The French pétanque tossing ball leader, Obut, was sanctioned by the French Competition Authority (“FCA”) for abusing its dominant position (market share of over 80% in the manufacturing market) by imposing upon its distributors a resale pricing policy, thus virtually eliminating competition in the pétanque ball retail market. Obut did not deny the allegations and requested a settlement with the FCA, resulting in a 320,000 euro penalty on the tossing ball manufacturer and retailer.
Obut operates in both the pétanque ball manufacturing and distribution markets, which puts it in a competitive position with its distributors. Therefore, in order not to suffer from potentially lower prices that could be offered to customers by its distributors/competitors, Obut requested its distributors to comply with its catalogue prices. Thus, from May 2009 until July 2016, Obut was found to have abused its dominant position, by imposing a price standardization policy in the pétanque ball retail market, and consequently preventing its resellers from boosting their sales through cheaper prices or special offers.
Obut was found to have monitored compliance by its distributors by sending sales representatives to their outlets to check on the selling prices. An Obut employee was even dedicated to the monitoring of prices on the resellers’ websites. Failure to comply with Obut’s pricing policy would lead to commercial retaliation: late deliveries, orders blocked, dereferencing measures, etc.
Moreover, this abuse of dominant position was harmful for consumers who could not benefit from competition between pétanque ball sellers and remained dependent on this price standardization policy.
The FCA notified the company of the aforementioned grievances. Rather than disputing the alleged damages, Obut did not deny them and requested a settlement under article L. 464-2 paragraph III of the French Commercial Code, which allows the acceptance of a proposal from the authorities as to a penalty within a minimum and a maximum amount, it being specified that the FCA may take into account any mitigation measures undertaken by the company. Thus, after the grievances were notified, Obut made the commitment to implement a compliance program to include competition law training for its staff, appointment of a compliance officer and the submission to the FCA of an annual report presenting measures undertaken by the company to adhere to such compliance program. Taking those preventive measures into account on balance against the seriousness and the duration of the wrongdoings, the FCA imposed a 320,000 euro penalty on the French pétanque ball leader. The maximum penalty that could have been imposed on Obut was 1.6 million euros (10% of its annual revenue, pursuant to article L. 464-2 paragraph I of the French Commercial Code).
On a side note, it is interesting that this settlement is the fifth transaction of this nature since the implementation of the settlement procedure in August 2015 under the growth, business and equal economic opportunities Act of 6 August 2015 (“loi pour la croissance, l’activité et l’égalité des chances économiques”) [see for instance "French Competition Authority Sends Unprecedented Warning Against Gun Jumping", Bryan Cave EU & Competition Law Update, November 2016]. Recourse to such settlements may increase as the French legislator is increasingly trying to incite companies to cooperate with authorities in other areas through similar agreements (see for example the recent implementation of the judicial public interest agreement under Sapin II Act for corruption and bribery practices (“convention judiciaire d’intérêt public”), similar to the US Deferred Prosecution Agreement).
FCA Decision 17-D-02 dated 10/02/2017