On 26 February 2015, the French Competition Authority (“FCA”) imposed a € 300,000 fine on an economic interest group (“GIE”) for non-compliance with a previously FCA-approved “commitment procedure” proposed by the GIE. The so-called “commitment procedure” is a procedure whereby a company under investigation commits to put an end to abusive practices in order to avoid or alleviate a finding of liability and the corresponding fines and penalties, by issuing a series of proposed undertakings.
The French GIE in question, “Les Indés Radios” (“Les Indés”), a grouping of independent local and regional radios, allows such radios to enter the national advertising market through offers such as simultaneous broadcasts of ads by a certain number of radios at the local level. In light of its unique market position, Les Indés is considered a key entity for the local and regional companies to access the national market.
However, the local and regional radios were found to have significantly been hindered from entering and exiting the GIE by certain clauses contained in its internal regulations, which were not deemed fully transparent, objective, or predictable, and were found to have enabled Les Indés to carry out a subjective and/or discriminatory examination of the conditions of membership. The FCA, in a procedure initiated in 2006, found such clauses to be obstacles to entrepreneurial freedom and a violation of competition law.
In order to alleviate the FCA’s concerns about cartel qualification and to escape prosecution, the GIE had committed to :
- introduce objective criteria of membership based on an audience threshold directly related to audience measurements on the market;
- provide a transparent and adversarial procedure to exit the GIE;
- replace the penalty of exclusion by a mere financial penalty for those radios non-complying with the obligation to transmit certain information in case of modification of their management.
The FCA had accepted these commitments which, therefore, became binding (decision n°06-D-29 of 9 October 2006).
However, during a routine verification, the FCA found that only part of the commitments undertaken by Les Indés had been implemented, notably :
- the objective audience threshold criterion had been eliminated by the 2010 internal regulations and the assessment of the threshold was carried out on a discretionary basis by Les Indés’ management board;
- the adversarial procedure to acquire membership had only partially been introduced in the internal regulations.
The FCA also objected that certain clauses of the new internal regulations, adopted in 2010, contradicted the objectives of the commitment procedure: membership status was subject to the submission by the applicant radio of the identity of certain persons; the length of the notice period had been extended in case of a radio resignation, which lowered its opportunities to propose competing offers.
In its decision, on top of issuing a € 300,000 fine, the FCA also imposed that Les Indés amend its internal regulations to conform to their commitments, under a daily penalty for delay of € 500.
In order to assess the ceiling of the fine, Les Indés, as a GIE, was considered a company by the FCA, which is consistent with French case law. This increases the ceiling of the fine to 10 % of the annual global revenue –excluding taxes- during the period in which the infringements took place. The maximum possible fine amount was thus €700,000 in this case.
In this decision, the FCA stressed its vigilance to infringements to competition law but also its severity when assessing compliance with accepted commitments, implicitly recalling that its approval of commitments does not aim to satisfy individual interests, but to guarantee the protection of the French public economic order.
The decision of the Authority can still be appealed before the Paris Court of Appeals.