The European, Middle Eastern and African Antitrust Review 2017

France: Cartel Regulation

20 July 2016

King & Wood Mallesons

French cartel regulation is no longer based solely on sanctions but also on a dialogue that allows more pragmatism and weakens the structure of anticompetitive practices. The successful implementation of all the components of the French leniency programme has made the French competition authority more like a regulator.

A new, more powerful authority

Since 2 March 2009, the principal authority with responsibility for enforcement regarding cartels is the Competition Authority (the Authority). It replaced the former Competition Council (the Council) pursuant to the Law on the Modernisation of the Economy (LME) of 4 August 2008. The Authority is an independent administrative body responsible for the analysis and regulation of competition in the French market under the relevant provisions of French and EU competition law. Investigations of cases referred to the Authority are carried out by rapporteurs who, following a decision of the commercial chamber of the French Supreme Court in 1999 (regarding the Council but transposable to the Authority) do not participate in the deliberations of the Authority but merely report to the Authority in open session.1 This is to ensure compliance with the requirements of article 6 of the European Convention of Human Rights.

By virtue of the LME, the Authority is endowed with more powers and extensive means. It has its own investigation services, the ability to go to court and the right to render, on its own initiative, opinions on competition-related issues. The investigation services are managed by a general rapporteur. The LME creates a hearing officer in charge of recording the parties’ comments on the proceedings.

Nonetheless, these changes should not put into question the main positions taken in the past by the Council in particular, as the Council’s former president heads the Authority.

Certain practices have been excluded from the scope of the Authority’s jurisdiction. The ordinance of 13 November 2008, which implements the LME, provides that the French Minister of Economy (the Minister) is entitled to settle and order measures as regards practices that only affect local markets. The Minister is in charge of such ‘micro anticompetitive practices’ if they do not come under articles 101 and 102 TFEU, and if the combined turnover in France of all the undertakings concerned does not exceed €100 million and the turnover of each of the undertakings in France does not exceed €50 million. The Authority is not completely relieved of its duty as, in case of failure of the Minister to settle the case with the undertaking, such a case can be referred to the Authority for sanction.2

Substantive test

Since the entry into force of the New Economic Regulations Act (NRE),3 the French substantive test, contained in article L420-1 of the French Commercial Code (the Code), prohibits concerted practices, agreements and alliances, express or tacit, between undertakings that have as their object, or may have as their effect, the prevention, restriction or distortion of competition in a market, and in particular those that aim to:

  • limit access to, or competition from, other undertakings;
  • interfere with price setting by market forces by artificially favouring a rise or a fall;
  • limit or control production, markets, investment or technical development; or
  • share markets or sources of supply.

Anticompetitive practices committed directly or indirectly through the intermediary of a subsidiary situated outside the French territory are also expressly included within the scope of the prohibition.

The French competition authorities have traditionally considered that proof of a demonstrable effect on competition is not necessary where the object of an agreement is to restrict competition. This position of principle has generally been confirmed by French courts, although a ruling by the Paris Court of Appeal4 overturned a decision by the Council on the basis that it had not been established that the frequent exchanges of price information between service station operators had any real effect on the pricing behaviour of the major petrol suppliers (Total, Shell, Esso and BP) on which fines totalling €27 million had been imposed.

The Council found that repeat and frequent exchanges of sensitive price information had been taking place between motorway service station operators – that is, service stations had been exchanging information by telephone on the price charged for different types of fuel several times a week and had been transmitting that information to their respective head offices.

This information had allegedly been used to determine the prices charged by operators on French motorways that, in line with previous decisions by the European Commission, was identified as a separate market. As a result, prices had converged to a higher level than that which would have otherwise prevailed. The Council emphasised that these practices were particularly serious in the light of:

  • the oligopolistic nature of the market;
  • the fact that consumers of fuel on motorways are captive; and
  • the widespread nature of these practices, which had been carried out for some years, as admitted by service station managers when questioned.

The position of the Council on the object or effect criteria has been confirmed in two decisions in which the Council considered that the exchange of information involving trade secrets, in particular in an oligopolistic market, is in itself anticompetitive. These decisions were issued within a few days of each other respectively in the luxury hotel and wireless operator sectors.5 In these decisions, the Council stressed that sharing strategic information in an oligopoly artificially raises transparency among competitors and thus creates a collusive equilibrium distorting competition. In the luxury hotel case, the infringement only consisted of information exchange and the strategic information mainly included occupation rates, average prices per room and incomes relating to each available room.

In the wireless operator case, it mainly included information on the number of subscriptions and terminations as well as market shares. The Council pointed out that the information exchanged was confidential as the parties could not have had access to it in any other way and it was not shared with the customers. With respect to the exchange, a fine of €709,000 was imposed in the luxury hotel case and of €92 million in the wireless operator case. The Paris Court of Appeal upheld these two decisions.6 However, the French Supreme Court only partly upheld the wireless operator decision by stating that the previous decisions had failed to establish that the exchange of confidential information had either an anticompetitive object or an actual or potential anticompetitive effect, therefore underlining that the mere exchange of information is not anticompetitive per se.7 The ‘remand’ Court of Appeal therefore attempted to demonstrate the actual anticompetitive effects of the practices and decided to reject the appeal. This latter decision was again subject to appeal before the Supreme Court. The Supreme Court overturned the Paris Court of Appeal’s decision once more by considering this time that, although the anticompetitive effects were now sufficiently explained, the damage to the economy could not be presumed and that this too should be demonstrated. The Paris Court of Appeal upheld the fines imposed by the Council in its first decision and the Supreme Court upheld this position.8

Following this same approach, the Authority fined endive growers and their professional organisations in March 2012 approximately €4 million for price fixing through an exchange of sensitive information. In this case, undertakings used an IT information exchange tool in which each producer was obliged to report its prices in real time on a non-anonymous basis. Any producer who did not report a price in accordance with the price decided collectively was thus immediately identified and could be subject to reprisal measures. The practices at stake were considered to be even more serious because the parties were clearly aware that they were infringing competition rules. On many occasions, the head of the Directorate General of the French Ministry of Economy in charge of Competition, Consumer Protection and Fraud Repression (DGCCRF) had drawn their attention to the fact that the agricultural sector did not benefit from any exception under competition rules. In addition to the fine imposed, the Authority issued an injunction ordering the parties to modify the IT information exchange tool so that it only records past, anonymous and aggregated data.

However, the Court of Appeal of Paris ruled in a judgment of 15 May 2014 that the endive growers’ organisation did not exceed its legal mission consisting of price regulation. The Court also found that the practices were occasional and that they could not be considered as a single, complex and continuous infringement owing to a lack of common anticompetitive objective.9 Following an appeal before the French Supreme Court, a request for preliminary ruling has been lodged with the Court of Justice of the European Union to ask the question of whether an anticompetitive agreement can escape from the prohibition provided for by article 101 TFEU because the practices actually related to the responsibilities assigned to the endive growers’ organisation under the common organisation of the market (common agricultural policy).10

The effect of a practice on the market is taken into account by the de minimis rules that entered into force on 27 March 200411 and are largely modelled on the European Commission’s Notice on Agreements of Minor Importance. Under article L464-6-1, agreements or practices between actual or potential competitors (horizontal agreements) whose combined market share is less than 10 per cent, or between undertakings that are not actual or potential competitors (vertical agreements) whose respective market shares are less than 15 per cent, may be exempted from the application of article L420-1 on the grounds that they do not have an appreciable effect on competition.

However, where the parties’ arrangements contain certain hard-core infringements, the agreement or practice does not benefit from the above exemption. For horizontal agreements, such hard-core infringement comprises price fixing, limiting production or supply, and market or customer sharing.

Recently, the Authority fined 10 companies a total of €192.7 million for cartel behaviour in the sector for fresh dairy products sold under retailers’ brands. The companies were said to have held meetings and had numerous telephone conversations aimed at price fixing and price increasing, as well as at allocating volumes, notably in bidding processes run by major retailers.

In the same way, the Authority fined 21 French poultry producers and two professional organisations €15.2 million for colluding on prices in May 2015.

A happy family? Group undertakings

It is generally considered that article L420-1 does not apply to intra-group arrangements where subsidiaries lack any real commercial autonomy. In this respect, mention should be made of a decision where the Council imposed fines totalling €4.3 million on subsidiaries of the Air Liquide Group (Air Liquide) for anticompetitive practices in the hospital medical gas sector.12 In that case, the Council found that two subsidiaries of Air Liquide had engaged in market-sharing and price-fixing agreements between 1994 to 1996 while bidding to become suppliers of medical gases to public hospitals and private healthcare establishments.

The Council noted that it was not illegal for the subsidiaries of the same group to agree on a sole bidder. However, here the two subsidiaries of Air Liquide had submitted two separate bids during a call for tenders and had thereby, according to the Council, presented themselves as two independent and competing companies on the market. In such circumstances, it was illegal for the subsidiaries to coordinate the terms and price of their respective offers as this misled hospitals as to the real degree of competition for the tender. It made no difference that those who had organised the tenders knew of the corporate links existing between the bidders.

Similar decisions were rendered more recently by the Authority.13 In these decisions, the Council cited the Air Liquide decision as a precedent.

Penalties

The main penalties for breach of the prohibition contained in article L420-1 are fines of up to 10 per cent of worldwide turnover, or periodic penalty payments of up to 5 per cent of the daily average turnover for every day of delay in the implementation of either a decision of the Authority or an injunction imposed by the Authority, or both.14 Turnover to be taken into account for the calculation of fines will be the highest amount realised by the undertaking in any financial year during the period in which the practices took place. For the purposes of the French cartel rules, as with the penalties for breaches of article 101 TFEU, the notion of undertaking extends to all group undertakings wherever situated. Article L464-2 of the Code was introduced by the NRE and has a significant effect on the penalties that may be imposed by the Authority. Under the previous regime, the maximum penalty that could be applied to undertakings was 5 per cent of turnover in France for the preceding year. As a result, the total fines imposed by the Council and then by the Authority has been as follows over the past 10 years:

  • 2001: €51.1 million;
  • 2002: €64.3 million;
  • 2003: €88.5 million;
  • 2004: €50.2 million;
  • 2005: €754.4 million;
  • 2006: €128.2 million;
  • 2007: €221 million;
  • 2008: €631.3 million;
  • 2009: €206.6 million;
  • 2010: €442.5 million;
  • 2011: €419.8 million;
  • 2012: €540.4 million;
  • 2013: €160.5 million;
  • 2014: €1,013.6 million; and
  • 2015: €1,252.2 million.

The 2014 figure includes the highest total fine imposed by the Authority in the past 10 years, in the home care and personal care manufacture case, and amounted to €951.1 million. This fine exceeded the wireless operators’ record fine of €575 million imposed in 2008. Moreover, the Authority imposed also in 2015 the highest individual fine of €350 million against Orange.15 It seems that the serious fines policy implemented by the Council made it a very attractive forum that resulted in a great increase in the number of complaints lodged before the Council in 2008. This trend has been maintained with the creation of the Authority.

On 16 May 2011, the Authority published its final guidelines for setting antitrust fines defining, in particular, the basic amount of the penalty as a proportion of the value of the sales of the products or services to which the infringement relate.16 In a decision of 29 March 2012, the Paris Court of Appeal, anticipating the application of the guidelines, imposed on the Authority the obligation to apply this rule.17

Applying the guidelines, the Authority takes into consideration the situation of the sanctioned entity or undertaking or of the group to which the undertaking belongs. Thus, repeated infringements or financial difficulties can respectively lead to an increase18 or a reduction19 of the fine’s amount.

French law has largely followed the case law of the European Court of Justice with regard to the continuity of the undertaking and the fines that may be imposed. Accordingly, where a business is acquired, the acquirer shall be responsible for all anticompetitive practices undertaken by the newly acquired business, irrespective of whether or not the infringements started before or after the acquisition. An acquirer of the business of an undertaking may not therefore rely upon the fact that it could not have prevented the undertaking from engaging in cartel activity prior to its acquisition of control.

It is interesting to note that the sanctions that may be imposed by the French competition authorities extend not only to undertakings, but also to individuals engaged in economic activities where fines of up to €3 million may be imposed for breaches of article L420-1. This provision is designed to cover sole traders who engage in cartel-type behaviour.

In addition to the civil or administrative sanctions applied to individuals and to undertakings, individuals may be subject to criminal penalties amounting to fines of up to €75,000 and imprisonment for up to four years where they have ‘fraudulently taken a personal and decisive action in the conception, organisation or implementation of the practices covered by article L420-1’.20 These penalties are not imposed by the Authority, although the Authority itself will generally refer the matter to the Public Prosecutor for further investigation. While the criminal provisions are rarely involved, guidance on this application has been given in a decision of the Council requiring the Public Prosecutor to examine the possibility of bringing a criminal prosecution against the chairman of the Fédération départementale de la Boulangerie et Boulangerie Pâtisserie de la Marne (FDBP) – a bakeries trade association in the Marne region of France – as a result of his active and decisive role in the establishment and implementation of a cartel among members of the FDBP.21

In its decision, the Council noted that three elements must be proven in order to impose criminal charges:

  •  personal participation: it is not sufficient for the purposes of the criminal offence that the accused is a director of the undertaking concerned. There must be an active and personal role on the part of the accused in the conception, planning and implementation of the cartel;
  •  decisive participation: the behaviour of the accused must be shown to have been decisive and a causal link established in putting the anticompetitive behaviour into practice; and
  • fraudulent participation: the accused must have intentionally breached the relevant competition rules, which may be inferred as a result of a breach of other criminal practices, such as breach of trust, corruption, etc.

In this case, the Council considered that all three elements had been satisfied by the behaviour of the FDBP chairman and recommended bringing a criminal prosecution.

The FDBP chairman brought an action against the Council’s decision to refer the case to the Public Prosecutor. This allowed the Paris Court of Appeal to hold, for the first time, that it is not competent to appreciate the decision of the Council to refer the case to the criminal authorities.22 The Paris Court of Appeal confirmed this position in a second decision, which will also be applicable to the Authority’s decisions in this regard.23

Blowing the whistle – leniency and reduction of fines

While the Authority is in a position to commence investigations on its own initiative or following a complaint, an investigation can also be commenced as a result of a leniency application. The provisions have been strengthened since the enactment of the NRE.

Article L464-2 IV of the Code provides that undertakings may be exonerated from financial penalties, either in part or in full, where they have ‘contributed to establishing the reality of a prohibited practice and to determine its authors by providing elements which the Authority or the administration were previously unaware of’. As with the procedure at EU level, it is necessary to provide new information to the competition authorities that will enable them to begin an investigation. Providing information that merely supports information already held by the authorities will not be sufficient to obtain full immunity from fines. Undertakings unable to satisfy the requirements for full immunity from the fine can nevertheless apply for a reduction in the fine.

In response to an increasing number of leniency applications, the Authority has decided to appoint a leniency officer, following the example of the Dutch and German competition authorities. As a result, since September 2011, potential applicants can freely and anonymously contact the leniency officer to obtain information about the leniency programme. This officer attends meetings between the leniency applicant and the rapporteur, and provides technical support to the rapporteur in charge of the leniency case as well as cooperating with other competition authorities involved in multiple applications.24 Where an application for leniency is received by either the general rapporteur of the Authority or, in certain rare cases, the director general of the DGCCRF, the rapporteur that is appointed, or the director general, presents a request to the Authority for a grant of leniency. Following this is a private hearing at which said applicant and the Public Prosecutor present their views. The Authority then considers whether or not to grant leniency and, if it does, then grants full or partial leniency in respect of fines. The leniency procedure is a great and increasing success. Twenty-three leniency applications were submitted to the Council by the end of 2007, 18 in 2008, five in 2009, seven in 2010, four in 2011 five in 2012 and seven in 2013, which leads to a total of 69 leniency applications by the end of 2013.25 Eleven leniency decisions26had been issued by the end of December 2015 and the first one was published on 11 April 2006, in the door manufacturing sector.27

The case involved 10 wooden door producers that implemented two national cartels. Nine of them were fined a total of €5 million, while the whistleblower was granted full immunity. The total amount of the fine imposed may not seem particularly high, but the cartelists did not have very high turnovers – from €5 million to €82 million – and the fines imposed on them ranged from 0.75 per cent to 1.87 per cent of their turnovers. The Paris Court of Appeal dismissed the claims of two wooden door producers which brought an appeal against the Council’s decision.28

One of the leniency decisions was particularly interesting as the Council granted full immunity to two companies that had denounced the existence of the cartel. It held that they had both provided sufficient evidence enabling the Council to initiate proceedings as regards the denounced practices and to launch an inquiry in the relevant sector.29 However, it should be noted that these two companies were part of the same group. In 2008, two leniency decisions were issued by the Council: on 21 May, in the wood industry sector; and on 16 December, in the steel industry.

The same year, a laundry detergent cartelist, Unilever, disclosed the existence of a cartel to the Authority. In December 2011, the Authority fined the four major laundry detergent manufacturers a global amount of €367.9 million. Unilever obtained full immunity. This decision is one of the most important leniency cases the Authority has investigated, and the first one concerning a mass-market product. After Unilever had disclosed the existence of the cartel, all the parties involved decided to cooperate and to take part in the French leniency programme.30

Similarly, in May 2013, following a leniency application from a French chemical commodities distributor, the Authority issued a decision concerning commodity market products, fining a cartel a total of €79 million. The whistleblower obtained full immunity, while the second and third applicants to leniency respectively obtained 25 per cent and 20 per cent reductions.31

In December 2014, two leniency decisions were issued by the Authority: one on 18 December 2014 in the home care and personal care manufacture sector;32 another one on 22 December 2014 in wallpaper manufacture.33

Finally, very recently, a fresh dairy products manufacturer, Yoplait, informed the Authority of a cartel in the sector of white label fresh dairy products and therefore received immunity from fines. Senagral was the second leniency applicant and its penalty was reduced by 35 per cent.34

On the date of its first leniency decision, the Council also published a procedural notice on the French leniency programme, later completed by an additional set of guidelines. Another version of this notice was issued by the Authority on 21 March 2009 and a revised version was published by the Authority on 3 April 2015, which is very similar to the Council’s Notice. In these, the Authority established three conditions that the applicant must meet to be eligible for leniency, as the law sheds no light on this point. The applicant:

  • must fully cooperate with the Authority at every stage of the procedure (namely providing the Authority with any information regarding the alleged infringement, being at the disposal of the Authority to answer questions, refraining from any concealment of evidence, refraining from informing the other parties to the anticompetitive practice of its leniency application);
  • should not have coerced any other member of the anticompetitive agreement to enter into it; and
  • must have stopped participating in the anticompetitive practice as soon as the procedure is launched and at the latest when it receives the leniency notice, although the Authority may postpone this date to prevent other members of the anticompetitive practice from becoming aware of the proceedings.

In order to increase transparency and incentives for companies to file ‘Type 2’ leniency applications, the revised guidelines included a predetermined range of fine reduction, namely between 25 and 50 per cent for the first company providing significant added value to the investigation, between 15 and 40 per cent for the second, and no more than 25 per cent for the third.

The whistleblower’s name is thus kept secret, within the limits of the Authority’s domestic and EU obligations, until the statement of objections is notified. In addition, the Authority undertakes not to refer the case of a leniency applicant to the Public Prosecutor under the criminal provisions mentioned above.

The procedural notice also detailed the following points:

  • the grant of a marker to applicants allowing them to know their rank and thus the amount of fine reduction they may be entitled to;
  • clarification of conditions for obtaining total or partial exoneration, wherein the Authority indicates the nature and the content of evidence and information applicants must provide to benefit from exoneration. The Authority also underlines the way applicants must behave during the investigation phase;
  • guarantees concerning statements made by companies are reinforced. The Authority provides a framework for the communication of these statements to ensure their confidentiality; and
  •  the possibility to introduce a summary application with French competition authorities where the European Commission is likely to deal with the case. In such cases, the amount of information the applicant must provide is alleviated as long as the Authority has not decided to act in the case.35 Finally, the revised guidelines strengthen the role of the leniency adviser, particularly as a gateway for firms looking to file leniency applications.

Since the Macron Law dated 6 August 2015, the Authority is no longer required to prepare a specific report before any immunity reward further to a leniency application. Moreover, despite an existing extension of the French leniency rules applicable to breaches of article L420-1 of the Code and article 101 TFEU, companies should always be prudent to apply for leniency to the European Commission at the same time as making an application to the Authority. Such a position is in line with the Court of Justice’s ruling dated 20 January 2016, assessing that the leniency programme of the EU and those of the member states coexist autonomously, which reflect the system of parallel competences of the Commission and of national competition authorities.36

Undertakings can also benefit from fine reductions as a result of a party not contesting the existence of the alleged practices. In this case, the maximum fine that may be imposed is reduced by half. In addition to this reduced-fine ceiling, if the undertakings also offer commitments to modify their behaviour in the future, the Authority may grant a reduction of the actual fine.37 By way of illustration, the Council granted a 90 per cent reduction of the fine imposed on La Poste for anticompetitive discounts. La Poste did not contest the Council’s allegation and submitted a set of substantial undertakings designed to prevent any recurrence of such behaviour.38 The Council also implemented this procedure in the cablemaking and in the laundry cleaning and renting sectors in which the companies involved were respectively granted a fine reduction of 10 per cent and 100 per cent as they offered highly innovative measures that had not yet been implemented in France, such as an internal whistleblowing procedure.39 It appears, from the existing cases applying the negotiated settlement procedure, that for the moment the French competition authorities seem to have found the proportion of fine reduction to be granted depending on the companies’ behaviour:

  • companies that undertake to implement compliance programmes for their employees or executives may be granted a 10 per cent reduction;
  • companies implementing a whistleblowing procedure may be granted a 20 per cent fine reduction;40 and
  • companies taking further commitments such as behavioural commitments may be granted a 30 per cent reduction.

Since the Macron Law dated 6 August 2015, this procedure evolved into the settlement procedure. Under the previous procedure, the undertakings had no information on the possible fine reduction to be applied. Under the new settlement procedure, the general rapporteur of the Authority will suggest a range of fine with a minimum and a maximum fine that might be imposed. The undertaking may then decide to accept or refuse it. The undertaking has also the possibility to negotiate that range of fine with the Authority by offering behavioural commitments for the future or even commitments that take the form of a compliance programme.

Moreover, in a framework document on compliance programmes dated 10 February 2012, the Authority stresses that compliance programmes should rely on measures creating a culture of compliance with competition rules, such as training, but also on internal alert, advice or audit mechanisms for preventing, detecting and processing potential infringements. In particular, it describes the key features of an effective compliance programme. The Authority confirms that the introduction of a compliance programme or the improvement of an existing compliance programme can lead to a reduction of fine of up to 10 per cent only in the case of settlement procedure. In addition, a company implementing a compliance programme that discovers and puts an end to an anticompetitive practice, other than a cartel, on its own initiative, could benefit from mitigating factors in any of the Authority’s subsequent investigation into this infringement.41

Undertakings may also, since Ordinance 2004-1173 of
4 November 2004, offer commitments to remedy the situation and avoid a decision ruling on the existence of an infringement.42

Once said commitments are considered sufficient by the Authority, and after receiving the observations of interested third parties, the commitments will form part of the binding decision of acceptance issued by the Authority. To date, this procedure has been implemented 59 times by the Council − followed by the Authority − since its entry into force and has proved effective in solving competition concerns within a short time frame.43 Nevertheless, the attractiveness of this procedure for undertakings could be undermined in the future further to recent decisions of the Paris Commercial Court in a private enforcement case, enjoining the Authority to disclose documents obtained during the commitment procedure,44 although this judgment has been nuanced in case of legitimate cause raised by the Authority.45 The Council restrained the application of such procedure in cases of horizontal agreements. However, in a case of collusion on various tenders, the Council applied such procedure and granted a 35 per cent reduction of the fine incurred. Nonetheless, the Council emphasised that this case should not be seen as setting a precedent allowing a party in a horizontal anticompetitive agreement to benefit from such procedure, due to the fact that the initiative for having collaborated with competition authorities preceded the introduction of the ‘leniency procedure’ into French law and the commitments offered by the parties were partially similar to those now required within such procedure. In addition, the Council underlined the significance of said commitments.46

The Authority published a Procedural Notice on 2 March 2009, which is very similar to the one the Council had published the previous year and which is to give general advice to undertakings on how to use the commitments mechanism. It holds that the procedure should not be applied to particularly serious agreements such as cartels. It specifies that the commitments submitted have to be relevant, credible and verifiable. They also have to be necessary and sufficient to address the competition concerns. The Notice further guarantees that all the documents provided by the undertakings in the course of the procedure are removed from the file if the procedure is prematurely terminated. It ultimately specifies the effects of the decision making the commitments compulsory, as well as the method for following up implementation of the commitments.47

Raiding the offenders – investigation powers

As the LME and the French Consumer Rights Act of 17 March 2014 (the Hamon Law) gave the Authority its own investigation services, the Authority will no longer depend on DGCCRF officers to lead investigations except maybe for certain local investigations.

Once the Authority is in charge of a case, either through a complaint or ex officio, a rapporteur will be appointed to conduct the investigations under the supervision of the general rapporteur. The rapporteur will instruct officers of the Authority to conduct further investigations, which may often take the form of dawn raids. In such circumstances, two procedures are followed.

Ordinary investigation (article L450-3 of the Code)

Any of the officers of the Authority may proceed to investigation in all public areas used for commercial purposes from 8am to 8pm. Officers may decide not to disclose their identity if it seems necessary to them in order to ensure the establishment of the infringement. They may access business premises and, if the premises are both for business and private use, officers can conduct their investigation only with a judge’s warrant. Under article L450-3, officers can request copies of business documents (business books, invoices or any business related document) by any means and made on any support. They can also have access to computers and conduct interviews. Failure to comply with such requests renders individuals liable to fines of up to €300,000 and up to two years’ imprisonment.

Judicial investigation (article L450-4 of the Code)

Where the officers of the Authority wish to conduct searches and seize documents from either business or domestic premises, they must obtain a warrant from a judge. Raids carried out under warrant must be carried out in the presence of a police officer and, in the absence of the representative of the company, two independent witnesses.

The attendance of external lawyers was not provided for by French law, and in practice their presence was thus a tolerance and not a right until the ordinance implementing the LME. However, the ordinance implementing the LME includes the right for a company facing a judicial investigation within its premises to be assisted by an external lawyer.

The criminal chamber of the French Supreme Court has confirmed that a national judge may only find against a decision by the Commission ordering an inspection and seeking the assistance of the French authorities where such a course of action would be arbitrary or disproportionate.48 On the other hand, the judge cannot substitute his or her own assessment as to the need for such an inspection for that of the Commission. As such, the case law of the French Supreme Court is in line with the ruling of the European Court of Justice in Case C-94/00, Roquettes Frères v Commission.

The legality of inspections conducted by the French authorities was recently referred to the European Court of Human Rights with allegations regarding the seizure of various documents, including privileged ones. In its decision dated 2 April 2015, the ECHR ruled that the safeguards provided by French law on inspections and seizures had not been applied in a practical and effective manner in this case, particularly when it was known that the seized documents included correspondence between a lawyer and his or her client. Moreover, when a judge is called upon to examine allegations identifying the seized documents, unrelated to this investigation or covered by legal professional privilege, he or she is required to examine in detail those documents and order their return where appropriate.49

With respect to the moment when parties may refer their case to a judge, recent case law50 shows that parties are not entitled to contact directly the judge who delivered the warrant while the inspection is taking place. They must refer their concerns to the police officer appointed by the warrant. Once the officers of the Authority have completed their investigations, the rapporteur either prepares a statement of objections or proposes a decision that there is no case to pursue. The parties shall then have two months to access the case file and present their observations. In the case of a proposed decision that there is no case to pursue, the Authority shall then either agree or request further investigation.

Where a statement of objections has been issued and the parties have submitted their observations, the Authority shall prepare a draft report, which is communicated to the parties. The parties shall then have a further two months to comment on the proposed report. Following this phase, the Authority issues its decision.

Notes

  1. French Supreme Court, 5 October 1999, TGV Nord et Pont de Normandie; French Constitutional Council, Decision 2012-280, 12 October 2012.
  2. Competition Authority, Decision 16-D-02 of 27 January 2016 (relative aux pratiques mises en œuvre dans le secteur du transport scolaire par autocar dans le Bas-Rhin): the Authority fined up to €96,000, whereas the undertaking would have been sanctioned for €75,000 if it had settled the case with the Minister.
  3. Act No. 2001-420 of 15 May 2001, loi relative aux nouvelles régulations économiques.
  4. Paris Court of Appeal, Judgment of 9 December 2003, against the former Competition Council’s Decision 03-D-17 of 31 March 2003.
  5. Competition Council, Decisions 05-D-64 of 25 November 2005 (relative à des pratiques mises en œuvre sur le marché des palaces parisiens) and 05-D-65 of 30 November 2005 (relative à des pratiques constatées dans le secteur de la téléphonie mobile).
  6. Paris Court of Appeal, 1st ch, sect H 26 September 2006 (rejected the appeal against Decision 05-D-64). Paris Court of Appeal, 1st ch, sect H 12 December 2006 (rejected the appeal against Decision 05-D-65).
  7. Commercial chamber of the French Supreme Court, 29 June 2007. Paris Court of Appeal, 11 March 2009.
  8. Commercial chamber of the French Supreme Court, 7 April 2010, Paris Court of Appeal, 30 June 2011, upheld by the French Supreme Court, 30 May 2012.
  9. Paris Court of Appeal, 7th Ch, pole 5, 15 May 2014 (overturned Decision 12-D-08).
  10. Court of Justice of the European Union, Case C-671/15 Président de l’Autorité de la concurrence v Association des producteurs vendeurs d’endives (APVE) (pending case).
  11. Article 24 of the Ordinance of 25 March 2004 amending article L464-6 of the Code.
  12. Competition Council, Decision 03-D-01 of 14 January 2003 (relative au comportement de sociétés du groupe Air Liquide dans le secteur des gaz médicaux).
  13. Competition Council, Decisions 05-D-04 of 17 February 2005; 05-D-17 of 27 April 2005; 05-D-26 of 9 June 2005 and 05-D-47 of 28 July 2005. Second and fourth decisions were partly overturned by Paris Court of Appeal decisions of 13 December 2005 and 25 April 2006, but these decisions did not affect the principle applied by the Council on intra-group anticompetitive agreements; Decision 10-D-03 of 20 January 2010; Decision 10-D-04 of 26 January 2010 (upheld by the Paris Court of Appeal, 28 October 2010).
  14. Article L464-2 I and II of the Code.
  15. Competition Authority, Decision 15-D-20 of 17 December 2015, Orange France.
  16. Competition Authority, Notice of 16 May 2011 on the Method Relating to the Setting of Financial Penalties.
  17. Paris Court of Appeal, 29 March 2012.
  18. Competition Authority, Decision 13-D-09 of 17 April 2013 (relative à des pratiques mises en œuvre sur le marché de la reconstruction des miradors du centre pénitentiaire de Perpignan).
  19. Competition Authority, Decision 13-D-03 of 13 February 2013 (relative à des pratiques mises en œuvre dans le secteur du porc charcutier).
  20. Article L420-6 of the Code.
  21. Competition Council, Decision 04-D-07 of 11 March 2004 (relative à des pratiques relevées dans le secteur de la boulangerie dans le département de la Marne).
  22. Paris Court of Appeal, 1st CH, sect H, 26 October 2004.
  23. Paris Court of Appeal 1st CH, sect H, 22 February 2006. Appeal of the Council’s Decision No. 04-D-39 of 3 August 2004.
  24. Competition Authority, press release of 4 October 2011, Appointment, Anne Krenzer is appointed Leniency Officer for the Competition Authority.
  25. Competition Council, Activity Report 2007. Competition Authority, Activity Report 2011. Competition Authority, press release of 29 May 2013 Distribution of commodity chemicals cartel, fiche 4 la clémence, un outil de détection et de répression des cartels.
  26. Competition Council, Decisions 06-D-09 of 11 April 2006, 07-D-48 of 18 December 2007, 08-D-12 of 21 May 2008 and 08-D-32 of 16 December 2008 ; Competition Authority, Decisions 11-D-17 of 8 December 2011, 12-D-09 of 13 March 2012 and 13-D-12 of 28 May 2013, 14-D-19 of 18 December 2014, 14-D-20 of 22 December 2014, 15-D-03 of 11 March 2015, 15-D-19 of 15 December 2015.
  27. Competition Council, Decision 06-D-09 of 11 April 2006 (relative à des pratiques mises en œuvre dans le secteur de la fabrication des portes).
  28. Paris Court of Appeal. 1st CH, sect H, 24 April 2007, rejects the appeal against Competition Council Decision 06-D-09 of 11 April 2006.
  29. Competition Council, Decision 07-D-48 of 18 December 2007 (relative à des pratiques mises en œuvre dans le secteur du déménagement national et international).
  30. Competition Authority, Decision 11-D-17 of 8 December 2011.
  31. Competition Authority, Decision 13-D-12 of 28 May 2013 (relative à des pratiques mises en œuvre dans le secteur de la commercialisation de commodités chimiques).
  32. Competition Authority, Decision 14-D-19 of 18 December 2014 (relative à des pratiques mises en oeuvre dans le secteur des produits d’entretien et des insecticides et dans le secteur des produits d’hygiène et de soins pour le corps).
  33. Competition Authority, Decision 14-D-20 of 22 December 2014 (relative à des pratiques mises en oeuvre dans le secteur du papier peint en France).
  34. Competition Authority, Decision 15-D-03 of 11 March 2015 (relative à des pratiques mises en oeuvre dans le secteur des produits laitiers frais).
  35. Procedural Notice of 17 April 2007.
  36. Court of Justice of the European Union, Case C-428/14, 20 January 2016, DHL Express S.r.l. e. a./Autorità Garante della Concorrenza e del Mercato.
  37. Article L464-2 III of the Code.
  38. Competition Council, Decision 04-D-65 of 30 November 2004. See also Decisions 03-D-10 of 20 February 2003; 03-D-45 of 25 September 2003; 04-D-30 of 7 July 2004; 04-D-37 of 27 July 2004; 04-D-42 of 4 August 2004 and 05-D49 of 28 July 2005; 07-D-02 of 23 January 2007; 07-D-21 of 26 June 2007; 07-D-26 of 26 July 2007; 07-D-33 of 15 October 2007; 07-D-40 of 23 November 2007; 07-D-48 of 18 December 2007; 08-D-13 of 11 June 2008; 11-D-02 of 26 January 2011; 11-D-07 of 24 February 2011; 12-D-06 of 26 January 2012.
  39. Competition Council, Decisions 07-D-21 of 26 June 2007 and 07-D-26 of 26 July 2007.
  40. Competition Council, Decision 08-D-13 of 11 June 2008 (relative à des pratiques relevées dans le secteur de l’entretien courant des locaux); Competition Authority, Decisions 12-D-10 of 20 March 2012, challenged before the Paris Court of Appeal (challenged before the Paris Court of Appeal and the French Supreme Court: rejection) and 13-D-03 of 13 February 2013.
  41. Framework document on compliance programmes of 10 February 2012.
  42. Article L464-2 I of the Code.
  43. Competition Council, Decisions 05-D-12 of 17 March 2005; 05-D-16 of 26 April 2005; 05-D-25 of 31 May 2005; 05-D-29 of 16 June 2005; 06-D-01 of 7 February 2006; 06-D-20 of 13 July 2006; 06-D-24 of 24 July 2006; 06-D-28 of 5 October 2006; 06-D-29 of 6 October 2006; 06-D-40 of 20 December 2006; 07-D-07 of 8 March 2007; 07-D-17 of 10 May 2007; 07-D-22 of 22 July 2007, 07-D-30 of 5 October 2007; 07-D-31 and 07-D-32 of 9 October 2007; 07-D-43 of 10 December 2007; 07-D-45 and 07-D-46 of 13 December 2007; 08-D-04 of 25 February 2008; 08-D-21 of 7 October 2008; 08-D-26 of 5 November 2008; 08-D-34 of 24 December 2008; 09-D-01 of 12 January 2009; 09-D-08 of 16 February 2009; 09-D-11 of 18 March 2009; 09-D-27 of 30 July 2009; 09-D-32 of 26 October 2009; 10-D-01, of 11 January 2010; 10-D-06 of 26 February 2010; 10-D-18 of 14 June 2010; 10-D-20 of 25 June 2010; 10-D-27 of 15 September 2010; 10-D-29 of 27 September 2010; 10-D-30 of 28 October 2010; 11-D-08 of 27 April 2011; 11-D-11 of 7 July 2011; 11-D-14 of 20 October 2011; 11-D-18 of 15 December 2011; 11-D-20 of 16 December 2011; 12-D-04 of 23 January 2012; 12-D-17 of 5 July 2012; 12-D-16 of 12 July 2012; 12-D-18 of 20 September 2012 (challenged before the Paris Court of Appeal and the French Supreme Court: rejection); 12-D-22 of 22 November 2012; 12-D-29 of 21 December 2012; 13-D-18 and 13-D-17 of 20 September 2013; 13-D-15 of 25 June 2013; 14-D-04 of 25 February 2014; 14-D-09 of 4 September 2014; 14-D-11 of 2 October 2014; 15-D-05 of 21 April 2015, 15-D-06 of 5 May 2015, 15-D-09 of 4 June 2015, 15-D-12 of 30 July 2015, 15-D-14 of 10 September 2015, 15-D-19 of 15 December 2015.
  44. Paris Commercial Court, 24 August 2011, upheld by the Paris Supreme Court, 16 March 2012.
  45. Paris Court of Appeal, 20 November 2013.
  46. Competition Council, Decision 07-D-02 of 23 January 2007 (entente dans le secteur de la collecte et du traitement des déchets en Seine Maritime).
  47. Procedural Notice of 3 April 2008.
  48. Criminal chamber of the French Supreme Court, Nos. 98–30 389 and 00–30 180, 22 October 2003.
  49. European Court of Human Rights, 2 April 2015, Vinci Construction and GTM Génie Civil and Services against France.
  50. French Supreme Court, 9 March 2016.

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