effect since 2019 |
| Egalim 2, Act of October 18, 2021 | Written contracts with producers; portion of agricultural raw materials excluded from trading |
| Descrozaille Act, 2023 | Promotional restrictions extended to household goods, cosmetics, and personal care products |
| Act of April 14, 2025 | Measures extended through April 15, 2028; resale at a loss also prohibited for private-label products; stricter penalties |
The Descrozaille Act is sometimes referred to as “Egalim 3.” The underlying principle remains the same: to remove farm income from the price war between retailers.
What the Egalim Act Regulates Regarding the Sale Price
Two rules directly affect the listed price: a minimum price below which items cannot be sold, and a maximum limit on discounts.
| Rule | What it requires | Scope |
|---|---|---|
| SRP+10 | Resale price at least equal to the actual purchase price plus 10% | Food and Pet Products |
| Value Cap | Promotional discount limited to 34% of the price | Food |
| Volume Ceiling | No more than 25% of the annual volume specified in the contract may be sold as a promotional offer | Food |
| DPH Ceiling | Promotional discount limited to 40% of the price | Drugstore, Perfumery, Personal Care |
These limits apply to all business models, including promotional bundles and free products. The calculation for each business model is detailed in our article on Egalim and the threshold for selling at a loss.
How the Egalim Act Changes Pricing
The regulatory framework is shifting the competitive landscape: less room to lower food prices, more trade-offs elsewhere.
- Price alignment has its limits. The minimum price depends on each retailer's purchasing terms: a competitor may legally advertise a loss leader price that you are prohibited from offering.
- The floor fluctuates. A better-negotiated discount lowers it, while a rate increase raises it—sometimes even during the week.
- Promotions are taking on a new form. Retailers have shifted their focus to promotional strategies that are compatible with budget caps and to non-food items.
The actual purchase price, which sets the floor, is determined during annual commercial negotiations. The distinction between invoice discounts and service fees is explained in our article on front-end and back-end margins.
The Egalim Act and Other Pricing Regulations
Egalim is not the only legal requirement: it is in addition to the rules governing the announcement of price reductions, which are covered by a different law.
| Rule | What she frames | Origin |
|---|---|---|
| Break-even point | The minimum resale price | Commercial Code, as amended by Egalim |
| Promotion Caps | The depth and volume of the discounts | Egalim Laws |
| 30-Day Reference Price | The announcement of a price reduction | Consumer Law |
A promotion that complies with Egalim regulations may still be misleading if its reference price is incorrect. Both checks are performed together, as explained in our article on the 30-day reference price.
Incorporate Egalim into its pricing policies
Our belief is that these rules cannot be verified in a spreadsheet after the fact. They must serve as parameters for the pricing engine.
An up-to-date actual purchase price
The floor price is recalculated as soon as the purchase terms change.
A terminal in the engine
A price below the threshold is indicated before publication, not at the register.
A Controlled Promotional Plan
The ceiling is verified once the development is completed.
A record of the trade-offs
Each exception can be justified in the event of an audit.
This framework is part of the price compliance rules that every retailer must implement. Our Modular Pricing Solution platform incorporates these rules natively, and our promotions management system enforces the price caps as soon as the plan is created.
Frequently Asked Questions
Short answers to the most frequently asked questions about the Egalim Act.
What is the Egalim Act?
The Egalim Act is a set of French laws, enacted beginning in 2018, that regulate commercial relations between farmers, manufacturers, and retailers. Its goal is to ensure fairer compensation for agricultural production and to limit price wars in the food sector. For in-store prices, this translates to a “no-loss resale” threshold increased by 10% on food products and caps on promotional discounts. The framework was expanded in 2021, 2023, and 2025, and its provisions remain in effect through April 15, 2028.
What does Egalim mean?
Egalim is the abbreviation for the États généraux de l'alimentation, a consultative process launched in 2017 involving producers, manufacturers, distributors, and public authorities. The first law resulting from this process, dated October 30, 2018, retained this name. Subsequent legislation is referred to as Egalim 2—for the law of October 18, 2021—and sometimes as Egalim 3 for the Descrozaille Law of 2023. In everyday language, the term “Egalim Law” refers to this entire framework rather than to a single piece of legislation.
What is the difference between Egalim 1 and Egalim 2?
Egalim 1, in 2018, focused primarily on the retail price to consumers: a “no-loss resale” threshold increased by 10% for food products and promotional price caps. Egalim 2, introduced in 2021, addresses the relationship between producers and manufacturers upstream: written contracts with farmers and the exclusion of agricultural raw materials from negotiations between manufacturers and retailers. The first measure caps shelf prices, while the second protects the price paid to farmers. Both measures are factored into annual commercial negotiations.
What is SRP+10?
SRP+10 is the “no-loss resale” threshold plus 10 percent established by the Egalim Act. A distributor may not resell a food item or pet product for less than its actual purchase price plus 10 percent. In effect since 2019, it was extended through April 15, 2028, by the law of April 14, 2025. Since the actual purchase price depends on negotiated terms, this minimum price applies to each retailer individually and changes with every price reduction or increase.
How does the Egalim Act restrict promotions?
The Egalim Act limits promotions in terms of value and volume. For food products, the promotional discount cannot exceed 34% of the price, and the volume sold at a promotional price is limited to 25% of the annual volume specified in the agreement with the supplier. For household goods, cosmetics, and personal care products, the value cap has been raised to 40% since the 2025 law. These rules apply to all promotional formats: a “buy one, get one free” offer, which is equivalent to 50%, exceeds the food category cap.
How can you incorporate the Egalim Act into your pricing policy?
Egalim should be treated as a benchmark for price calculations, not as a post-hoc check. Specifically, the threshold for selling at a loss is recalculated for each product as soon as purchasing conditions change, and any price that falls below that threshold is flagged before it is published. Promotional caps are verified when the promotional plan is developed. This requires a reliable actual purchase price and documented rules, so that each decision can be justified in the event of an audit.
What should you do when a competitor lists a price below your break-even point?
Do not match prices: Setting a price below your break-even point is prohibited, even if a competitor is legally able to do so because of better purchasing terms. The solution lies in other strategies. You can adjust the perceived price of similar products, choose a compliant promotional strategy, or renegotiate the purchasing terms for the product in question. It’s helpful to first assess whether this product truly influences your customers’ price perception before sacrificing margin elsewhere to compensate.
What happens when a supplier's rate increases under the Egalim program?
The price floor rises automatically, since the break-even point follows the actual purchase price. A selling price that is not adjusted in time can then fall below the break-even point without anyone having decided to do so. The best approach is to recalculate the thresholds as soon as the new conditions take effect, then quantify the impact of a price increase on sales volume before implementing it. This is often where the price elasticity of each product makes the difference between a forced price increase and a strategically managed one.
Key Takeaways
- The Egalim Act is a series of laws (2018, 2021, 2023, 2025) governing commercial relations in the food industry.
- Regarding pricing:SRP+10 on food products and promotional caps of 34% (food) and 40% (personal care products), through April 15, 2028.
- These rules should serve as guidelines for the pricing mechanism, not as a form of ex post control.
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The no-loss resale threshold prohibits reselling a product for less than its actual purchase price.
For food products, it is increased by 10% through April 15, 2028, and discounts are capped at 34% by value and 25% by volume; for household goods, cosmetics, and personal care products, the cap is 40% by value.
These rules establish a minimum threshold that adjusts based on each purchase condition and limit promotional mechanisms. They must be integrated into the pricing engine as thresholds calculated on a per-product basis, rather than being enforced retroactively.
In the retail sector, a product's profitability isn't determined solely by its selling price. Part of it is determined on the shelf (the front-end margin), and another part is negotiated with the supplier, off the sales receipt (the back-end margin).
Far from disappearing, the back-end margin is shifting toward services and international operations. Managing one without the other often leads to underestimating—or overestimating—the actual profitability of a product.
Price compliance refers to the legal rules that a price and its display must follow.
In France, four rules apply: the reference price for discount advertisements, the prohibition on reselling at a loss, the EGalim promotional caps, and price disclosure requirements.
These rules are simple to state but difficult to apply to thousands of products and multiple channels. Most discrepancies stem from incomplete data at the time the price is set, not from any intention to mislead.