France: Competition Authority

This is an Insight article, written by a selected partner as part of GCR's co-published content. Read more on Insight

The French Competition Authority has continued to move forward at a sustained pace in 2015 and the first half of 2016. It has maintained its unabated willingness to generate tangible results for consumers as well as its strong resolve to make use of the full spectrum of its powers and capacities as both a credible enforcer and a persuasive advocate. The combined use of various prerogatives – such as imposing fines on infringers; making commitments binding upon firms whose behaviour has raised competition concerns; devising well-suited remedies to allow a merger to proceed; and issuing opinions to assess the impact on competition of draft or existing pieces of legislation – enables the Authority to be respected by public and private stakeholders alike as a determined watchdog and trusted adviser, to make the most of its procedural toolbox and to enhance its own expertise, ultimately in the best interest of sound competition enforcement.

2015 has been a year of many achievements with 20 decisions issued on the merits, among which nine issued financial penalties for a total amount of €1.25 billion. This is not only an increase compared to 2014 (€1 billion), but also an all-time record for the Authority. Our enforcement record was evenly distributed between abuse (four decisions) and cartel (four decisions) cases, covering a wide variety of sectors (telecommunications, media, fresh dairy products, poultry meat, craft bakery and express delivery services), demonstrating our commitment to monitor all sectors of relevance to the overall economic fabric.

Two of our four cartel cases were solved thanks to the leniency programme. The parcel delivery case, which involved price coordination from 2004 to 2010, was the 11th case coming out of the leniency programme in the past 10 years, for a total amount of fines in excess of €3 billion over that time period.

In addition to the nine fining decisions, the Authority issued five commitments decisions, including the landmark decision in the online hotel reservation sector. The case presented unprecedented issues raised by retail most favoured nation (MFN) clauses, and triggered an enhanced cooperation between the Swedish, Italian and French competition authorities in close coordination with the European Commission. In the context of newer forms of restrictions in a burgeoning digital economy, resorting to commitments was considered to be the most effective and well-balanced response to restore competition while preserving efficient free search and comparison services for the benefit of consumers, and provided a blueprint which other national authorities could rely on to wrap up their own pending investigations.

Besides its enforcement actions, the Authority makes regular use of interim measures. It recently issued various measures against the former incumbent operator on the gas market, which had imposed prices for individual market offers (ie, non-catalogued offers reserved to business customers) without taking real costs into account. By doing so, the Authority ensured that any potential risk of predatory or exclusionary pricing was prevented in order to avoid possible irreversible damage to the sector pending a decision on the merits of the case.

Merger control has also been a major part of the Authority’s enforcement activity with a total of 192 decisions in 2015, including six decisions involving commitments, both structural and behavioural. 2015 reflected a continued attention in the choice of tailor-made and innovative commitments as illustrated by the first time use of a fix-it-first solution in a merger in the liquefied petroleum gas sector. Additionally, 72 decisions have been issued since the beginning of 2016 (as of 17 May), of which one transaction has been cleared subject to the adoption of commitments. 2016 has had a robust start with two ongoing in-depth examinations, respectively in the advertising and retail sectors, and other ongoing high-profile cases in the media and food retail sectors. Monitoring the compliance of their commitments by companies has moreover remained a high priority of the Authority, which exercises a sustained vigilance in that area. A telecoms operator which had committed to sell a mobile operator in the French overseas territories as part of a merger that was cleared back in 2014 has recently been fined €15 million for breach of its commitments to maintain the economic sustainability of the mobile operator until its divestiture and not to interfere with its management.

In parallel with its active enforcement efforts, the Authority has vigorously pursued its advocacy activities. Twenty-two opinions were issued in 2015 and 11 have been issued so far in 2016. Last year was an opportunity for the Authority to focus its advocacy on disruptive innovations especially in the transportation sector. The Authority has largely contributed to the debate on the competition between taxis and chauffeur-driven cars (eg, Uber) in two opinions issued on proposed regulations regarding the implementation of (i) fixed fees for taxi rides from the Paris city centre to its neighbouring airports, thus paving the way for taxis to adopt pricing policies geared to the demands of users who, for some, shun the traditional metered rates, as well as (ii) a state-operated platform collecting on a voluntary basis information on the availability and geo-tracking of taxis in real-time as a means to facilitate the process of ordering a taxi by mobile applications or search engines using the aggregate data. The use of advocacy in the field of disruptive innovations has similarly marked the first half of 2016 with three opinions published on proposed regulations aiming at reshuffling the existing nationwide organisation of driver’s licence tests to open the market to new innovative business models. 2015 has also seen significant results of past advocacy efforts with the adoption by the government of the recommendations issued in a 2014 market study on interregional coach transportation service: within a few months of the enactment the 2015 Growth and Activity Law (the Macron Law), 1,300 direct jobs were created, 157 cities and airports were connected by coach service and 1.5 million passengers travelled by coach compared with 110,000 for the whole preceding year.

The Authority has occasionally complemented its traditional advocacy tools with other means of action such as joint studies with fellow competition agencies on topical issues of common interest. It recently released a joint paper with the German Bundeskartellamt on data and its implications for competition law. The increasing collection, processing and commercial use of data in digital markets has prompted a broad debate about the role of data in corporate strategies and of competition law in such strategies. The joint study seeks to provide a comprehensive overview of the questions data-related behaviour and, more generally Big Data, can raise, with a focus on whether data can create or reinforce market power. The Authority has followed up on this initiative by launching a sector inquiry into online advertising, six years after a previous inquiry, which had assessed in particular Google’s dominance in the market for online search advertisement. The inquiry will focus this time on online ‘display’ advertisement, which has witnessed profound changes in recent years with the growth of real-time bidding and the ever-growing importance of data in managing ad campaigns. The Authority will examine for instance whether there is room for independent intermediaries as major players tend to integrate throughout the entire advertisement supply chain, and what risks this integration can create in terms of input and customer foreclosure.

Finally, the Authority has continued to improve its toolkit with the entry into force in 2015 of a new negotiated procedure replacing the former settlement procedure that had been in force for the past 15 years. It is expected that this new procedure will bring greater predictability for companies, allow for a faster resolution of cases and help reduce the risks of appeals. According to the new mechanism in place, companies choosing not to question the objections notified to them will agree on a (limited) range of possible fines with the investigative services which will then be submitted to the board, for determination of the final amount of the fine within the proposed bracket. Implementing this revamped tool will be a priority of the Authority in 2016. Draft guidelines will be developed based on experience gained from first cases and will be submitted for comments during a public consultation by the end of the year.

Unlock unlimited access to all Global Competition Review content