France: Competition Authority
The French Competition Authority (the Authority) has continued to move forward at a sustained pace in 2018 and the first half of 2019. 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. Further, the Authority’s expertise is valued and recognised by the French Government and Parliament as shown by the staggering number of requests for opinions received by the institution last year. The digital economy and data-driven services (big data, algorithms, artificial intelligence) were among the sectoral priorities for 2018 and will remain at the center of the Authority’s activity in 2019.
The Authority’s robust enforcement in 2018 was reflected in a number of noticeable cases.
It imposed a €189 million fine against six domestic appliances manufacturers in a large-scale cartel. It also sanctioned an unlawful agreement aimed at restricting online sales in the sector of outdoor power equipment. This decision was taken only a few months after the Coty judgment by the CJEU and undertook to clarify, in a cross sector approach, the legal framework applicable to selective distribution and the use of the online sale restrictions. The Authority additionally took a proactive stance in a dominance case whereby it sanctioned a waste management company for having used its dominance on the market to apply excessive price increases to local hospitals. The Authority considered that such an abrupt, significant and lasting price increase, without any objective or relevant justifications by the company, constituted an abuse of exploitation. Showing vigilance as concerns compliance with its decisions, the Authority also fined the Fnac Darty group €20 million for failing to comply with the structural remedies attached to its approval of Darty’s acquisition by Fnac since Fnac failed to divest three stores out of a total of six.
Merger control has also been an area of continued strong engagement in 2018 and new breakthroughs for the Authority. It examined, for the first time, the merger of two online platforms (Logic-Immo.com and SeLoger.com) in the real estate listings in a very detailed phase II decision.
The merger was authorised without condition after an in-depth examination of the dynamics of platforms’ competition. The digital economy was yet again at the center of the Authority’s activity as demonstrated in two other mergers, which involved ‘phygital’ retail distribution (combining brick and mortar and online retail). Eager to ensure the constant effectiveness of its merger review, the Authority announced several immediate measures following a series of public consultations: the reduction of the volume of information requested during the notification stage, the expansion of the use of the simplified (fast-track) procedure and the creation of a new online merger notification procedure. The Authority also announced a wider revision of its merger control guidelines for 2019. In a similar vein, the Authority pursued its dialogue with the business community on the issue of gun jumping by publishing a comprehensive doctrine article on practices to avoid, following the €80 million fine imposed in 2016 on a telecom and broadcasting group.
On a procedural level, the year 2018 was also marked by the adoption of the procedural notice on settlement, which sets out in a detailed manner how the Authority conducts the procedure. It is to be emphasised that the six companies involved in the aforementioned domestic appliances cartel all went through the settlement procedure, which highlights this new procedural option. The document on settlement, which builds on a two-year decision-making practice and follows wide public consultation on a draft notice, aims at giving companies and lawyers or counsels practical guidance on how to use and apply for the procedure. This new settlement procedure has already brought, since its implementation in 2015, benefits in terms of predictability for the parties on the settled fine, efficient resource allocation and minimisation of litigation costs.
Alongside its active enforcement efforts, the Authority has vigorously pursued its advocacy activities. The Authority launched a vast sector inquiry on the sectors of medicines and medical biology given the importance of the healthcare sector in the national economy and the many changes brought by digitalisation (with the development of ‘e-health’ services).
The findings of this much-awaited healthcare sector inquiry were released in April 2019. As the medicinal product distribution sector is undergoing significant transformations, the Authority issued several proposals, from among the following: easing the constraints on online medicinal product sale, to allow French pharmacies operating in France to compete on a level playing field with websites set in neighbouring European countries like Belgium; enabling the effective development of the new missions that have been entrusted to pharmacists by public authorities; clarifying and easing the regulation on advertising to allow pharmacists to communicate on their parapharmacy offers and services; diversifying (with supervision) the possibilities of financing pharmacies; and partially easing and strictly supervising the pharmacy monopoly to authorise the dispensing of medicinal products in parapharmacies and mass retail.
In 2018, the Authority also delivered several opinions on a wide range of issues: the agricultural sector; the resale below cost threshold for food products; the regulated legal professions; and the online display advertising sector. This last sector inquiry influenced the French position in the discussion on the proposal for an ePrivacy regulation. Likewise, the opinion on the agricultural sector informed the debate for the adoption of the law on the balance of commercial relations in the sector. The Authority also took a number of advocacy initiatives that contributed to move forward current thinking and soft law in other areas such as the launch of a joint study on algorithms with the Bundeskartellamt, and the creation of a new book collection meant to improve compliance and to disseminate essential notions of competition law, whose first edition was released in June 2018 on loyalty rebates. It also launched a new series of hearings designed to discuss new topics with stakeholders such as blockchain and fintech.