France: private practice perspective
The French competition enforcement agency
History and structure
The French competition enforcement agency, historically known as the Competition Council, was set up by an Ordinance in 1986. In 2008, a French law transformed the Competition Council into the Competition Authority (the Authority), endowing it with the power to review mergers in addition to antitrust matters.
The Authority has independent administrative authority status and has been operating in this capacity since 2009. As a result, even though it acts on the state’s behalf, and advises the French government on the drafting of legislation, it is independent of the government. Its independence is guaranteed through its composition, the way in which it is structured and its continually increasing powers. An example of the Authority’s continually increasing powers lies in the creation of its own investigative services and the extension of its jurisdiction to the regulation of certain legal professions. The Court of Appeal of Paris has exclusive national jurisdiction to review all antitrust decisions rendered by the Authority (cartels and abuse of dominance), whereas its merger control decisions may be appealed only to the Supreme Administrative Court.
The Authority is composed of two main bodies:
- the board – made up of 17 members comprising the current President, four vice-presidents and 12 non-permanent members. The board reviews the cases investigated by the investigative services; and
- the investigation services – split into 10 specialist units (five antitrust units, one merger unit, one inspections unit, one regulated professions unit, one economist unit and one digital economy unit) and led by the General Rapporteur plus one leniency officer.
The board, the President and the other members of the Authority are appointed by decree of the French government for five years (a renewable term). As regards the investigation services, over 100 agents are appointed by the General Rapporteur – with the latter being appointed by the French Minister for the Economy and Finance.
Authority scope and powers
The Authority has full jurisdiction in competition matters. It enforces European and French provisions on cartels, abuse of dominance, unilateral conduct (eg, abuse of economic dependence), as well as mergers meeting French jurisdictional (turnover) thresholds and not triggering an EU filing with the European Commission.
The Authority does not have jurisdiction over consumer protection law issues, unfair and restrictive practices, and practices of minor or local competitive impact. The Directorate General for Competition, Consumer and Fraud Affairs (DGCCRF) is competent in these areas, as are the French courts. Unlike the Authority, the DGCCRF is a department within the Ministry for the Economy and Finance. The Authority and the DGCCRF frequently collaborate, especially concerning dawn raids. The DGCCRF and the Authority signed a joint charter in July 2019 to develop cooperation, reduce the time to investigate and direct cases to the relevant authority.
The Authority has the power to review antitrust complaints filed by companies (18 requests in 2020), initiate investigations, lead sector inquiries (eg, the ‘FinTech’ specific inquiry in 2021) and market consultations. The Authority is one of the most active national competition authorities in Europe.
The Authority enjoys significant investigative powers to conduct dawn raids. In 2020, 13 dawn raids were launched by the Authority, more than in 2019 (eight). Seventy-five per cent of investigations initiated by the Authority were on an ex officio basis.
As to its decision-making powers, the Authority has a wide range of tools at its disposal:
- It may grant interim measures for urgent matters (seven requests in 2020) before issuing a final decision on merits if the plaintiff brings sufficient evidence. In March 2021, the Authority did not issue interim measures against Apple in the online advertising sector but is continuing to investigate the case on substance. In June 2021, the Authority dismissed Canal Plus’s request for interim measures and complaint for abuse of dominance against Ligue de Football Professionnel for lack of sufficient evidence in the football TV rights market.
- The Authority may also accept commitments (eg, cases closed without any fine) or impose remedies (three decisions in 2020). In June 2021, Facebook proposed commitments in the online advertising sector, whereas Google accepted remedies to benefit from a reduction of the fine (see below).
- It can also issue non-binding opinions upon request or on its own initiative (13 opinions in 2020), issue injunctions and impose periodic penalties and commitments, as it did in the Google case (€220 million) in June.
- The Authority may also refer a case to the criminal courts.
- Finally, the Authority can impose fines, which represented €1.8 billion in 2020, an amount constituted mainly by the Apple (€1.2 billion), Novartis/Roche and Genentech cases (€444 million) and the ham and cold meat sector cartel (€93 million).
As to court oversight, the Court of Appeal of Paris has jurisdiction to review antitrust decisions. The year 2020 saw an appeal rate of 56 per cent. The Court may uphold, annul or amend (being a major difference from the European courts) the Authority’s decisions. In 2019, all of the Authority’s decisions were upheld. In July 2021, however, the Paris Court of Appeal reduced the amount of fines imposed in the endives cartel case (€1.1 million instead of €3.9 million) due to the low level of damage to the economy and the duration and degree of individual participation of the entities. The Paris Court of Appeal’s rulings are subject to review by the Supreme Court solely in relation to points of law. The Authority’s merger decisions may be appealed to the Supreme Administrative Court.
Enforcement trends and priorities
In May 2021, a French Ordinance allowed the transposition of the ECN+ Directive of December 2018, which aims at strengthening the power of national competition authorities and increasing their effectiveness. The ECN+ Directive contains several major changes for the Authority and companies:
- the introduction of the principle of prosecutorial mechanism, allowing the Authority to better adapt its resources to the most important issues. The Authority will now have the power to set its own priorities and dismiss complaints that do not correspond to them;
- the introduction of ex officio interim measure proceedings, which allows the Authority to impose interim measures at its own discretion without the necessity for a complainant to request such measures;
- the power to issue structural injunctions to companies (eg, divestiture of a subsidiary) as well as behavioural injunctions;
- criminal immunity for individuals in leniency proceedings. The Ordinance provides that company directors and managers benefiting from total immunity under a leniency procedure are now able to benefit from criminal immunity if they have actively cooperated with the Authority;
- the possibility for the Authority to access encrypted company data under investigation. The new provisions subject Authority proceedings to the ‘freedom of evidence’ standard applicable in criminal matters, which will broaden the scope of admissible evidence;
- the increase of fines for associations of undertakings, which has been set at 10 per cent of the worldwide revenue of the association’s member companies.
Following the publication of the Ordinance transposing the ECN+ Directive, in July 2021 the Authority published a new procedural notice on the method for determining fines taking into account these changes.
The Authority continues to prioritise the review of practices in the digital sector. In June 2021, the Authority made public the proposed commitments made by Facebook regarding the access conditions by advertising technology providers to its Facebook Marketing Partners. In June 2020, the Authority published a market study on competition and e-commerce highlighting the need to regulate online intermediaries and platforms. In January 2020, the Authority published a specific inquiry report on the fintech sector to assess the competitive situation in the sector of new technologies applied to payment activities. In addition, the Authority created a new digital economy unit whose function is to cooperate with other units and other regulators in all competition matters related to the digital sector.
A further priority concerns sustainable development, which will be integrated into the decision-making practice of the Authority. The Authority created a dedicated team within its investigative services and it is actively involved in the work carried out within the framework of the European Competition Network.
As far as merger review is concerned, 2020 saw an important number of merger cases (209 decisions representing 83 per cent of the Authority’s decisions), a high number of unconditional clearance decisions (182 out of 195 filed notifications), with only 5 per cent of its decisions being conditional clearance decisions, and the first prohibition decision (see below).
In July 2020, the Authority published its new Merger Control Guidelines, replacing the previous 2013 Guidelines.
Recent trends as to cartels, abuse of dominant position and unilateral conduct cases have also shown some particularities. In this regard, 2020 was characterised by the imposition of high fines (€1.8 billion resulting from 10 infringement decisions out of a total of 45 Authority decisions).
Recent developments – 2020
Most the Authority’s merger decisions were unconditional clearance decisions, often justified by the parties’ low combined market shares, the fragmentation of the market, and the presence of alternative competitors and other countervailing factors.
For the first time, the Authority implemented the powers conferred by the EGalim law, which resulted in commitments to address antitrust risks caused by two major joint purchasing agreements in the area of retailers’ own-brand label products (Auchan/Casino/Metro/Schiever and Carrefour/Tesco).
In August 2020, the Authority issued its first ever prohibition decision. The case concerned a joint takeover of a hypermarket by Soditroy and Leclerc in the food retail sector. The Authority considered that the merger would have created a duopoly with a price increase and that the proposed remedy was deemed insufficient to allay its concerns.
Abuse of dominance/unilateral conduct
In March 2020, the Authority issued an important decision against Apple and two of its French resellers concerning resale price maintenance (RPM) and abuse of economic dependence by Apple in the downstream market, resulting in a record- breaking fine of €1.1 billion on Apple. By way of background, Apple distributes its products via a network of 200 distributors – both large generalists and specialist dealers (authorised standard resellers or premium resellers offering an immersive Apple reselling experience). The Authority concluded first that these premium resellers were subject to fixed prices, and observed that behind Apple’s ‘recommended’ prices, Apple monitored prices, controlled promotions and left little margin for reseller profits, thus resulting in de facto RPM. The Authority added that Apple had abused economically dependent premium resellers in breach of a (rarely invoked) provision of the French Commercial Code.
In January 2020, the Authority issued a ruling concerning an alleged refusal by Orange to afford access to an essential facility. In this case, an association of telecom operators claimed that Orange, the incumbent operator, had denied access to its fibre network. However, the Authority found that this network was not ‘essential’ because of the existence of reasonable alternatives. Interestingly, the Authority has since launched an investigation into the business telecoms market.
In July 2020, the Authority imposed a €93 million fine on 12 ham producers found to have engaged in a vertical anticompetitive practice aimed at coordinating prices. By way of background, some members of the cartel applied for leniency and reported two practices between 2010 and 2013 considered to be particularly egregious. This decision is quite similar to a cartel decision rendered in December 2019 affecting the retail fruit sector. This decision resulted in the Authority fining nine producers €58.3 million.
In January 2020, the French Supreme Court laid down what constituted a restriction by object, on the one hand, and a restriction by effect, on the other, within the meaning of article 101 TFEU. In so doing, it overturned an appellate court decision. In September 2010, the Authority fined a bank cartel for colluding on an interchange fee. The Court of Appeal upheld the Authority’s decision, emphasising that the agreements were by their very nature so harmful as to constitute a restriction by object. The Supreme Court overturned the Court of Appeal’s decision, recalling, however, in line with the CJEU’s rulings on the matter (see more recently in this regard, Case C-228/18 Gazdasági Versenyhivatal v Budapest Bank Nyrt), that the concept of a restriction by object must be restrictively construed. With respect to the Groupement des Cartes Bancaires case at hand, the Supreme Court considered that the impact of the interchange fees on final pricing was not so obvious that the Court of Appeal should have examined its anticompetitive effects.
2021 – The year at hand
In July 2021, the Authority imposed a €125 million fine on several eyewear brands and manufacturers, including Luxottica and LVMH, for imposing selling prices on opticians and prohibiting them from selling on the internet. These practices, which are anticompetitive by their nature, are serious for the Authority. In particular, they involved the use of monitoring and retaliation mechanisms.
In June 2021, the Authority imposed a €220 million fine on Google, concluding that Google’s self-preferencing practices regarding online display advertising infringed article L420-2 of the French Commercial Code. The Authority noted that Google granted preferential treatment to two of its own service platforms in the online display advertising supply chain to the detriment of their respective competitors and publishers. The Authority considered that Google’s self-preferencing practices were harmful, particularly in the context of declining sales from printed press subscriptions. Google requested the benefit from the settlement procedure and proposed remedies – which were accepted by the Authority – whereby it would: (i) offer third-party platforms improved interoperability with its ad server; and (ii) amend existing settings to allow publishers using third-party ad servers to access on its platform in real time.
In March 2021, the Authority fined the three main French manufacturers of industrial sandwiches for mass retail distribution €24 million for having devised and implemented a non-aggression pact. The practices were revealed through the leniency procedure. The second and third leniency applicants were granted fine reductions of 35 per cent and 30 per cent respectively in view of the added value of the information they provided, which made it possible to establish the existence of certain exchanges. Another leniency applicant benefited from the ‘leniency plus’ scheme, which involved granting an additional exemption to a second-tier applicant if it provides indisputable evidence of additional facts.
For the first time, in March 2021, the Authority used the article 22 EUMR referral mechanism by referring to the European Commission a transaction between Illumina – a biotechnology company – and Grail that fell below the French and EU thresholds. In April 2021, the Supreme Court declined jurisdiction in the dispute concerning this referral request. The matter is currently being examined by the European Court of Justice, and the European Commission has also decided to examine the transaction.
In May 2021, the Authority blocked a takeover transaction in the hydrocarbon transport by pipeline sector (Ardian/SPMR) since it would have given Ardian significant market power in the pipeline sector, which is considered to be essential infrastructure by the Authority.
In July 2021, the Authority fined Google €500 million for having disregarded several injunctions issued in the context of the interim measures decision of April 2020. Indeed, the Authority ordered interim measures against Google at the request of publishers and editors for abuse of dominance. The Authority also ordered Google to present a remuneration offer for the current use of their protected content to press publishers and agencies.
A recurring concern also relates to the higher courts’ oversight of the Authority’s dawn raids. By law, the carrying out of such a raid requires close collaboration between the Authority and the judge authorising the raid. An appeal may be brought against a court’s authorisation of a dawn raid or against the conditions under which a raid was carried out. In the 2020 Whirlpool case, concerning a cartel in the domestic appliance market, the Court of Appeal held that the appellant’s rights of defence were violated by the Authority investigators precluding the appellant from contacting its legal counsel during the investigation.
Similarly, in the 2020 General Import case, the Supreme Court held that the protection of business secrets prevailed over the Court of Appeal’s determination to establish a breach of the law. The case concerned exclusive distribution agreements for consumer goods. The Court of Appeal sought to lift the protection of business secrets afforded by French law without substantiating such measures. However, the Supreme Court required that there be specific and properly substantiated reasons to justify the lifting of such protection.
Reference is also made to the robust stance taken by the Authority when it comes to attempts to obstruct a dawn raid:
- In this context, in the Akka Technologies case , some employees were found to have engaged in evidence tampering by altering the functioning of an electronic mailbox and by breaking seals, thus triggering overall company liability. As a result, and despite the defendant’s claim that it acted only with negligence, the Court adopted a broad definition of obstruction and confirmed the €900,000 fine imposed by the Authority.
- In May 2021, the Fleury Michon group was fined €100,000 for having obstructed the conduct of the investigation carried out by the Authority in the ham and cold meat sector cartel. During the investigation, it appeared that the group had not informed the investigators of an internal restructuring operation and the removal of Michon Charcuterie, one of the authors of the practices, and actively contributed to misleading the Authority.
- In July 2021, the Authority fined a company and its parent €5,000 for obstruction of an investigation even though this investigation had been initiated at the request and on behalf of the Hellenic Competition Commission.