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France: Competition Authority
President of the Competition Authority
The Competition Authority has continued to move forward at a steady pace in the first half of 2014. It has maintained its unabated commitment to generating tangible results for consumers as well as its strong resolve to make use of the full spectrum of its powers and capacities as both a credible enforcer and a persuasive advocate. The combined use of various prerogatives – such as imposing fines on infringers; making commitments binding upon firms whose behaviour has raised competition concerns; devising well-suited remedies to allow a merger to proceed; conducting an in-depth market study into a sector of prominent importance for consumers; and issuing opinions to assess the impact on competition of draft or existing pieces of legislation – enables the Authority to be respected by public and private stakeholders alike as a determined watchdog and trusted adviser, to make the most of its procedural toolbox and to enhance its own expertise, ultimately in the best interest of sound competition enforcement.
The Authority has maintained a high level of antitrust enforcement over the past 12 months, whether through fining or negotiated procedures. As announced in this publication last year, the Authority has built on the precedent it set in the Plavix case, whereby it had fined pharmaceutical giant Sanofi-Aventis for having implemented a denigrating strategy against the generics of one of its blockbuster drugs. In December 2013, the Authority took a similarly hard stance against another laboratory – Schering-Plough – seeking to forestall the market entry of generics of its own patent drug Subutex by denigrating them through a global and structured disparagement campaign aimed to discourage doctors and chemists from prescribing or dispensing the generic drug produced by its competitor Arrow.
Commitments are another avenue for leveling the playing field for all operators in a swift, accurate and efficient manner. They have been used on several occasions lately and have indeed served to improve dramatically the competitive landscape. The Authority was, for instance, the first competition agency to look into various practices of a technical, legal and commercial nature implemented by Nespresso that seem to have induced consumers into using only Nespresso-brand capsules in its coffee-making machines. The Authority has launched a market test to assess whether the proposed commitments by Nespresso, a firm of the Nestlé Group, are sufficient to allay the competition concerns that had been identified, pertaining to possible barriers to entry and barriers to growth for other manufacturers of coffee capsules suitable for use in its machines.
The Authority also takes its merger control prerogatives seriously – of the 10 fining decisions made in 2013, two were against firms that had failed to notify a merger. Of the 200-plus mergers cleared in the past 12 months, one interesting case concerned grocery store chains, with a major retailer (Casino) moving from joint to sole ownership of another (Monoprix). We conducted a thorough analysis, catchment area by catchment area, using advanced screening tests (GUPPI), and cleared the merger subject to the sale of 58 stores, 55 of which are located in Paris. Our analysis also built on the findings made in 2012 while conducting a market study, upon request from the municipality of Paris, that looked into the competitive environment in the food retail sector in the city – thereby exemplifying how the different instruments in the competition enforcer’s toolbox work as a continuum and offer plenty of opportunity for cross-fertilisation.
Over the past year to date, the Authority has issued six opinions, of which two major ones spelled out our findings and recommendations as a result of sector enquiries.
With the pharmaceutical industry still a top priority, we have released the end results of a high-profile sector inquiry into the distribution of medicines. For some years now, the health sector has been undergoing major changes regarding innovation, the re-orientation of research toward biotechnologies, the development of generic and bio-similar medicines, the budgetary constraints on the national health-care system, and the new challenges faced by dispensing chemists, to name a few. With this in mind, the Authority decided in February 2013 to commence an ex officio investigation into the distribution of pharmaceuticals. After conducting a public consultation, inviting all players in the sector to react to our interim findings, we issued our final opinion in December 2013. It offers a review of the dynamics of competition at each stage of the value chain and contains recommendations with a view to instilling some more competition in a tightly regulated sector, in particular to enhance price-competition and transparency at the retail level through a progressive opening of the monopoly held by pharmacists on the distribution of non-prescription medicine, while also addressing competition concerns regarding other stakeholders involved in the distribution of medicines, namely pharmaceutical laboratories and intermediaries.
Transport, in every form, is another sector that has attracted a large share of our attention lately, in an all-round effort. We have conducted a sector inquiry into long-distance coach transportation, and offered suggestions to infuse greater competition into the sector to enable consumers to make more use of this cheap and flexible means of public transport. Despite its numerous advantages, coach transport currently remains very limited in France. The main constraint on the development of regular coach services is the regulatory framework, with the current obligation for operators to offer inter-regional routes through cabotage services only. The Authority recommended that the administrative authorisation scheme be made simpler, more open and more transparent to facilitate entry into the market, and that access to coach stations also be modified to offer clearer procedures and ensure a fair and non-discriminatory treatment of all operators. Ultimately, the Authority is also in favour of the creation of an independent agency responsible for the regulation of rail and road transport.
The Authority advised the government on a major legislative reform in the governance of the railway sector, bringing the infrastructure manager and the incumbent railway operator together in the same corporate holding structure, and laid out the conditions for a level playing field to be set prior to the full liberalisation of the passenger rail services. The draft law is now before parliament.
We took a prominent part in a public debate by issuing an opinion about the competition issues raised by hired chauffeured vehicles – an activity that has grown significantly recently thanks to the use of mobile technology – in relation to taxis, a regulated profession enjoying a legal monopoly on part of its activities.
Upon a recent referral by parliament, the Authority is also now entrusted with a mission to look into the management of motorways (which were privatised in 2005) and the regulation of motorway tolls.
Finally, the Authority recently submitted to a market test the commitments offered by railway operator SNCF to address the competition concerns identified regarding the conditions of train ticket retail distribution offered respectively to its own subsidiary and to competing travel agencies.
President of the Competition Authority
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