A total of 15 French companies have been found guilty of participating in a general cartel of public markets relating to the restoration of historical monuments concerning, among other things, the restoration of churches and cathedrals in various regions of France.
The Competition Authority narrowly interpreted the condition for exemption provided by Article L420-4/I of the Commercial Code, which applies only to practices that result from the implementation of an act or regulation and not to usual practices that encourage undertakings in a sector to exchange information during calls for tender. The individual complicity of certain representatives of the contracting public bodies will not normally reduce the seriousness of the offences, as the undertakings concerned - used to bidding in numerous tenders - could not have been unaware of the unlawful nature of the conduct.
The authority's reasoning on the issue of the parent company's liability for an infringement committed by a subsidiary is very innovative. According to European case law,(1) where a parent company directly or indirectly holds all or almost all of the shares in its subsidiary, there is a simple rebuttable presumption imputing liability for the unlawful acts of the subsidiary to the parent undertaking. This requirement of specific proof is not due to a relationship between the parent company and its subsidiary in instigating the infringement or because the parent company is involved in the infringement, but because they constitute a single undertaking. To rebut the presumption, it is not enough to assert that the parent company had nothing to do with the implementation of its subsidiary's commercial policies; evidence must be brought relating to the economic, legal and organisational links between them which demonstrate that they do not constitute a single economic entity.
Where the parent company holds all, or almost all, the shares in its subsidiary, liability for the latter's anti-competitive behaviour is attributed to it. In accordance with the principle of the primacy of European law with regard to a substantive rule, this system of proof must be applied by the Competition Authority when it cumulatively applies Article L420‐1 of the Commercial Code and Article 101 of the Treaty on the Functioning of the European Union.(2) However, it was unclear how the authority would act when only national law applied.
The current case concerned practices limited to a part of the national territory and implemented by small and medium-sized French companies established at regional level; thus only national law applied. The Competition Authority was not required to apply European law and, therefore, a fortiori, did not have to follow the interpretation of the European court and could decide solely on the basis of domestic law. The authority nevertheless held that:
"with regard to a substantive rule, it is appropriate to ensure the implementation of homogeneous rules on imputing liability and in particular, a single standard of proof, when the Authority applies only internal competition law or when it applies internal law and EU law simultaneously."
The judgment is in line with the Akzo Nobel jurisprudence and gives a clear indication of how the authority will decide future cases. However, in the present case, argument focused on the analysis presented in the statement of objections, which was based not on that presumption but on factual elements intended to establish the effective exertion of a decisive influence of the parent company over its subsidiaries. The behaviour of the subsidiaries was imputed to the parent, based on an analysis of factors relating to their economic, organisational and legal links, such as the control over the subsidiaries by the advisers of the parent company's chief executive officer and the existence of a common commercial policy within the group.
For further information on this topic please contact Joseph Vogel at Vogel & Vogel by telephone (+33 1 53 67 76 20), fax (+33 1 53 67 76 25) or email ([email protected]).
Endnotes
(1) Case C-97/08 P Akzo Nobel v Commission [2009], LawLex200900003054JBJ.
(2) Competition Authority, October 9 2009, LawLex200900003580JBJ, pts 411 et seq.