France: Competition Authority

The French Competition Authority (the Authority) has continued to move forward at a sustained pace in 2016 and the first half of 2017. 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.

2016 saw the completion of 50 enforcement investigations, with 14 decisions issued sanctioning undertakings for a total amount of €203 million. Five decisions were reached on the basis of our new settlement procedure, which entered into force in August 2015 and can be applied to all proceedings in which a statement of objections was sent thereafter. In fact, a potent testimony to this new tool's success is the fact that all antitrust investigations wrapped up in 2016 in which the procedure could apply saw some, and sometimes all, parties agreeing to settle. Such was the case, for instance, of our investigation into the sector of the distribution of consumer goods in the French overseas territories where importers had sought and obtained import exclusivities from mainland manufacturers. Absent settlement, the Authority is of course ready to hit firms with hefty fines to sanction and deter prohibited conducts. It thus imposed on one of the global leaders in the supply of rolled zinc for roofing and rain gutters a fine of €69 million for abusing its dominant position by pursuing over nine years a policy aiming at constraining its distributors to adhere to exclusive purchase obligations, with the effect that competitors were kept out of the French market and constructors had to suffer artificially high prices.

As part of its enforcement action, the Authority makes regular use of interim measures in an effort to prevent any serious and immediate anticompetitive effect on the market. It did so, at the request of an alternative operator, against the incumbent operator in the energy sector to ensure that the price of some of its market offers to business customers reflected its actual costs in order to avoid any risk of establishing predatory or exclusionary pricing.

Merger control completes the Authority's enforcement track record with an increased activity in 2016 counting a total of 230 clearance decisions, including six with commitments. Two major cases have drawn particular attention: a landmark merger in the electronic products sector; and the first ‘gun jumping' decision in France. In the Fnac/Darty merger involving two major retail chain competitors selling electronic products, the Authority chose, for the first time, to include in its market definition both in-store and online retail, a move showing the care taken by the Authority to act as a pragmatic enforcer that does not hesitate to adapt, in the context of strong growth of internet sales, its decision-making practice in order to take into account market evolutions. Mindful of refining its tools, the Authority took the initiative to gather evidence on the substitutability between in-store and online sales by commissioning a survey of more than 20,000 consumers, which was a first as well for the Authority.

The Authority also adopted a landmark decision last year in the field of merger control, sending across the message that it will not take lightly notifying parties' violation of their standstill obligation and premature completion of their transaction. It thus imposed an €80 million fine on a telecom and broadcasting group for gun jumping in relation to two transactions subject to the Authority's compulsory review. This is the highest fine ever imposed for gun jumping by a competition agency, justified by the generalised nature of the behaviour at hand, evidenced notably by internal documents and mails seized during a dawn raid at the group's French headquarters.

In parallel to its active enforcement efforts, the Authority has vigorously pursued its advocacy activities, and 28 opinions were issued in 2016. In a fast-changing economy, advocacy serves as an essential tool to gain expertise in new business models and develop guidance for market players. The Authority launched an ex officio 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 focuses 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 advertising campaigns. This initiative came after the publication of a joint paper with the German Federal Cartel Office on data and its implications for competition law. The joint study sought 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.

Also conducted at its own initiative, the Authority released a sector-wide inquiry on hearing aids, a market affecting millions of French citizens, only a small portion of whom are equipped, considering the high price of the devices and related services.

In addition to its ex officio capacity, the Authority issued a number of recommendations regarding other segments of the economy such as transports (taxis and passenger coach stations) and regulated legal professions on the question of the establishment of courts' attorneys, bailiffs and notaries, pursuant to new regulatory powers vested in the Authority in August 2015 aimed at supporting objective, fact-based access and price rules for these legal professions.