I ENFORCEMENT POLICIES AND GUIDANCE
Cartels and leniency rules have been subject to several significant modifications in recent years in France. In line with the development of the economy and of competition rules at European level, a new set of rules was implemented in 2002, introducing the French leniency programme.
Following the enactment of Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition, laid down in Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), French antitrust laws were amended in 2004 to implement a de minimis regime as well as a commitment procedure, and to strengthen the investigative and sanctioning powers of the French Competition Council.
The Law on the Modernisation of the Economy No. 2008–776 of 4 August 2008 created the Competition Authority (the Authority), which replaced the Competition Council from March 2009 onwards.
Since then, various reforms have been adopted to bolster the Authority’s investigative and sanctioning powers. In particular, on 16 May 2011, the Authority adopted the Notice on the Method Relating to the Setting of Financial Penalties, which lends more transparency and predictability to the calculation of the amount of fines. Its application led to an increase in the amount of the fines.
On 17 March 2014, Law No. 2014–344 (Hamon Law) was adopted to, inter alia, introduce a class action mechanism to France as of 1 October 2014.
More recently, on 3 April 2015, the Authority issued a revised procedural notice on the leniency programme. Most notably, this revised notice introduces a systematic press release following dawn raids, reinforces the obligation of cooperation for leniency applicants, provides for the filing of summary applications, and specifies the scale of fine reductions.
i Statutory framework
Prohibited cartels and concerted practices are regulated by Articles L420–1 to L420–7 of the French Commercial Code (FCC).
In the same language as Article 101 TFEU, Article L420–1 FCC prohibits any agreement, written or oral, between two or more undertakings, express or tacit, whose object or effect is to prevent, restrict or distort competition, and in particular if it:
- a limits the market access of, or free competition between, other undertakings;
- b prevents free pricing on the market, artificially encouraging price increases or limiting price reductions;
- c limits or controls production, opportunities, investment or technical progress; or
- d shares markets or sources of supply.
In general, the Authority follows the European Commission’s (the Commission) practice concerning agreements and concerted practices. In particular, an infringement cannot be established solely through parallel behaviour, so the Authority must find additional evidence showing that the parallel behaviour results from anticompetitive conduct such as exchanges of information.
Article L464–6–1 of the FCC foresees a de minimis threshold in France: the Authority may decide not to pursue a case should the parties be competitors with a combined market share of less than 10 per cent, or should they be neither current nor potential competitors, with a combined market share of below 15 per cent.
This exemption is not automatic and does not apply in most serious cartel cases containing a hard-core anticompetitive restriction such as price-fixing.
ii The Authority
The Authority is an independent administrative public body that has full powers to enforce competition law. Its investigative services carry out the investigation, under the supervision of the Rapporteur-General. They act independently from its college, which, after hearing the parties and the investigative services, adopts decisions in antitrust cases.
Administrative and some judicial (commercial, civil and criminal) courts can also enforce national and European antitrust rules in cases falling under their jurisdiction (referring questions to the Authority where necessary).
iii Starting the investigation
The Authority can initiate proceedings ex officio, or cases can be referred by the Minister of Economy, or complaints can be submitted by companies or collective organisations (e.g., professional bodies, trade or consumer associations), or by individuals carrying out on economic activity.
iv Powers of investigation
There are two types of investigations under French law: ordinary investigations and investigations under judicial control.
According to Article L450–3 FCC,2 the investigators (agents of the Authority or of the Minister of Economy) may:
- a have access to all business premises, land or means of transport for professional use or the provision of a service as well as to premises that serve both as a dwelling and as a place of business (in this specific case, with prior judicial authorisation);
- b request copies of books, invoices and all other professional documents;
- c have access to software and computerised data and request that such data be put in a legible format;
- d request explanations or information from any employee or company representative; and
- e request an expert opinion.
Investigation under judicial control
Pursuant to Article L450–4 FCC, searches and seizures (i.e., dawn raids) in all locations can only be carried out on the basis of a judicial order, delivered upon request from the Minister of Economy or from the Rapporteur-General, or concerning investigations started by the Commission.
Investigations (searches and seizures) are carried out under court supervision and in the presence of the company’s representative (or two independent witnesses) and of police officers who assist the Authority’s investigative services and who can report, when necessary, to the supervising court. The Supreme Court specified that the company’s representatives (e.g., external counsel) could not directly contact the supervising court in relation to the investigations and had to refer first to the police officers who can then confer with the supervising court.3
Companies have to be informed that they can be assisted by their external legal counsel, although inspectors do not have to wait for their arrival to start and carry out the investigation. The Authority’s investigative services can interrogate the companies’ representative and other employees to obtain any information useful to their investigation.
Investigators are required to draft minutes describing the dawn raid and to establish a list of all documents seized, a copy of which should be given to the company’s representative.
Under Article L450–4 FCC, companies can appeal the judicial order authorising the investigation. Such an appeal must be filed within 10 calendar days of the notification of the judicial order. The decision of the Court of Appeal can be further challenged before the Supreme Court within five calendar days. Similarly, the company subject to investigation is able to challenge the conditions under which the investigation was carried out before the Court of Appeal within 10 calendar days of the receipt of the minutes of the investigation. A further appeal to the Supreme Court is also possible.
When a company fails to answer a request by the investigative services, the Authority may issue an injunction, sanctioned by a daily periodic payment (see Section V.ii, supra).
For both types of investigation, obstruction to the investigation (i.e., providing false or misleading information) can be sanctioned by a fine of up to 1 per cent of the total turnover of the company. In principle, legal privilege may be opposed to the investigators.
Business secrets cannot be opposed to the investigators but their protection in relation to other parties to the procedure may be requested at a later stage. When such a request is accepted, other parties will have access to a non-confidential version of these documents and a summary of such documents. Confidential information that is useful to a party’s rights of defence can be declassified in the course of the proceedings.
Ending the investigation: final decision
The Authority can adopt a decision to close the proceedings (i.e., without imposing a sanction) at any stage of the procedure.
If the investigative services propose to close the proceedings, the parties and a representative of the Minister of the Economy can access the file and submit their observations within two months. The Authority can then either close the case or request further investigations.
Alternatively, the Rapporteur-General can notify a statement of objections to the incriminated parties to the proceedings, and to the representative of the Minister of the Economy (or initiate discussions under the commitments avenue – see Section V.iii, infra). The recipients have, in principle, two months to access the case file and reply. The Rapporteur-General then notifies all parties with a ‘report’ that answers the parties’ arguments and that describes the investigative services’ view on the various criteria used to determine the amount of the fine (no specific amount is set out). The parties have, in principle, two months to submit their observations in response.
When the case does not raise significant concerns, the Rapporteur-General may submit the case to a simplified procedure, without the stage of the report. This simplified procedure is also applicable in cases where leniency applications have been accepted (a report should be established for companies that did not apply for leniency).
Finally, an oral hearing is organised before the college of the Authority. Hearings are not public and only the concerned parties and a representative of the Minister of the Economy can attend. In general, the Rapporteur-General (represented by the case handlers), the representative of the Minister of the Economy and the parties present oral observations. The hearing officer may also attend the hearing to present a report. After this, the Authority issues its final decision.
In 2014, the average time for the Authority to handle a cartel case from its referral until the final decision was approximately 22 months.4
Decisions of the Authority can be appealed within a month of their notification to the parties concerned. That appeal is not suspensive. The decisions of the Court of Appeal can be further appealed to the French Supreme Court within one month of their notification. The president of the Authority can also appeal to the Supreme Court any decision of the Court of Appeal that rescinds or reverses a decision of the Authority.5 The appeal to the Supreme Court is limited to points of law and is not suspensive.
II COOPERATION WITH OTHER JURISDICTIONS
i Cooperation within the EU
According to Regulation (EC) No. 1/2003, national competition authorities (NCAs) and courts are fully empowered to enforce Article 101 TFEU, as well as to grant individual exemptions by virtue of Article 101(3) TFEU.
The implementation of Regulation 1/2003 necessarily implies full cooperation between the Commission and NCAs to ensure a consistent application of EU rules.
In this respect, several measures have been implemented, such as:
- a the creation of the European Competition Network (ECN), through which NCAs can exchange information;
- b the Authority has a duty to inform the Commission immediately when it starts an Article 101 TFEU investigation. It may also inform other NCAs. Conversely, the Commission must share the most important documents collected with the NCAs, as well as any other documents useful for the analysis of the case at a national level, at their request; and
- c the Authority must inform the Commission before adopting a final decision, and the Authority may, in such circumstances, provide the Commission with a short summary of the case and of the proposed decision.
Information exchanged between the Commission and the NCAs will only be used to apply Articles 101 and 102 TFEU. However, it can also be used for the application of national law when it is applied in the same case, in parallel to EU law, and does not lead to a different outcome. In addition:
- a NCAs and national courts may ask the Commission to share its opinion on questions concerning the application of EU competition rules; and
- b under Article L.450–1 FCC, the agents of the Authority may have to assist investigations initiated by the Commission or other NCAs if requested, and vice versa.
Information containing business secrets can be communicated between NCAs as long as, in substance, they are not publicly disclosed.
As an example of a successful cooperation with other competition authorities in the EU, the French, Swedish and Italian competition authorities have worked together, in close coordination with the European Commission, to obtain commitments from the company Booking.com in these three countries regarding vertical restraints.6
ii Interplay between jurisdictions
The interplay between jurisdictions may affect the legal procedure in two situations: when the Authority applies both Article L420–1 FCC and Article 101 TFEU, and when several competition authorities apply Article 101 TFEU in parallel.
The Authority applies both Article L420–1 FCC and Article 101 TFEU
To avoid any risk of conflict when applying national law and EU law, Article 3 of Regulation (EC) No. 1/2003 provides that the application of EU law prevails. Accordingly, national law cannot lead to the prohibition of agreements or concerted practices that affect trade between Member States but do not restrict competition or may be exempted (falling under the conditions of Article 101(3) or a block exemption regulation).
Several competition authorities apply Article 101 TFEU in parallel
In certain situations, a case may be investigated either by the Commission or by one or several NCAs acting in parallel. To avoid multiple procedures and to ensure that a case is dealt with by the best placed authority, Article 11–6 of Regulation (EC) No. 1/2003 provides that, if the proceeding is initiated by the Commission, the NCAs are relieved of applying Article 101 TFEU. If an NCA is already acting on a case, the Commission may only initiate proceedings after consulting with that NCA.
According to the Commission notice on cooperation within the NCAs, the initiating national authority should remain in charge of the case. Reallocation of a case would only be considered when the initiating authority considers that it is not well placed to act, or when other authorities consider themselves equally well placed to act.
In a 2007 case, the former authority (French Competition Council) decided that any previous infringement committed by an undertaking that was ruled upon by the Commission or by another NCA would be taken into account when determining the fine to be imposed on that undertaking.7
iii Leniency cooperation within the EU
In 2006, the ECN adopted the Model Leniency Programme (MLP) to make it easier for companies to apply for leniency where it is not clear which NCA is better placed to take the case. By endorsing the revised MLP, NCAs have agreed to use their best efforts to align their current and future leniency programmes and practices on the MLP.
In November 2012, the ECN adopted a revised version of the MLP that, in particular, clarifies and simplifies the information that must be provided by companies applying for leniency to several authorities:
- a a standard template for summary applications, which companies will be able to use before all NCAs, is now included (the ECN has published a list of national authorities that accept summary applications); and
- b all leniency applicants applying to the Commission in cases concerning more than three Member States will be able to submit a summary application to NCAs.
Other changes include clarifications on conditions that applicants must meet to qualify for leniency – in particular on the duty to cooperate – and the scope of leniency programmes under the MLP. The revised text also indicates that the ECN competition authorities should offer the same level of protection against disclosure for written as well as for oral leniency statements.
On 3 April 2015, the Authority adopted a Revised Leniency Notice in order to reflect the changes made to the MLP.
III JURISDICTIONAL LIMITATIONS, AFFIRMATIVE DEFENCES AND EXEMPTIONS
i Territorial scope of application
Article L420–1 FCC expressly covers practices committed ‘even through the direct or indirect intermediation of a company in the group established outside France’. Traditionally, the Authority considers that it may apply French provisions relating to cartels when they have an effect, either direct or indirect, on the French territory.8
ii Material scope of application
The legal antitrust framework applies to all economic activities. There are no industry-specific offences.
iii Affirmative defences and exemptions
According to Article L420–4 FCC, practices falling under Article L420–1 FCC may be exempted under specific circumstances and conditions:
- a in the event that practice at hand results from the application of a legislative act or a regulation implementing such act, it can be exempted should it be the direct and unavoidable consequence of the legislative text, and that practice should be no more restrictive than the legislative provision;
- b in the same way as Article 101(3) of the TFEU, Article L420–4(2) of the FCC exempts agreement or practices:
• whose effect is to improve economic progress, including by creating or maintaining jobs;
• that allow users a fair share of the resulting profit;
• that do not give the undertakings involved the opportunity to eliminate competition for a substantial part of the products in question; and
• that do not impose restrictions that are not indispensable to the achievement of this objective; and
- c by a decree adopted following a favourable opinion from the Authority, certain categories of agreement or certain agreements, in particular when they are intended to improve the management of small or medium-sized undertakings, may be considered as fulfilling the conditions hereupon. Such decrees have similar effects to European block exemptions but are very rarely issued.
IV LENIENCY PROGRAMMES
As detailed in Section II.iii, supra, the Authority adopted the Revised Leniency Notice to conform its leniency programme to the European Model Leniency Programme.
Generally speaking, leniency is available only for participants to a cartel (i.e., a hard-core infringement that amounts to competitors fixing prices, limiting quantities, sharing markets, etc.). The Revised Leniency Notice has added hub-and-spoke infringements to the list, thus covering infringements carried out between competitors with the support of actors in a vertical relationship with the cartel participants.
To date, the Authority has received at least 69 leniency applications and has taken 10 decisions on this basis. Decisions adopted in proceedings where leniency was applied concerned, in particular, the steel industry where, for the first time, no full immunity was granted, or the sector of home and personal care products where the Authority imposed its highest fine ever.9
i Procedural steps
Companies can have anonymous and informal contacts with the Leniency Adviser, in order to obtain general information relating to the leniency procedure.
Companies should apply for leniency with the Rapporteur-General either by registered mail10 or orally (in which case, the Rapporteur-General confirms in writing the date and time of the application). To apply orally, a company must request an appointment with the Rapporteur-General by calling a dedicated phone line. Where multiple requests for appointments are made, applications are treated on a first come, first served basis.
The applicant must provide information on the infringement, as detailed below. The Rapporteur-General may grant the applicant a set period of time to submit all the relevant elements of proof to support its application (such elements will be considered as received on the day of the application when the deadline is respected).
Based on the information and evidence provided to the Authority, the case handler appointed to investigate the leniency application drafts a report to determine whether the conditions for leniency are met. If so, he or she sets out a proposal for immunity or fine reduction.
That report is sent to the undertaking concerned and to the representative of the Minister of the Economy, who are summoned to a hearing before the Authority (in principle, at least three weeks later).
Following the hearing, the Authority adopts an opinion indicating whether it will grant total or partial immunity and specifying the conditions attached thereto. If the Authority considers that no immunity or reduction of fine may be granted, the undertaking can request that all elements of proof that it communicated be returned to it.
When adopting the final decision on the merits of the case, if the undertaking has properly fulfilled the conditions set by the Authority in its opinion, it will be granted the immunity or reduction of fine indicated in the leniency opinion. In case the conditions attached to the leniency opinion have not been respected, the Authority may either not award any fine immunity or reduction, or it may lower the level of fine reduction awarded to the Authority.
ii Required conditions to benefit from leniency
Any applicant for leniency must:
- a end its participation in the alleged anticompetitive activities immediately, and in any case, no later than the date of the notification of the leniency opinion by the Authority (who may decide to postpone this date to preserve the confidentiality and efficiency of its investigation);11
- b cooperate fully and in good faith with the Authority as from the time of its application and throughout the investigation. In particular, the applicant must:
• provide it with all evidence in, or that may come into, its possession relating to the suspected infringement;
• not call into question at any time and until the end of the proceedings the factual elements that it revealed in the context of the leniency proceedings and underlying the leniency opinion, the materiality of the facts revealed, as well as the very existence of the practices;12
• promptly answer any request for information relating to the alleged cartel;
• make current and, if possible, former employees and legal representatives available for questioning;
• abstain from destroying, falsifying or concealing relevant information or evidence relating to the alleged cartel; and
• abstain from disclosing the existence or the content of its leniency application (except to other competition authorities) before the Authority has issued its statements of objections, unless otherwise agreed;
- c not have taken any measures to coerce other undertakings into participating in the infringements.
In practice, the Authority accepted that a leniency applicant reveals anticompetitive conduct in which it was not directly involved, but was aware of, as long as material links existed between these and the practices in which the applicant directly took part.13
Also, since the Revised Leniency Notice, the leniency applicant must provide all details on the entities its application intends to cover as only entities belonging to ‘a single economic unit’ at the time of the leniency application may be covered, to the exclusion of former parent companies.14
iii First in
The first eligible applicant receives total immunity, provided that it submits information and evidence that the Authority did not previously hold and that allows the Authority to carry out an investigation under judicial control.15 This requires the applicant to provide, at the very least, contact details of the other participants in the alleged infringement, a detailed description of the markets concerned and the infringing practices, all evidence in its possession, and information concerning any previous or planned leniency applications to other competition authorities in relation to the same practices.
If the Authority already has information on the practice revealed, the undertaking may qualify for total immunity if:
- a it is the first to provide evidence that, from the Authority’s point of view, is sufficient to enable it to establish an infringement of antitrust law;
- b at the time of the application, the Authority did not have sufficient evidence to establish an infringement; and
- c no undertaking has obtained a conditional opinion granting total immunity from fines for the alleged infringement.
iv Following applicants
Other undertakings can benefit from a reduction of fines by providing the Authority with evidence that has ‘significant added value’ (i.e., evidence that strengthens the ability of the Authority to prove the alleged infringement). In this respect, the Authority considers that elements of proof that are contemporaneous to the infringement add value as compared to ex post evidence, that evidence that directly establishes the infringement adds value as compared to evidence that establishes it indirectly and that evidence that is indisputable adds value as compared to evidence that is disputable.
To determine the level of fine reduction, the Authority will take into account the ranking, the time of the application and the extent to which the elements submitted bring significant added value to the case.
Further, if the applicant submits compelling evidence that establishes additional elements of fact with direct consequences on the quantum of the fine imposed to all cartel participants, this additional contribution will be taken into account in the setting of that applicant’s fine (amounting to a partial immunity).
According to the Revised Leniency Notice, the second leniency applicant to provide significant added value shall expect, depending on the circumstances, a fine reduction ranging from 25 to 50 per cent of the fine. The third leniency applicant to come forward shall then expect a fine reduction ranging from 15 to 40 per cent and any subsequent leniency applicant shall expect a maximum fine reduction of 25 per cent.16
The Revised Leniency Programme specifies that the Authority will publish a press release after it carries out dawn raids, in order to give companies not targeted by the raid the opportunity to apply for leniency. The press release will not name the companies subject to investigation and the Authority will also publish a press release if it decides to close the case.17
Timing for leniency application has been crucial in various recent cases, where the Authority dismissed applications for leniency on the grounds that it already had sufficient information from previous applications.18
The Authority asserts that it will keep the identity of the leniency applicant confidential for the duration of proceedings until the statement of objections is sent to the parties concerned.
This confidentiality shall be maintained within the limits of the national and EU obligations of the Authority. In particular, the Authority may communicate the information received by leniency applicants to the Commission or to other NCAs within the ECN. However, all NCAs have undertaken not to use information exchanged through the ECN to call into question a national leniency application. The Authority specified in its Revised Leniency Notice that oral statements made under the leniency programme will only be transmitted to other competition authorities, pursuant to Article 12 of Regulation (EC) No. 1/2003, provided that the conditions set out in the notice relating to cooperation are met, and the confidentiality guaranteed by the receiving authority is equivalent to that guaranteed by the Authority.
To ensure the efficiency of the leniency programme, Law No. 2012–1270 of 20 November 2012 provides that the Authority shall not communicate any documents produced or collected in the context of leniency proceedings to any judicial court requesting documents or consulting the Authority.
vii Effect of leniency on employees
When the Authority considers that the facts of the case should qualify for a criminal sanction pursuant to Article L420–6 of the FCC, it may refer the case to the State Prosecutor’s Office.
However, the Authority has undertaken not to refer a case where employees of the undertaking applying for leniency would be liable to be subject to such proceedings.
i Statutory framework
On 16 May 2011, the Authority adopted a Notice on the Method Relating to the Setting of Financial Penalties, the objective of which is to enhance the transparency of the method followed by the Authority in setting financial penalties and to provide upfront guidance to the parties. This notice explains in detail how the Authority sets financial penalties on a case-by-case basis, pursuant to the four criteria provided by Article L464–2 of the FCC:
- a the seriousness of the infringement;
- b the significance of the harm done to the economy;
- c the individual situation of the undertaking or of the group to which the undertaking belongs; and
- d reiteration.
Based on these criteria, the FCA uses the following method:19
- a it sets a basic amount that represents a proportion of the value of the sales, made by each undertaking or entity at stake, of the products or services to which the infringement relates. The proportion of the value of the sales used to determine the basic amount depends on the seriousness of the infringement and of the importance of the harm done to the economy;
- b it adjusts the basic amount to take into account factors relating to the specific behaviour and the individual situation of each undertaking or entity at stake: mitigating and aggravating circumstances (such as ‘single-product’ undertaking), financial difficulties or to the contrary, economic power, inter alia;
- c it increases the amount in case of reiteration; and
- d it checks that the amount does not exceed the legal maximum (10 per cent of the companies’ consolidated worldwide pre-tax turnover or €3 million for individuals), and it reduces the amount to take into account leniency applications or transaction proceeding, and adjusted in view of the undertaking’s or entity’s ability to pay the fine, to the extent that such an adjustment is requested and warranted.
The Authority’s guidance takes into account, within the framework of the FCC, the ‘principles for convergence’ agreed upon by all the NCAs of the European Union to ensure the effective and consistent implementation of European competition rules.
In the settlement and leniency procedures, companies cannot challenge the existence of the infringement or their participation in such infringement, but retain the right to be heard on the amount of the fine. In practice, it may give rise to significant and lengthy debates.
ii Civil and administrative sanctions
A wide range of sanctions for the infringement of Article L420–1 of the FCC can, where justified, be applied by the Authority, such as injunctions, publication and fines.
The Authority may issue orders obliging the parties to terminate the anticompetitive practices within a determined period. This order may be sanctioned by a periodic penalty payment.
The Authority may also issue injunctions through interim measures at the request of the parties initiating an investigation, provided that a strong presumption exists that the alleged practice will seriously and immediately affect the general economy, the economy of the concerned sector, or the interests of consumers or of the complainant.20
Article L464–9 of the FCC confers upon the Minister of Economy the power to issue orders obliging companies to terminate anticompetitive practices in cases where the affected market is local and the company’s turnover is below a given threshold (such practices are known as ‘micro-practices’). Under the same conditions and following proceedings detailed in the FCC, the Minister of Economy may also propose a settlement.
Pursuant to Article L464–2–I, Paragraph 5 of the FCC, the Authority may order the publication of the decision at the undertaking’s expense, in particular in sectoral or generalist newspapers or in the annual report of the company.
The Authority can impose periodic penalty payments of up to 5 per cent of the average daily turnover of a company when a company fails to comply with its decision or a binding commitment.
As regards cases dealt with through the simplified procedure, the maximum fine that can be imposed on each party concerned is €750,000.21
Companies that obstruct an investigation risk a fine of up to 1 per cent of their consolidated worldwide pre-tax turnover.22
Litigation regarding the setting of the financial penalties and the application of the Authority Notice is increasing. As an example, almost all the companies appealed the Authority decision relating to the personal and home-care products sector on 18 December 2014 and the appeals were focused on the determination of the financial penalties.
iii Mitigation of fines
With the implementation of Ordinance No. 2004–1173 of 4 November 2004, two procedures have been created to alleviate the Authority’s workload by offering a reduction of the potential fines: the commitment procedure and the settlement procedure.
The commitment procedure
In the commitment procedure, the Authority can close a case without imposing any fine when the parties offer commitments that are sufficient to bring to an end to the practices that the Authority suspects of being anticompetitive. On 2 March 2009, the Authority published a procedural notice on the commitments procedure that details the proceedings leading to the adoption of a decision. The commitment procedure does not apply for hard-core cartels or to any infringement that has already caused significant harm to the economy. Its objective is, rather, to prevent such harm to the economy by allowing swift intervention (e.g., in markets undergoing liberalisation or characterised by fast innovation).
That commitment procedure does not entail an admission of guilt and it can only be entered into before the Authority issues a statement of objections. If the commitments procedure fails, the Authority will withdraw from the case any document obtained during the commitment procedure.
Commitment decisions are published on the Authority’s website. Such decisions do not offer conclusions regarding the existence of an infringement, but merely summarise the Authority’s suspicions and explain why it considers that the commitments remedy such suspicions. Legally, it is always possible for a third party to bring an action for damages.
The settlement procedure
The settlement procedure was created in 2001 and the Authority published a procedural notice in 2012. On 6 August 2015, it was replaced by a new procedure – the transaction.
Under this procedure, the Rapporteur-General can submit a transaction offer to an undertaking that has decided not to challenge the statement of objections. The focus of the discussion between that undertaking and the Rapporteur-General will now be on the maximum amount of the fine that could be imposed (in the former procedure, the discussions related to the amount of the fine reduction, at a moment where the undertaking did not have an indication of the potential total amount of the fine). This new procedure therefore aims to increase predictability for companies. Whether it will do so remains to be seen.
In the context of a settlement procedure, companies can also offer to take commitments to further mitigate the amount of the fine. Frequently, companies commit to implement the Authority’s model compliance programme (in a recent case, the Rapporteur-General refused to consider commitments other than to apply the model compliance programme on the basis that equal treatment of all involved undertakings had to be catered for).
The procedural notice, following the Authority’s decision in the Detergent cartel case,23 gives companies the capacity – if the general case handler deems it appropriate – to combine the benefits of leniency with the settlement procedure. This may apply, in particular, if the objections notified to the undertaking in question differ on one or more significant aspects from the content of its leniency application. Such a situation arose in a decision, in which the Authority granted a company (Univar) a reduction of 20 per cent of the fine on the basis of its leniency application, and an additional reduction of 15 per cent of the fine based on the settlement procedure.24
iv Criminal sanctions
Criminal sanctions very rarely occur in French law. Only those individuals who have fraudulently taken a personal and decisive part in the conception, organisation or implementation of the prohibited practices can be fined up to €75,000 and even sentenced to a four-year term of imprisonment.25 The Criminal Court may order the undertaking to pay the criminal fine imposed on an employee.26
Since the implementation of Criminal Law No. 2004–204 of 9 March 2004, criminal sanctions (fines only) can now also be imposed on companies infringing Article L420–1 of the FCC.
Such criminal sanctions cannot be issued by the Authority, which is only empowered to refer the criminal part of the case to the State Prosecutor.
VI ‘DAY ONE’ RESPONSE
The Authority has extensive powers to conduct investigations and, as described in Section I.iv, supra, trying to oppose their investigation may result in a fine.27 Therefore, it is of utmost importance that undertakings subject to such investigations are assisted by legal counsel as quickly as possible to efficiently protect their rights of defence without placing themselves at risk.
In the event of an unexpected investigation such as a dawn raid, undertakings should immediately form a team of employees prepared to respond to such an investigation (including in-house and external counsel) who will accompany the investigators. The identity of the inspectors should be checked and a copy of the judicial authorisation made.
The local representative of the company should lead the inspectors to their designated office and discuss the further practical proceedings. At that point, it is important to clarify the extent and the goal of the inspection, and which products, documents, time periods and countries the inspectors are interested in. Only documents covered by the scope of the investigation may be consulted and seized. Usually, however, the inspectors will only communicate the purpose of the inspection in a very broad manner. Employees should not destroy any document or electronic data (during or after the investigation), or try to warn other undertakings about the inspection. Generally, the inspectors will not wait until external legal counsel arrives on the premises to begin the inspection. It is also recommended that the envisaged duration of the inspection be discussed, and secretaries named to note the exact questions asked by the inspectors and answers given by employees, to specify in writing all documents inspected and to make copies of all documents copied.
Employees or representatives of the undertakings should offer to assist the inspectors in copying documents. This could make it easier for the undertaking to make its own copies of the documents. Undertakings subject to inspection should also name one or more contact persons who will be the only ones with the authority to provide any kind of information to the inspectors.
It is also important to try to create a friendly and cooperative atmosphere. As a general rule, however, it is advisable to avoid conversations of a general nature, in particular regarding the position of the employees in the undertaking. In such informal conversations there is always a danger that incriminating information regarding the subject matter of the inspection is unwillingly disclosed to the inspectors.
It is also useful to make at least two copies of the documents inspected (one for the undertaking and one for external legal counsel), and it is preferable to give only an oral explanation when the questions are directly related to such documents.
Undertakings should not communicate to the inspector documents that are legally privileged (i.e., any exchange of correspondence between the undertaking and outside counsel, or any other internal document summing up such exchange or correspondence).
VII PRIVATE ENFORCEMENT
Private damages claims can be initiated before ordinary courts (but not before the Authority) but are relatively rare in practice. The claimant has to prove the existence of tort, damage and causation between the two.
Moreover, the Sapin II law recently voted by the French Parliament granted the government the ability to issue an order with the aim of implementing the Directive 2014/104/EU governing actions for damages under national law for infringements to national and European competition law provisions.28 Therefore, the state of the law, as detailed below, could change in the coming months, once the Directive has been implemented.
Damages are generally calculated according to the principles of civil law: the amount of damages granted to the victim of anticompetitive practices must only restore the victim to the situation that would have prevailed had the damage not occurred. Punitive or triple damages do not exist under French law.
Although civil judges are not bound in any way by the decisions of the Authority for the assessment of the existence of a tort giving rise to liability or for the calculation of damages flowing therefrom, such decisions could contribute greatly to the success of such actions. At least, such a decision would greatly facilitate proving the existence of a tort. Pursuant to Article L462–3 of the FCC, the Authority may provide any document concerning anticompetitive practices on judicial request, excluding all information obtained through the leniency programme. In order to obtain the judicial request, a party has to prove that the documents are not in its possession and that they are necessary for its defence. In a recent judgment, the Paris Court of Appeal clarified that this applies both to the claimant and the defendant so long as the requested information is necessary to the exercise of their rights.29
Class actions have been available in France since 1 October 2014, after the adoption of the Hamon Law on 17 March 2014 and its implementing decree on 24 September 2014.
Class action is an opt-in, two-phase procedure. Duly authorised associations for the defence of consumers can introduce these actions to claim compensation for actual damage to economic interests resulting from any failure by a business to comply with its obligations, legal or contractual, for the supply of goods or services.
During the first phase, the judge rules on the liability of the undertaking. As regards antitrust damages, the liability of the undertaking is established once a final decision of a European or national authority or jurisdiction is adopted. This decision has to be definitive, at least as regards the liability of the undertaking. In the ruling on the liability, the tribunal has to specify in particular:
- a the harm that might be compensated and its amount, or at least a method of calculation;
- b the publicity measures to be taken in order to inform the consumers concerned, which will be implemented once the liability decision is definitive;
- c the deadline (between two and six months after the publicity measures) for the consumers concerned to declare their intention to participate in the class action; and
- d the deadline within which consumers must obtain compensation.
To join a class action, a consumer has to explicitly mandate the association and specify the amount of compensation requested. In the event of multiple associations, the consumer has to declare his or her membership of an association either to one of the associations or directly to the undertaking against which the class action is implemented. The class action may only include consumers who are in a similar or identical situation with respect to the same undertaking.
During the second phase, compensation is determined individually for each consumer. The disputes raised by the implementation of the liability judgment are submitted to a pretrial judge. In the case of a dispute before the pretrial judge, the deadline within which the consumers must receive compensation is suspended.
Mediation can take place at any time. However, the agreement should receive judicial approval.
The first class action was brought on 1 October 2014 by the main consumer association (UFC Que Choisir) against the real estate agency Foncia for abusive charges in its rental contracts.
VIII CURRENT DEVELOPMENTS
The main current developments under French law in cartel and leniency regulation are:
- a the recent adoption of the Macron Law on 6 August 2015, which vests the Authority with new investigative and consultative powers and amends the transaction and leniency proceedings, as described above; and
- b the adoption of the Hamon Law on 17 March 2014, which introduced class actions under French law and increased the powers of investigations and the obligations of undertakings during investigations relating to anticompetitive practices.
Through both of these laws, the Authority sought to obtain greater investigation powers30 and to alleviate its workload for cases where the parties do not challenge the existence of an infringement. In that respect, the Authority’s position may restrict companies’ rights or extend its own prerogatives, so that companies are frequently compelled to initiate appeals. The net effect therefore seems to shift the workload from the Authority to the Court of Appeal. This is the case particularly because the Authority imposes significant fines even in cases where parties opt for procedures that mitigate the amount of the fine (leniency or settlement proceedings).
Such a tendency of the Authority to impose higher fines in cartel cases has recently become clear. For instance, in its decision dated 18 December 2014, concerning the personal and home-care products sector, the Authority imposed fines totalling almost €1 billion (€951.1 million) to various companies that exchanged information during a period of about a year-and-a-half. Six out of the eight concerning undertakings in the home-care products sector and nine out of the 11 in the personal-care products sector either obtained some form of leniency or had their fine reduced pursuant to the settlement procedure, with some receiving both. Such fine is noteworthy, in particular since the context could have called for a nuanced assessment of the various parameters to determine the amount of the fine. For instance, the incriminated exchanges of information took place in the context of legislative reforms that sought to modify the application of the below-costs resale prohibition. A wide consensus emerged that such prohibition led to higher retail prices for consumer goods and had to be reformed. According to the Authority, these reforms threatened to erode manufacturers’ profitability. Manufacturers would thus have exchanged information to prevent the proper application of the reforms and to mitigate retailers’ buyer power. The Authority widely publicised the adoption of its decision of 19 December 2014, ensuring maximum press coverage relating to its record-setting fine. The president of the Authority made press statements to insist on this increased degree of severity, and the Court of Appeal confirmed most parts of the Authority’s decision in October 2016. Among others, the Court of Apple approved the Authority’s use of the double net turnover in order to set the basic amount of the financial penalty instead of the triple net turnover as suggested by the companies (which therefore means that the fine was computed on a value of sales that took into account part of the price that was ultimately pocketed in by the retailers and not by the suppliers that took part in the infringement). It also dismissed the companies’ arguments related to the absence of harm done to the economy although both the parties’ economists and the Authority’s economist team agreed that no statistically significant overcharge could flow from the infringement (or a very limited one). Therefore, it only reduced very slightly the fines imposed on three undertakings out of eight on purely technical grounds.31
Also, the Authority (via its president who has power to represent the Authority in court) is now showing itself to be a fierce litigator. In two well-known cases, the Court of Appeal decided to substantially reduce the fines imposed by the Authority. In both cases, the president of the Authority appealed the Court of Appeal’s decision and requested the Supreme Court to reinstate its initial fine:
- a in the Endives case, while the Court of Appeal had considered that competition law could not apply to certain anticompetitive behaviour that stemmed from the application of agricultural regulation, the Supreme Court decided to issue a preliminary question to the Court of Justice of the European Union regarding whether or not competition law shall apply to agreements among trade organisations related to their mission of common organisation of the agricultural market and stayed the proceedings;32 and
- b in the Flour case, the Supreme Court partially quashed the Court of Appeal’s decision where it had considered that the Authority had failed to establish that an association created in 1965 by various millers in France, with the support of the government, to facilitate the retail sale of flour, had an anticompetitive aim. Indeed, the Supreme Court considered that the Court of Appeal decision lacked of legal basis since it did not check whether or not the common commercialisation organisation between the companies was going beyond a strictly necessary measure to allow their penetration and maintenance on the market.
Another noteworthy development is the Authority’s use of its power to disjoin cases where leniency applications have been made, which also contributes to increasing the total amount of the fines for companies:
- a in the Flour case, a German miller applied to the Authority for leniency. In 2012, the Authority first imposed significant fines, totalling €242.4 million, to various millers for two different cartels concerning flour sold to retail stores for end consumers’ use. The Authority disjoined part of the case to create a parallel case concerning flour sold to industrial users, in which it imposed a new fine of €1.1 million to three millers in 2015; and
- b in the home-care and personal-care products sector, the Authority first imposed a €367.9 million fine to four manufacturers of detergents in 2011. It disjoined part of the case to impose a new fine totalling €951.1 million in 2014 (see above).
Finally, in the recent decision dated 15 December 2015 relating to the standard and express delivery industry,33 even though it imposed an overall penalty of €672 million, the Authority took into account the financial difficulties experienced by several companies to pay the fine: as regards six companies (out of 20 companies concerned), a reduction of more than 90 per cent in relation to the amount theoretically due was granted, illustrating the need to impose necessary but proportionate penalties.
1 Hugues Calvet and Olivier Billard are partners, and Guillaume Fabre is an associate, at Bredin Prat. The authors would like to thank Juliette Lehucher for her contribution to the preparation of this chapter.
2 The French Constitutional Court found that this provision was constitutional in Case No. 2016–552 QPC, 8 July 2016 (Société Brenntag). In substance, the Court considered that although no appeal allows to challenge investigation acts undertaken on the basis of this provision, such acts (i) rely on the good will of the concerned undertaking (i.e., they cannot be implemented against its will – although the Authority may in a second step adopt a formal binding decision for the undertaking to provide the relevant information under the threat of an injunction and a daily periodic penalty payment or a fine, or both) and (ii) may be challenged in the context of the appeal against the Authority decision on the merit of the case.
3 Cass. Crim. 9 March 2016, Pourvoi No. 14–84566.
4 Annual Report 2015, p.27, www.autoritedelaconcurrence.fr/doc/ra2015_rapport_activite.pdf.
5 Article L464–8 of the FCC.
6 Decision No. 15–D–06 of 21 April 2015 concerning practices implemented in the online hotel booking sector.
7 Decision No. 07–D–08 of 12 March 2007.
8 Decision No. 89–D–22 of 13 June 1989.
9 Decision No. 14–D–19 of 18 December 2014.
10 Article R464–5 of the FCC.
11 In a recent case, the Authority did grant total immunity to a company even though one of its representative took part to a meeting after the leniency application where illegal exchanges of information took place and in the absence of evidence that the representative left the meeting. This was because this behaviour did not prevent, delay nor made it more difficult to prove the existence of the infringement (Decision No. 15–D–19 of 15 December 2015 relating to practices implemented in the standard and express delivery industry).
12 Point 23, (ii) of the Revised Leniency Notice 2015.
13 Decision No. 13–D–12 of 29 May 2013.
14 Point 16 of the Revised Leniency Notice 2015.
15 Article L450–4 of the FCC; see Section II, supra.
16 Point 21 Avis 2015.
17 As an example, the Authority published a press release after dawn raids on 22 November 2016 in the energy sector.
18 Decision dated 18 December 2014 in Case No. 14–D–19 concerning the home and personal care products sector.
19 Notice on the Method Relating to the Setting of Financial Penalties of 16 May 2011.
20 Article L464–1 of the FCC.
21 Article L464–5 of the FCC.
22 Article L464–2 of the FCC.
23 Decision No. 11–D–17 of 8 December 2011.
24 Decision No. 13–D–12 of 29 May 2013.
25 Article L420–6 of the FCC.
26 Article L470–1 of the FCC.
27 See Section II, supra.
28 Law related to transparency, fight against corruption and economic life modernisation said Sapin II, adopted the 8 November 2016 by the National Assembly.
29 Paris Court of Appeal, Decision No. 12/06864 of 24 September 2014.
30 For instance, the Macron Law sought notably to empower the Authority’s agent to request the communication of data held and processed by electronic communication operators – including phone calls and Internet data. In the absence of sufficient safeguards for individual rights, this was declared inconsistent with the right to privacy by the Constitutional Council on 5 August 2015.
31 Paris Court of Appeal, 27 October 2016, RG No. 2015/01673.
32 Cass. Com. 8 December 2015, Pourvoi No. H 14–19.589.
33 Decision of the Authority No. 15–D–19 (see note 11, supra).