The Cartels and Leniency Review: France
Enforcement policies and guidance
Cartels and leniency rules in France have been subject to several significant modifications in recent years. 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 and 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 French Competition Authority (the Authority), which replaced the Competition Council in March 2009. Since then, various reforms have been adopted to bolster the Authority's investigative and sanctioning powers, and the Authority has adopted guidelines relating to various procedural aspects. In particular, on 16 May 2011, it adopted the Notice on the Method Relating to the Setting of Financial Penalties.
A few amendments to French law have also been implemented to facilitate private enforcement. First, Law No. 2014-344 (the Hamon Law) was adopted on 17 March 2014 to introduce, inter alia, a class action mechanism to France as of 1 October 2014. Second, in early 2017, various texts were adopted to transpose into French law Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the EU Member States and of the European Union.
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 of the TFEU, Article L420-1 of the 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:
- limits the market access of, or free competition between, other undertakings;
- prevents free pricing on the market, artificially encouraging price increases or limiting price reductions;
- limits or controls production, opportunities, investment or technical progress; or
- shares markets or sources of supply.
In general, the Authority follows the practice of the European Commission (the Commission) 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 less than 15 per cent.
This exemption is not automatic and does not apply in the most serious cartel cases containing a hardcore anticompetitive restriction, such as price-fixing.
ii The French Competition 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 an 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 of the FCC, the investigators (agents of the Authority or of the Minister of Economy) may:
- 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);
- request copies of books, invoices and all other professional documents;
- have access to software and computerised data and request that such data be put in a legible format;
- request explanations or information from any employee or company representative; and
- request an expert opinion.2
Investigation under judicial control
Pursuant to Article L450-4 of the 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 has specified that a company's representatives (e.g., external counsel) cannot directly contact the supervising court in relation to the investigations and first has to refer to the police officers, who can then confer with the supervising court.3
A company must be informed that it can be assisted by its external legal counsel, although inspectors do not have to wait for counsel to arrive to start and carry out the investigation. The Authority's investigative services can interrogate the company's representative and other employees to obtain any information useful to their investigation. Article L450-3-2 of the FCC stipulates that the agents may use an assumed identity concerning certain issues, such as internet sales or concerted practices granting exclusive rights to import in the French overseas departments.
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 of the FCC, a company can appeal the judicial order authorising the investigation. Such an appeal must be filed within 10 calendar days of 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 receipt of minutes of the investigation. A further appeal to the Supreme Court is also possible.
When a company fails to answer a request from the investigative services, the Authority may issue an injunction, sanctioned by a daily periodic payment (see Section V.ii).
For both types of investigations, obstruction to an 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 a company. In principle, legal privilege may be denied to the investigators. To determine which documents are thus protected, the company's external counsel will send to the investigators a list of documents considered as protected within a short period following a dawn raid, as determined by the Authority. The investigators will then review this list, jointly with the company's external counsel, and remove any documents they consider to be covered by legal privilege from the investigative file.
Business secrets cannot be withheld from 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 the documents. Confidential information that is useful to a party's rights of defence can be declassified during 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 closing 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). 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 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 report stage. 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 2017, the average time for the Authority to handle a cartel case from its referral until the final decision was approximately 21 months.4
Decisions made by the Authority can be appealed within a month of their notification to the parties concerned. That appeal is not suspensive, but a suspension of the implementation can be requested to the first president of the appeal court. Such a request is granted only in very exceptional circumstances. In January 2019, an appellant was able to obtain a suspension of the Authority's decision, on the ground that, in substance, implementing such decision would have disorganised its distribution network and generated sunk costs.5
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.6 The appeal to the Supreme Court is limited to points of law and is not suspensive.
Cooperation with other jurisdictions
i Cooperation within the European Union
Under Regulation (EC) No. 1/2003, national competition authorities (NCAs) and courts are fully empowered to enforce Article 101 of the TFEU, and to grant individual exemptions by virtue of Article 101(3) of the 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, three of which are:
- the creation of the European Competition Network (ECN), through which NCAs can exchange information;
- the Authority's duty to inform the Commission as soon as it starts an investigation under Article 101 of the TFEU. It may also inform other NCAs. Conversely, the Commission must share with the NCAs the most important documents collected, and any other documents useful for the analysis of the case at a national level, at their request; and
- 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 of the 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:
- NCAs and national courts may ask the Commission to share its opinion on questions concerning the application of EU competition rules; and
- under Article L450-1 of the 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 European Union, 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.7
ii Interplay between jurisdictions
The interplay between jurisdictions may affect the legal procedure in two situations: when the Authority applies both Article L420-1 of the FCC and Article 101 of the TFEU, and when several competition authorities apply Article 101 of the TFEU in parallel.
The Authority applies both Article L420-1 of the FCC and Article 101 of the 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 of the 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 of the 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 regulating authority (the 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.8
iii Leniency cooperation within the European Union
In 2006, the ECN adopted the Model Leniency Programme (MLP) to make it easier for companies to apply for leniency if it is not clear which NCA is best 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 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
- 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 and oral leniency statements.
On 3 April 2015, the Authority adopted a Revised Leniency Notice to reflect the changes made to the MLP.
Jurisdictional limitations, affirmative defences and exemptions
i Territorial scope of application
Article L420-1 of the 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.9
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 of the FCC, practices falling under Article L420-1 of the FCC may be exempted under specific circumstances and conditions:
- in the event that the practice at hand results from the application of a legislative act or a regulation implementing that 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;
- 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
- 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.
As detailed in Section II.iii, 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 hardcore infringement that amounts to competitors fixing prices, limiting quantities, sharing markets, among other things). 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.
Up to and including 2018, the Authority had received 83 leniency applications10 and had made 13 decisions on this basis.11 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 home and personal care products sector where the Authority imposed its highest fine to date.12
i Procedural steps
Companies can have anonymous and informal contacts with the leniency adviser, to obtain general information relating to the leniency procedure.
Companies should apply for leniency to the rapporteur-general either by registered mail13 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. If several requests for appointments are made, applications are treated on a first come, first served basis.
An applicant must provide information about 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 (these elements will be considered as having been 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 have been 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 the return of all elements of proof that it communicated.
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. If 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.
ii Required conditions to benefit from leniency
Any applicant for leniency must:
- end its participation in the alleged anticompetitive activities immediately, and in any case, no later than the date of notification of the leniency opinion by the Authority (which may decide to postpone this date to preserve the confidentiality and efficiency of its investigation);14
- 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 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;15
- promptly answer any request for information relating to the alleged cartel;
- make available for questioning all current and, if possible, former employees and legal representatives;
- 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; and
- 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.16
In a recent decision, the Court of Appeal confirmed that when a leniency applicant does not abide by its duty to cooperate fully with the Authority, the Authority may withdraw the benefits of the leniency application. In this case, the leniency applicant had taken part in an anticompetitive meeting but had failed to disclose the existence of such meeting to the Authority. Whereas it should have benefited from total immunity, the Authority imposed a fine of €3 million, representing 5 per cent of the fine it should have paid absent the leniency application.17
Also, since the Revised Leniency Notice was brought into effect, a leniency applicant must provide all details about 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, excluding former parent companies.18
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.19 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:
- 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;
- at the time of the application, the Authority did not have sufficient evidence to establish an infringement; and
- 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). The Authority applied this provision, for the first time, in December 2018.20
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. The third leniency applicant to come forward shall 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.21
The Revised Leniency Programme specifies that the Authority will publish a press release after it carries out a dawn raid, to give any company not targeted by the raid the opportunity to apply for leniency. (The press release will not name the companies subject to investigation.) The Authority will also publish a press release if it decides to close a case.22
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.23
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 up-front guidance to the parties.
This Notice explains in detail how the Authority sets financial penalties in each case, pursuant to the four criteria provided by Article L464-2 of the FCC:
- the seriousness of the infringement;
- the significance of the harm done to the economy;
- the individual situation of the undertaking or of the group to which the undertaking belongs; and
Based on these criteria, the Authority uses the following method.
- 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.
- 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.
- It increases the amount in the case of reiteration.
- It checks that the amount does not exceed the legal maximum (10 per cent of a company's consolidated worldwide pre-tax turnover or €3 million for an individual), and it reduces the amount to be taken into account for leniency applications or transaction proceedings, 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.24
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 the 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.
Pursuant to Article 7 of Ordinance No. 2017-303 of 9 March 2017, the Authority may also reduce the financial penalty imposed on an undertaking that decided, during the proceedings before the Authority, to compensate the victims of the practices.
ii Civil and administrative sanctions
A wide range of sanctions for an 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.25
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 (which 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 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 €750,000.26
Companies that obstruct an investigation risk a fine of up to 1 per cent of their consolidated worldwide pre-tax turnover.27
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.28
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
The Authority can close a case without imposing any fine when the parties offer commitments that are sufficient to bring 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 to hardcore cartels or to any infringement that has already caused significant harm to the economy. Rather, its objective is to prevent such harm to the economy by allowing swift intervention (e.g., in markets undergoing liberalisation or characterised by fast innovation).
The 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 commitment procedure fails, the Authority will withdraw from the case any document obtained during the procedure.
Commitment decisions are published on the Authority's website. They 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. It was significantly amended, with effect from 6 August 2015.
Under the revised procedure, the rapporteur-general can submit a settlement 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 relates to 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). The aim of this new procedure is therefore to increase the predictability of the amount of a fine.
In the context of a settlement procedure, companies can also offer to make commitments to further mitigate the amount of a fine. Such commitments used to be almost exclusively related to the implementation of compliance programmes. The Authority now considers that compliance programmes should be part of the normal course of business of undertakings. Consequently, these programmes will no longer generally justify a mitigation of the fine, especially concerning serious breaches, such as information exchanges about future prices.
Under the old settlement proceedings and following the Authority's decision in the Detergent cartel case,29 companies could – if the general case handler deems it appropriate – 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 its fine on the basis of its leniency application, and an additional reduction of 15 per cent of the fine based on the settlement procedure.30
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.31 The criminal court may order the undertaking to pay the criminal fine imposed on an employee.32
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.
'Day one' response
The Authority has extensive powers to conduct investigations (as described in Section I.iv) and any attempt to oppose an investigation may result in a fine.33 Therefore, it is of utmost importance that an undertaking subject to such an investigation is assisted by legal counsel as quickly as possible to efficiently protect its rights of defence without placing itself at risk.
In the event of an unexpected investigation, such as a dawn raid, an undertaking should immediately form a team of employees prepared to respond to such an investigation (including in-house and external counsel) and who will accompany the investigators. The identity of the inspectors should be checked and a copy made of the judicial authorisation.
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 before they 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 seized.
Employees or representatives of the undertakings should offer to assist the inspectors with 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 individuals 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 unwittingly 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 questions are directly related to such documents.
Undertakings should not communicate to an inspector documents that are legally privileged (i.e., any exchange of correspondence between the undertaking and external counsel, or any other internal document summing up such exchange or correspondence).
i The contribution of Directive 2014/104/EU
Private damages claims can be initiated before ordinary courts. Until recently, no specific rules applied, meaning that a claimant had to prove, pursuant to the default rules of tortious liability, that it had suffered harm caused by a defendant's wrongdoing.
Ordinance No. 2017-303 of 9 March 2017 implemented Directive 2014/104/EU,
which governs actions for damages under national law for infringements to national and European competition law provisions. Some of its procedural aspects are already applicable. Its main substantive provisions are applicable to infringements committed as from March 2017.
Several important rules have been provided by this new legislation.
- Once a decision of the Authority or a French court can no longer be appealed and holds that an undertaking has taken part in an infringement, the participation of that undertaking to the infringement is presumed and cannot be rebutted (new Article L481-2 of the FCC).
- The claimant is generally presumed not to have passed on the cartel overcharge to its own clients, so that it is up to the defendant to prove that the claimant did pass on the cartel overcharge. When the claimant considers it was harmed by its supplier passing on the cartel overcharge from its own supplier, the claimant will have to prove that its supplier did in fact pass on that cartel overcharge, and may do so by proving that (1) the defendant took part in an infringement to competition law; (2) that infringement caused the claimant's supplier to pay a cartel overcharge; and (3) the claimant purchased the goods or services affected by that overcharge. In that case, the defendant has to prove that the claimant's supplier did not pass the overcharge on to the claimant (new Articles L481-3 and L481-4 of the FCC).
- Agreements among competitors are presumed to cause harm but this presumption can be rebutted (new Article L481-7 of the FCC).
- If several undertakings participate in an anticompetitive practice, they are jointly and severally liable for all the damages. Once ordered to compensate the claimants, they will be able, as a second step, to seek compensation from one another (new Article L481-9 of the FCC).
To access the documents relating to competition cases, Article L462-3 of the FCC states that the Authority may provide any document concerning anticompetitive practices on judicial request, excluding all information obtained through the leniency programme. 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. The Paris Court of Appeal has clarified that this applies both to the claimant and the defendant so long as the requested information is necessary to the exercising of their rights.34
ii Class actions
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:
- the harm that might be compensated and its amount, or at least a method of calculation;
- the publicity measures to be taken to inform the consumers concerned, which will be implemented once the liability decision is definitive;
- 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
- 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.
We are not yet aware of any class actions lodged following a decision by the Authority to fine undertakings for breach of competition law.
The main current developments under French law in the application of cartel and leniency regulation are as follows.
First, at the level of the Authority.
- The President of the Authority recently announced the next priorities of the competition regulator as being the digital sector, the public health sector and the large retail sector.35 The Authority published a sector-specific investigation into online advertising in March 2018.36 In addition, in July 2019, the competition authorities of the G7 countries and the Commission published a 'Common Understanding' outlining their joint approaches to the role of competition law in the digital economy. Concerning the public health sector, the Authority opened a sectoral inquiry into the pharmaceutical industry in November 2017.37 Within this framework, the Authority launched a public consultation in October 2018 to collect contributions from the relevant companies.38 Finally, concerning the large retail sector, parliament has enacted a new law to widen the scope of the Authority's powers: Article L462-10 of the FCC now provides that certain purchasing agreements between undertakings active in the retail sector have to be provided to the Authority at least four months prior to their implementation.39 It is now foreseen that the Authority can assess the implementation of such purchasing agreements, on its own initiative or at the request of the Minister for the Economy. On such an occasion, it assesses whether the purchasing agreement makes a sufficient contribution to economic progress to compensate for possible restrictions of competition, taking into account its impact for producers, suppliers and retailers as well as for consumers. For this purpose, the Authority may request the parties to the agreement to submit a report showing the effect on competition of this agreement. If anticompetitive effects have been identified, the Authority sets a deadline for the parties to remedy those effects. The Authority may also take interim measures if the damage to competition is sufficiently serious and immediate. These may include an injunction to the parties to undo their cooperation or request a modification of the agreement.
- In addition, there seems to be a growing trend for the Authority to rely on criminal investigations in France, which are more intrusive than dawn raids carried out pursuant only to the rules of competition law.
Second, follow-on litigation appears to intensify (with the exception of class actions) in the context of the implementation under French law of Directive 2014/104/EU on damages (although the French legal framework to implement that Directive is not yet applicable to most claims we have seen, those claims frequently, but wrongly, purport to rely on the various presumptions that have been created). This development of follow-on litigation is clearly encouraged at the national level. The Ministry of Justice has circulated a non-binding information memorandum on various practical aspects of follow-on litigation, and the Paris Court of Appeal has published a guide on how to estimate damages in competition law cases.
Third, the ECN+ Directive, the aim of which is to 'empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the markets', was published in the Official Journal of the European Union on 14 January 2019. In French law, a legislative process that would tend to bring domestic legislation in line with this Directive is under way. Different measures are suggested to simplify the procedures and facilitate the work of the Authority while preserving its effectiveness.
1 Hugues Calvet and Olivier Billard are partners and Guillaume Fabre is a counsel at Bredin Prat. The authors would like to thank Iris Lorenz 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 a challenge of investigation acts undertaken on the basis of this provision, such acts (1) 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 (2) may be challenged in the context of the appeal against the Authority's decision on the merit of the case.
3 Cass. Crim. 9 March 2016, Appeal No. 14-84566.
4 Annual Report 2017, p. 11.
5 Order from the Paris Court of Appeal dated 23 January 2019, RG No. 18/26546.
6 Article L464-8 of the FCC.
7 Decision No. 15-D-06 of 21 April 2015 concerning practices implemented in the online hotel booking sector.
8 Decision No. 07-D-08 of 12 March 2007 concerning practices implemented in the supply and distribution of cement industry in Corsica.
9 Decision No. 89-D-22 of 13 June 1989 following a request from Phinelec.
10 Annual Report 2016, p. 20; Annual Report 2017, p. 19; Annual Report 2018, p. 19.
12 Decision No. 14-D-19 of 18 December 2014 concerning the home and personal care products sector.
13 Article R464-5 of the FCC.
14 In a recent case, the Authority did grant total immunity to a company even though one of its representatives took part in a meeting after the leniency application at which 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 or delay the investigation, 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).
15 Point 23(ii) of the Revised Leniency Notice 2015.
16 Decision No. 13-D-12 of 29 May 2013 concerning practices implemented in the distribution of commodity chemicals sector.
17 Paris Court of Appeal, decision dated 19 July 2018, No. 16/01270.
18 Point 16 of the Revised Leniency Notice 2015.
19 Article L450-4 of the FCC; see Section II.
20 Decision No. 18-D-24 dated 5 December 2018 concerning the kitchen appliances sector.
21 Point 21 of the Revised Leniency Notice 2015.
22 As an example, the Authority published a press release after dawn raids on 6 April 2018 in the road freight transport sector.
23 Decision No. 14-D-19 of 18 December 2014 concerning the home and personal care products sector.
24 Notice on the Method Relating to the Setting of Financial Penalties, of 16 May 2011.
25 Article L464-1 of the FCC.
26 Article L464-5 of the FCC.
27 Article L464-2 of the FCC.
28 Decision No. 14-D-19 of 18 December 2014 concerning the home and personal care products sector.
29 Decision No. 11-D-17 of 8 December 2011 concerning practices implemented in the laundry detergents sector.
30 Decision No. 13-D-12 of 29 May 2013 concerning practices implemented in the distribution of commodity chemicals sector.
31 Article L420-6 of the FCC.
32 Article L470-1 of the FCC.
33 See Section II of this chapter.
34 Paris Court of Appeal, Decision No. 12/06864 of 24 September 2014.
35 Isabelle de Silva: 'The French Competition Authority, between rejuvenation and continuity', September 2017, Concurrences Review No. 3-2017, Art. No. 84398, pp. 9 to 14; Isabelle de Silva: 'Assessing online platform mergers: Taking up the new challenges faced by the French Competition Authority in the digital economy', June 2018, Concurrences Review No. 2-2018, Art No. 86698, pp. 39 to 49.
37 Decision No. 17-SOA-01 of 20 November 2017 relating to the functioning of competition in the medicinal products and chemical pathology sectors.
39 Law No. 2018-938 to promote balanced commercial relationships in the agricultural and food sector and healthy, sustainable food amended this Article in November 2018.