Settlement proceedings before the French Competition Authority (FCA) were introduced into French legislation in 2015 to replace the former non-opposition proceedings. Article L.464-2, III of the French Commercial Code provides that:
[w]hen an organisation or a company does not dispute the content of the objections which are notified to it, the General Rapporteur can submit to it a settlement proposal setting the minimum amount and the maximum amount of the financial penalty envisaged. When the company or organisation undertakes to modify its behaviour, the General Rapporteur can take this into account in the settlement proposal. If, within a time limit set by the General Rapporteur, the organisation or company approves the settlement proposal, the General Rapporteur proposes to the Competition Authority, which hears the company or body and the Government Commissioner without prior preparation of a report, to pronounce the financial penalty provided for in I within the limits set by the settlement.
The FCA published the settlement guidelines on 21 December 2018.
Object of the settlement
Pursuant to Article L.464-2 of the French Commercial Code, settlement proceedings allow a company that does not challenge the statement of objections sent by the FCA’s investigative services to receive a reduction of its financial penalty.
The General Rapporteur of the FCA can propose a settlement setting the maximum and minimum amount of the fine incurred, which gives companies greater predictability on their financial risk.
In return, the company requesting to benefit from the settlement proceedings must renounce the possibility of challenging the objections as described in the statement of objections. This implies that the company cannot challenge either the validity or the merits of the statement of objections. The company can nevertheless comment on the elements likely to be taken into consideration by the board of the FCA in its determination of the amount of financial penalty that could be imposed within the range mentioned in the settlement minutes.
Main differences from EU settlement proceedings
The French settlement framework differs greatly from EU settlement proceedings in that it:
- has a broader scope of application;
- takes place only after the receipt of the statement of objections by the concerned companies;
- allows the parties to have access to the entire file (including all evidence used by the investigative services to draft the statement of objections); and
- does not allow the companies to discuss the substance of the case (in particular, the materiality of the facts, their legal qualification, the geographic scope, etc.) other than the elements relating to the calculation of the financial penalty.
Scope of settlement proceedings
Settlement proceedings can apply to every type of anticompetitive practice (horizontal and vertical agreements, abuses of dominant position and other anticompetitive unilateral behaviour) or to a breach of Article L.410-3 of the French Commercial Code (specific provisions regarding overseas markets).
While the French Commercial Code does not exclude it, settlement proceedings do not seem particularly appropriate to cases involving novel or unsettled questions.
The provisions of the French Commercial Code relating to settlement proceedings do not cover merger control infringements. Yet it has to be noted that the FCA implemented ad hoc settlement proceedings in a gun-jumping case. In this case, Altice Luxembourg and SFR Group were fined for implementing two transactions before obtaining clearance from the FCA. After receiving the statement of objections, the two companies decided not to challenge the objections and signed settlement minutes. The board of the FCA took into consideration the settlement minutes in determining the amount of the financial penalty (€80 million).
The parties have two months from receipt of the statement of objections to submit their written responses (with a possible extension, in principle, of one additional month under certain limited circumstances) to the statement of objections or to reach a settlement agreement with the investigative services.
To the authors’ knowledge, the FCA is very reluctant to grant an extension of the deadline to take into account ongoing settlement discussions.
Should the companies requesting to benefit from settlement proceedings not sign the settlement minutes within the two-month deadline, the FCA will not take their request into account, unless there are certain exceptional circumstances.
In practice, this deadline is very tight, in particular in cases involving several companies, as the outcome of settlement proceedings will also depend on their procedural choice (see above).
Taking into account the discretionary power of the General Rapporteur as well as the difficulty to predict whether all companies will reach a settlement, the companies have to bear in mind that in most cases, there is no guarantee that settlement minutes will be signed until the very last moment.
Hence, it is of the utmost importance to (1) initiate as early as possible in the process of settlement discussions with the General Rapporteur and (2) prepare a fully fledged defence in parallel, ready for submission if no settlement is ultimately reached.
Main procedural steps of settlement proceedings
The choice of commencing settlement proceedings belongs to the company concerned and to its parent company
It is up to the company that receives a statement of objections to decide whether it is appropriate to request the commencement of settlement proceedings from the General Rapporteur, without having to explain the reasons for this procedural choice. In the event that several companies belonging to the same group are party to the same horizontal agreement, or if a parent company is involved in the statement of objections for anticompetitive practices committed by its subsidiary, each of these companies may decide whether to settle the case, depending on their own interests; each recipient of the statement of objections remains free to make its procedural choice.
The General Rapporteur cannot reject a company’s request to benefit from the settlement procedure on the sole ground that its parent company intends to make a different procedural choice.
However, the reduction in fine resulting from settlement proceedings cannot benefit a parent company that decides to challenge the objections.
Discretionary powers of the General Rapporteur to initiate settlement proceedings
The General Rapporteur assesses, on a case-by-case basis, the opportunity to enter into settlement proceedings. In that respect, the General Rapporteur has a very large margin of appreciation on whether it is appropriate to enter into such proceedings in each case and for each application submitted by the concerned companies. The General Rapporteur particularly takes into account the benefits that settlement proceedings will bring to accelerate and simplify the handling of the case.
Even after the settlement discussions have begun, the General Rapporteur can decide at any time, until the signing of the settlement minutes, to stop the discussions should he or she consider that it is no longer appropriate to continue exploring the possibility of settling the case.
Issuance of the statement of objections
Under French law, settlement proceedings start only after the issuance of the statement of objections.
From a practical standpoint, this has a significant impact on the parties’ strategy as any discussion on settlement takes place once:
- the investigative services have fully completed the investigation;
- the investigative services have reached a final view on the materiality of the facts, their legal qualification and the duration of the infringement, as well as the involved parties; and
- the case file contains all the pieces of evidence gathered by the investigative services.
Against this background, it is very important for the concerned parties to undertake a thorough assessment of the case, to decide whether settlement proceedings can be contemplated. Because it would be absolutely forbidden to challenge even parts of the statement of objections, the concerned party has to be ready to accept it as it stands. In particular, in cases where several objections have been notified, there is no possibility to enter into a settlement for some of them and challenge the others.
The company that receives a statement of objections shall freely determine whether it wishes not to oppose the statement of objections and request the implementation of settlement proceedings to the General Rapporteur.
When the General Rapporteur considers that settlement proceedings are appropriate or receives requests from one or several companies, he or she can initiate preliminary and confidential discussions with each of them, in particular regarding the amount of the financial penalty.
As the settlement is based on the statement of objections, it necessarily intervenes after the receipt of the latter. However, settlement exploratory discussions can take place even before the issuance of the statement of objections. In that respect, the General Rapporteur can inform the concerned parties of the existence and main steps of this proceeding, even before the issuance of the statement of objections. The concerned parties can also liaise with the investigative services to discuss the possibility of entering into settlement proceedings.
In practice, substantial settlement discussions will take place after the issuance of the statement of objections, once the concerned parties are fully aware of its exact content as well as of the evidence contained in the FCA’s file and can properly assess if they have an interest to enter into settlement discussions.
The General Rapporteur can disclose to the other companies that received the statement of objections, the existence of ongoing discussions regarding a potential settlement with one or several concerned companies. This information is very important as the success of settlement proceedings will greatly depend on the strategy adopted by the other participants in the anticompetitive practices.
The General Rapporteur can apply a term to the discussions at any time. Similarly, the companies remain free to decide not to pursue these discussions.
Because French settlement proceedings do not leave any room to challenge the objections or narrow their scope, the discussions focus on the amount of the financial penalty only.
To calculate the maximum and minimum potential financial penalty that will be stated in the settlement minutes, the FCA’s guidelines provide that the financial penalty principles set out therein can be used as a starting point for the discussion.
Although not obligated to do so, the FCA relies very much on its own guidelines and it is often very difficult for the parties to depart to any great extent from the principles set out therein.
Depending on the specifics of the case, the General Rapporteur can request the company to submit a first settlement proposal. Should this be the case, the company must be very cautious in calculating the minimum and maximum financial penalties, as this will be determined in the remaining discussions. Indeed, it will constitute the floor of the settlement discussions: in the negotiations, once the company has given an amount, it will not succeed, in practice, in obtaining a lower amount from the General Rapporteur unless new objective elements make this possible.
In practice, in many cases the margin of negotiation is fairly limited and the reduction offered by the General Rapporteur is not very high (in terms of the financial penalty calculated in accordance with the guidelines on the fines).
Should the General Rapporteur and the concerned company reach an agreement on the settlement, they will proceed with the signing of the settlement minutes.
The waiver to challenge the objections as described in the statement of objections is materialised in the settlement minutes by a declaration of the company stating, in clear, complete and unconditional terms, that it does not challenge:
- the reality of the practices (i.e., the materiality, duration, geographic scope and participation);
- the practices’ legal qualification as described in the statement of objections; in particular, their anticompetitive object or effect. For example, if the statement of objections considers that the practices at stake amount to a cartel, it will not be possible to claim that they only relate to exchanges of sensitive information; and
- the practices’ imputability to the relevant companies (including parent companies).
The settlement minutes also mention the minimum and maximum financial penalty.
The signing of the settlement minutes must take place within two months of receipt of the statement of objections (or within the extended deadline set out by the General Rapporteur) (see ‘Timing’, above).
The General Rapporteur can inform the other parties that received the statement of objections of the signing of the settlement minutes by one party, so that the other parties can also request to benefit from settlement proceedings if so desired.
At least three weeks prior to the hearing, the General Rapporteur must inform all parties to the proceedings, as well as the government representative, that some parties have opted for settlement proceedings.
Written submissions on the financial penalty
In the context of settlement proceedings, the investigative services do not need to prepare a report in response, even to describe the main elements that should be used to calculate the fine.
The case is referred directly to the board of the FCA.
The concerned company can submit written observations on the elements that should be taken into account by the board to determine the exact amount of the financial penalty within the range set out in the settlement minutes.
After signing the settlement minutes, the concerned company should not submit any response to the statement of objections that would challenge its content, either directly or indirectly. If it decides to do so, the board will consider that the concerned company decided to waive its rights to settlement proceedings and will refer the case back to the regular proceedings.
Access to the file: confidentiality of the settlement documents
To preserve the confidentiality around the settlement discussions, the FCA’s settlement guidelines point out that the case file will not contain any document or evidence submitted by the parties and relating to settlement proceedings. The same applies if settlement proceedings are aborted.
In addition, the settlement minutes are not shared with the other parties to the proceedings nor with third parties.
Settlement proceedings are also available for cases involving several companies.
Nevertheless, in these cases, the FCA generally considers it to be less attractive to enter into settlement proceedings with only some of the concerned companies because the procedural gains would be limited.
In this respect, the FCA’s guidelines state that it will usually enter into settlement proceedings only if all the participating companies decide not to challenge the objections and accept entering into settlement proceedings.
Although it is not entirely excluded that the FCA may settle with only some of the companies, such a situation should occur very rarely in cases where the FCA can still reap some benefits from this proceeding.
To the best of the authors’ knowledge, the FCA has not accepted partial settlements since the publication of the settlement guidelines on 21 December 2018.
Hearing and decision of the board
Once a case implementing settlement proceedings is referred to it, the board assesses the facts and the objections, on the one hand, and the settlement minutes, on the other. The board carefully examines the content of the settlement minutes.
Should the board consider that the conditions are met to impose a financial penalty, it sets the financial penalty within the limits mentioned in the settlement minutes. When appropriate, it also takes into account the leniency application and the contribution of the party to the investigations, as well as any commitment submitted along with the proposed settlements. The concerned party can submit oral explanations limited to explaining to the board why it should impose a financial penalty at the lower end of the range.
In determining the amount of the financial penalty, the board does not take into account the FCA’s guidelines on financial penalties; it only has to set a financial penalty that is within the range mentioned in the settlement minutes.
Should the board consider that the settlement minutes do not meet all the requested conditions, it notes that settlement proceedings cannot apply and refers the case back to the regular proceedings.
Should the board consider that the objections are not grounded or that the conditions to impose a fine are not met, it can refer the case back to the investigative services. In this case, the settlement minutes are deemed null and void.
In the case of partial settlement proceedings, the board can organise the hearing in two parts.
- The first part is common for all parties and relates to the objections and the materiality of the facts, as well as the legal qualifications.
- The second part takes place individually for each company that decides to settle and focuses on setting the financial penalty. The company can submit oral observations on the elements that should be taken into account to determine the financial penalty (within the boundaries set out in the settlement minutes).
The decision of the board will be published a few months after the hearing (usually within six months of the issuance of the statements of objections).
Usually, settlement decisions are shorter and provide less detail on the specifics of the case and on the method used to calculate the financial penalty than fully fledged decisions discussing the merits (unless they intervene within the framework of hybrid proceedings).
Appeal before the Paris Court of Appeal
Settlement proceedings have been introduced in France primarily to reduce the number of appeals before the Paris Court of Appeal. In the previous non-opposition proceeding, companies faced a high degree of uncertainty with regards to the final amount of their financial penalty (as the non-opposition agreement related only to a discount of 10 per cent to 20 per cent of the final financial penalty that was unknown at the time of the signing of the non-opposition minutes).
In settlement proceedings, the investigative services provide the company with the maximum and minimum fine amount. In settlement decisions, the FCA underlines that companies that settle renounce the right to challenge the objections in full knowledge of the facts and therefore accept all legal consequences, including the amount of the financial penalty.
Nevertheless, the Paris Court of Appeal clarified that the signing of the settlement minutes does not imply that the companies renounce the right to appeal the procedural regularity of the decision before the Paris Court of Appeal nor that they renounce the right to challenge the proportionality of the financial penalty (without consideration for where the amount lies in the range).
As a result, an appeal initiated by a company that has already settled is admissible, even though the grounds of its appeal are limited. The company can only criticise the procedural flaws (such as a breach of the non-discrimination principle), as well as the amount of the financial penalty within the range it accepted in the context of the settlement proceedings.
Articulation of settlement proceedings with other proceedings
Settlement and leniency
Settlement proceedings can be implemented alongside leniency proceedings.
If appropriate, as regards the situation of the concerned company and the objective of streamlining and simplifying the proceedings, the General Rapporteur can offer the company the possibility to settle. In this case, the company continues to benefit from its leniency application.
Because the leniency proceeding contributes to the determination and qualification of the facts and not settlement proceedings, the benefit for a company resulting from the settlement cannot equal the benefit resulting from the leniency (either total or partial) proceeding. In other words, the FCA ensures that it is financially more attractive for a company to apply for leniency than to enter into settlement proceedings.
Settlement and commitments
The FCA’s guidelines on settlement proceedings provide that the company can offer the commitments that are mentioned in its settlement proposal and in the settlement minutes. The company must also submit evidence showing that the commitments are substantial, credible and verifiable.
The FCA has significantly reduced the ability of companies to receive an additional fine reduction for offering commitments as it no longer grants a higher fine reduction for the mere implementation of a compliance programme. Indeed, the FCA now considers that compliance programmes are part of day-to-day business activities (especially for international groups) and should not justify a reduction in the financial penalties resulting from severe breaches of competition law, such as cartels and the exchange of sensitive information on future pricing and commercial strategy.
To the authors’ knowledge, since the publication of the FCA’s settlement guidelines, commitments have been accepted in the context of settlement proceedings in two cases. Because the settlement decisions do not provide much detail, it is not possible to determine how the FCA took the commitments into account in the calculation of the financial penalty.
Settlement and follow-on claims
Under French law, the decision to enter into settlement proceedings does not involve an admission of guilt or liability from the concerned companies.
As a result, claimants in actions for damages that do not benefit from the French provisions transposing the EU Damages Directive, in principle, cannot rely exclusively on settlement proceedings to establish the existence of a fault within the meaning of Article 1240 of the French Civil Code. In practice, it is very difficult for a party to challenge the existence of a fault in this context. Indeed, judges tend to infer the existence of a fault from the mere existence of a decision sanctioning the defendants for anticompetitive practices.
The situation is even easier for claimants in actions that benefit from the French provisions transposing the Damages Directive because the Directive enacts a presumption according to which an infringement of competition law found by a final decision of a national competition authority or by a review court is deemed to be irrefutably established for the purposes of an action for damages. This presumption will also apply to settlement decisions.
To protect the attractiveness of settlement proceedings and their confidentiality, Article L.483-5 of the French Commercial Code (transposing the Damages Directive) provides that the exchanges that take place in the context of a settlement negotiation, as well as the settlement minutes, will remain confidential and cannot be disclosed in the context of an action for damages.
1 Yelena Trifounovitch is a partner and Anne Jussiaux is counsel at Bredin Prat.
2 Law No. 2015-990, 6 August 2015, OJ 7 August 2015, Article 218.
3 Available at www.autoritedelaconcurrence.fr/sites/default/files/cque_transaction_dec18_1.pdf (in French).
4 Or an organisation. For simplicity, we refer to ‘companies’ within this chapter.
5 The head of the investigative services.
6 Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Articles 7 and 23 of Council Regulation (EC) No. 1/2003 in cartel cases, OJ C 167, 2 July 2008, pp. 1–6.
7 Articles L.420-1 to L.420-2-2 and L.420-5 of the French Commercial Code and Articles 101 and 102 of the Treaty on the Functioning of the European Union.
8 FCA’s guidelines, Paragraph 7.
9 FCA Decision No. 16-D-24, 8 November 2016.
10 For example, for translation purposes, where foreign companies are involved.
11 FCA’s guidelines, Paragraph 10.
12 Paris Court of Appeal, 19 May 2016, RG No. 2014/25803 (regarding non-opposition proceedings but transposable to settlement proceedings), confirmed by the Civil Supreme Court, Commercial Chamber, 18 October 2017, No. 16-19.120.
13 FCA’s guidelines, Paragraphs 17–18.
14 id., Paragraph 17.
15 id., Paragraph 20.
16 id., Paragraph 10.
17 id., Paragraph 20.
18 id., Paragraph 22.
19 Article R.464-4 of the French Commercial Code and FCA’s guidelines, Paragraph 31.
20 FCA’s guidelines, Paragraph 14.
21 id., Paragraph 24.
22 id., Paragraph 19.
23 id., Paragraphs 37 and 38.
24 FCA Decisions Nos. 18-D-15, 26 July 2018; 17-D-20, 18 October 2017; 17-D-14, 27 July 2017; 17-D-06, 21 March 2017; 17-D-02, 10 February 2017; and 17-D-01, 26 January 2017.
25 Paris Court of Appeal, 13 June 2019, RG No. 18/20229.
26 FCA’s guidelines, Paragraph 8.
27 id., Paragraph 9.
28 id., Paragraph 23.
30 See, for example, FCA Decision No. 17-D-20, 18 October 2017.
31 FCA Decisions Nos. 19-D-12, 24 June 2019 and 19-D-13, 24 June 2019.
32 Paris Court of Appeal, 2 July 2015, No. 13/22609,
33 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014. These provisions shall apply to facts generating liability dating from 11 March 2017 onwards.