The Competition Authority has issued an official notice summarising its decision-making practice and policy regarding fines. The document, which is binding on the authority except in special circumstances or for public policy reasons, echoes in a number of aspects the EU guidelines of September 1 2006 on the method of setting fines.
The authority first determines the basic amount of the fine for each undertaking, taking into account the seriousness of the facts and the extent of the damage to the economy (this is specific to France), and for both factors sets out the non-exhaustive assessment criteria. The amount is converted into a percentage of the value of sales. Unless the undertaking in question provides incomplete or insufficiently reliable information, the authority takes account of the value of sales of goods and services "related to the infringement", and not its total turnover. The notice does not stipulate, as is the case under EU law, whether goods or services "indirectly" related to the infringement are concerned (Part 13 of the guidelines). The sales taken into consideration are those achieved in France, or elsewhere within the European Economic Area if the infringement consists of the undertaking refraining from making sales in France.
The authority sets a scale for the proportion of the value of sales of between 0% and 30%, and 15% and 30% for the most serious infringements. It applies this percentage for the first year of participation in the infringement to the value of sales realised for that financial year and for half the value of every other year. Regardless of the fact that the EU policy is even harsher, with the amount determined in relation to the value of sales multiplied by the number of years of infringement (Parts 19 and 24 of the guidelines), these percentages could result in a significant increase compared to the previous decision-making practice.
The individualisation of fines makes it necessary to adjust the basic amount subsequently in respect of any extenuating or aggravating circumstances; these are listed non-exhaustively. There are also other factors specific to the situation of the undertaking, such as its status as a single-product company, which may justify a downwards adjustment.
A repeat infringement, which is an aggravating circumstance and examined separately (Article L464-2(I)(3) of the Commercial Code), requires a combination of four conditions:
- a finding of a previous infringement of the competition rules before the new infringement has ended;
- the existence of a new practice that is the same or similar in its object or effects;
- a finding of infringement that has acquired definitive character on the date on which the authority rules on the new infringement; and
- a period between the previous finding of infringement and the new infringement is less than 15 years.
The cost of repeat infringement is high and results in an increase in the basic intermediary amount of the fine – after individualisation - of between 15% and 50%, which may vary depending on how much time has passed between the two infringements and their nature. In this respect, French law can be distinguished from EU law, which sets no minimum period between the two infringements for a finding of repeat infringement (see Commission Decision of September 29 2004, LawLex200700001263JBJ, finding a repeat infringement 20 years after the first infringement), nor does it impose a band for fine increases (see Commission Decision of June 11 2008, LawLex201000001260JBJ, in which the basic amount was increased by 90% due to the repeated infringement). The European Court of Justice has found repeat infringement even where the initial decision was still subject to review by the courts (Case C-413/08, P Lafarge v Commission, LawLex20100000817JBJ).
In setting the ultimate amount of the fine, the authority makes final adjustments: it ensures that it has complied with the maximum fines laid down by law and may apply reductions where leniency has been granted or for non-contestation of the charges. As under EU law (Part 35 of the guidelines), it may also take account of the undertaking's financial situation affecting its ability to pay the fine. Difficulties in the sector on which the practices have taken place are not taken into consideration in the setting of the fine, in line with a recent judgment handed down by the Court of Cassation (Cass Com, March 29 2011, LawLex20110000708JBJ).
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]).