In 2008 a company involved in a cartel in the mass-market laundry detergent distribution sector blew the whistle to the Competition Authority in order to benefit from the leniency procedure under Article L464-2/IV of the Commercial Code. Subsequently, the three other cartel members also made an application for leniency which revealed the existence of a complex and continuous agreement to fix laundry detergent prices in the retail grocery sector (super/hypermarkets) and coordinate promotion policies between 1997 and 2004.

The practice was implemented within a regulatory context which was conducive to enabling manufacturers to control the retail prices of their products. The Galland Law prevents retailers from selling goods below cost price (ie, at a loss). In this case, the manufacturers' sale prices as they appeared on invoices corresponded to the threshold for resale at a loss. Since distributors were paid often or exclusively through back margins, the invoiced prices corresponded to the prices at which the products had to be sold to consumers.

Simultaneously, the European Commission had commenced proceedings targeting the same sector (COMP/39.579) and informed the French authorities that it would not assume jurisdiction over the present case. In effect, the two procedures were not concerned with the same products or companies, and the practices at issue had not been implemented over the same time periods.

After establishing the infringement, the authority stated that it would calculate the levels of fine in accordance with the practical methods set out in the Notice on the Method Relating to the Setting of Financial Penalties, published on May 16 2011. In order to set the fines, the authority first considered the value of sales for all categories of product to which the infringement related for each company during its last full accounting year of participation in the cartel. The basic amount of the fine was then set individually according to the seriousness of the facts and the extent of harm caused to the economy.

The authority classified the horizontal price-fixing agreement as a "very serious" infringement; the gravitas was aggravated by the secrecy and monitoring conducted by the cartel members to ensure that the agreement was applied effectively. The scope of the damage to the economy resulted from the fact that the cartel operated throughout the entire national territory and was implemented by companies which had a majority market share in supplying everyday consumer goods. Finally, the authority adjusted the fine amount by taking into account the individual situation of each party or of the group to which it belonged.

The authority rejected arguments relating to the impact of the economic crisis, insofar as it affected all operators and not just those purporting to rely on it, as well as the companies' commitment to adopt a compliance programme, as this could not, in the absence of any autonomous legal basis, be made binding without a procedure for the non-contestation of objections.

The authority granted immunity from fines to the first company which had provided sufficient information in order to establish the alleged infringement. The three other cartel members had their fines reduced on the basis of the added value that their evidence had brought. However, one company received a smaller fine reduction than that provided for in the authority's provisional leniency notice due to its failure to cooperate in a timely manner by attempting to push for a finding of a European cartel in spite of the European Commission's position on the separate nature of the two proceedings.

In addition, another cartel members criticised the special rapporteur for not having taken into account its non-contestation of objections notified after its leniency application was made. The authority replied that running the proceedings concurrently was not in itself impossible; as the case handler has discretion in this regard, he or she can choose to do so where the non-contestation of objections brings procedural benefits in addition to those brought by the leniency application. However, objections that are ultimately notified to the undertaking must be appreciably different from those referred to in the provisional leniency notice. This was not the case here.

The three cartel members were thus denied the benefit of full immunity and between them received total fines of €361.3 million.

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]).