What is the legal framework in your jurisdiction covering the behaviour of dominant firms?
The rules covering the behaviour of dominant firms under French law are mainly set out in article L420-2, paragraph 1 of the French Commercial Code (FCC), which prohibits the abuse of a dominant position by an undertaking or group of undertakings on the domestic market or a substantial part of the market.
The provisions of article 102 of the Treaty on the Functioning of the European Union (TFEU) are applied cumulatively when the abuse of dominant position may affect trade between member states.
Definition of dominance
How is dominance defined in the legislation and case law? What elements are taken into account when assessing dominance?
Article L420-2 does not provide for a definition of dominance.
However, the French Competition Authority (FCA) uses the definition retained by the European courts and defines dominance as the position of economic strength enjoyed by an undertaking that enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently from its competitors, customers and ultimately from its consumers.
When assessing dominance, French case law takes into account not only the undertaking’s market share but also several other factors such as the market positions of the next largest competitors, the undertaking’s reputation, the existence of barriers to entry, the absence of countervailing buying power or the fact of holding a technological lead.
Purpose of legislation
Is the purpose of the legislation and the underlying dominance standard strictly economic, or does it protect other interests?
The purpose of the dominance legislation is to preserve the process of competition in order mainly to protect customers and consumers and also to stimulate innovation, competitiveness, employment and economic growth.
Therefore, according to article L420-4 of the FCC, practices that have the effect of ensuring economic progress, including by creating or maintaining jobs, and reserve for users a fair share in the resulting profit (without giving the undertakings involved the opportunity to eliminate competition for a substantial part of the products in question) are not subject to the provisions of article L420-2 and can be granted an exemption (see question 13).
Sector-specific dominance rules
Are there sector-specific dominance rules, distinct from the generally applicable dominance provisions?
Article L420-2 applies to all economic sectors and links have been established between the FCA and French sectoral authorities in order to ensure the complementarity between competition rules and sectoral regulations.
The Regulatory Commission of Energy, the Regulatory Authority for electronic and postal communications, the Regulatory Authority for rail and road activities and the High Council for Audio-visual must, therefore, refer to the FCA any abuse of dominant position of which they become aware in their sectors, especially if they consider that these practices are prohibited by article L420-2, and they can also consult the FCA on any questions falling within its competence.
For its part, the FCA communicates to these authorities any referral concerning their respective sector and requests their opinion on sector-related issues.
Exemptions from the dominance rules
To whom do the dominance rules apply? Are any entities exempt?
The dominance rules apply to all production, distribution and service activities, including those that are carried out by public persons, in particular in the context of public service delegation agreements (article L410-1 of the FCC).
Transition from non-dominant to dominant
Does the legislation only provide for the behaviour of firms that are already dominant?
Article L420-2 applies only to dominant firms. Transactions through which firms acquire a dominant position are, in principle, examined through an ex ante merger control procedure.
Is collective dominance covered by the legislation? How is it defined in the legislation and case law?
Collective dominance is covered by French legislation in article L420-2, which prohibits the abuse of a dominant position by a ‘group of undertakings’.
Under French case law, such collective dominance is characterised when undertakings collectively hold a position of economic strength that gives them the power to behave to an appreciable extent independently from their competitors, customers and consumers.
In order to determine the existence of collective dominance, the FCA examines:
- first, whether the undertakings are united by structural links and have adopted the same course of action on the market;
- alternatively, whether collective dominance may result from the market’s oligopolistic structure, by applying the following criteria identified by the General Court in the Airtours merger control case (2002):
- each member of the oligopoly must have the ability to know how the other members are behaving in order to monitor whether or not they are adopting the same policy (market transparency);
- there must be an incentive not to depart from the common policy on the market (mechanism of retaliation); and
- the foreseeable reaction of current and future competitors and consumers does not jeopardise the results expected from the common policy (lack of competitive pressure from outsiders to the oligopoly).
Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?
The prohibition of abuse of dominant position applies to dominant purchasers, but the FCA’s decisions relating to the subject are rare.
One example is the FCA’s decision finding that cinema operator had abused its dominant position on the upstream market for the purchase of movie performance rights (decision No. 07-D-44 of 11 December 2007 GIE Ciné Alpes). Another example is the interim measures decision relating to the photovoltaic electricity sector, where the FCA found that EDF probably enjoyed a dominant position on the electricity-purchase market concerned because of its monopsony position (decision No. 13-D-04 of 14 February 2013).
In its commitment decision No. 17-D-12 of 26 July 2017, the FCA raised concerns about the possible foreclosure of the sugar beet procurement market in a particular geographic area due to practices implemented by Tereos, France’s leading sugar producer and main beet purchaser in this area, towards the beet producers. Tereos committed to adopt a series of measures aimed at answering these concerns.
Market definition and share-based dominance thresholds
How are relevant product and geographic markets defined? Are there market-share at which a company will be presumed to be dominant or not dominant?
The FCA defines the relevant product market as the meeting place of supply and demand of certain products or services that are regarded as substitutable and also refers to the Commission Notice on the definition of relevant market, according to which a relevant product market comprises all those products or services that are regarded as interchangeable or substitutable by the consumer.
Principally from the demand side perceptive: to evaluate the degree of substitutability of products or services, the FCA conducts an estimation of their cross-price elasticities by using the ‘hypothetical monopolist’ test, also called SSNIP test (‘small but significant and non-transitory increase in price’), when such data are available (eg, decision No. 16-D-14 of 23 June 2016 Umicore); the FCA also carries out a qualitative analysis by taking into account several criteria such as the products’ or services’ properties, their prices and conditions of use and the characteristics of the offer; and also sometimes ones from the supply side perceptive (with an evaluation of the market entries possibilities).
The geographic market is defined as the area in which a monopoly power could be exerted effectively without being exposed to the competition of suppliers located in other geographic areas or other goods or services. The FCA also usually refers to the definition of the EU Commission according to which the geographic market comprises the territory on which the undertakings concerned are involved in the supply and demand of product and services, in which the conditions of competition are sufficiently homogeneous and that can be distinguished from neighbouring areas because the conditions of competition are appreciably different in those areas.
Even if a market has already been defined in previous merger control cases, the FCA considers that such definition was restricted to these cases and is not necessarily transposable to the abuse of dominance case at hand. The FCA may, therefore, conduct a new market definition analysis in the context of the dominance investigation and, if necessary, reach a different view on the relevant market (eg, decision No. 16-D-14 of 23 June 2016 Umicore).
Even though dominance usually derives from the combination of several factors, it follows from French case law that an undertaking whose market share exceeds 50 per cent is presumed to hold a dominant position (decision No. 16-D-14 of 23 June 2016 Umicore).
Abuse of dominance
Definition of abuse of dominance
How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?
Article L420-2 provides no definition of abuse but specifies (by referring to article L420-1) that the abusive exploitation of a dominant position is prohibited when it has as an object or may have as an effect to prevent, restrict or distort competition on the market and sets the following non-exhaustive list of examples of abuses: refusal to sell, tie-in sales, discriminatory selling conditions and termination of established commercial relationships solely on the ground that the partner refuses to comply with unjustified commercial conditions.
While some practices are presumed to be abusive, no conduct is subject to an absolute per se prohibition with the FCA preferring to conduct a case-by-case analysis of the object and actual or potential effects of the alleged abusive practice and the potential grounds for exemption.
Exploitative and exclusionary practices
Does the concept of abuse cover both exploitative and exclusionary practices?
Article L420-2 of the FCC prohibits both exploitative and exclusionary practices, even though cases relating to exclusionary practices are more common.
Link between dominance and abuse
What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?
A causal link must be demonstrated between the dominant position and the abuse of that position.
However, article L420-2 may apply even if the abuse takes place on an adjacent market to the dominant market provided that close associated links are demonstrated between the dominant and the related markets, and a link exists between the position held on the dominant market and the practice observed on the related market (decisions No. 17-D-02 of 10 February 2017 Obut and No. 17-D-08 of 1 June 2017 Ouibus).
What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?
According to article L420-4 of the FCC, the following abusive practices are not subject to the provisions of article L420-2 and may benefit from exemption:
- abusive practices that result from the application of a statute or a regulation adopted for its implementation;
- abusive practices for which the authors can prove that they have the effect of ensuring economic progress (including by creating or maintaining jobs) and that they reserve for users a fair share in the resulting profit, without giving the undertakings involved the opportunity to eliminate competition for a substantial part of the products in question; and
- certain categories of agreement or certain agreements that are recognised as meeting the above conditions by decree (in particular when their object is to improve the management of small or medium-sized undertakings).
However, individual exemptions are seldom granted by the FCA and the requirement to not eliminate competition on the market makes it difficult in practice for an exclusionary practice to meet the exemption conditions.
Specific forms of abuse
Types of conduct Types of conduct
The FCA refers to the EU case law to divide rebate schemes granted by a dominant undertaking in three categories (decision No. 16-D-11 of 6 June 2016 TDF, confirmed on this point by the Paris Court of Appeal in its judgment of 21 December 2017, No. 16/15499):
- quantity rebates, linked exclusively to the volume of purchases from the dominant supplier, which do not usually fall under the scope of article 420-2 FCC because they are deemed to reflect efficiency gains of the dominant undertaking;
- fidelity rebates that are presumed to have a foreclosure effect (in its decision No. 15-D-20 of 17 December 2015, the FCA imposed a €350 million fine to the telecommunications company Orange, in particular for putting into place an elaborate fidelity rebate scheme); and
- ‘intermediary rebates’ whose validity is assessed only on a case-by-case basis.
Tying and bundling
Tying sales are listed by article L420-2 as an example of abusive conduct.
In accordance with the EU Commission Guidelines on abusive exclusionary conduct, the FCA stated that such conduct may be prohibited where an undertaking is dominant in the tying market and where, in addition, the tying and tied product are distinct products and the tying practice is likely to lead to anticompetitive foreclosure.
According to the FCA, pure bundling (where the products are only sold jointly) is, in principle, abusive when the tying product is essential, whereas the effects of mixed bundling are less harmful (opinion 10-A-13 of 14 June 2010 relating to the cross-use of customers’ databases).
In its commitment decision No. 14-D-09 of 4 September 2014, the FCA held in its preliminary assessment that Nespresso was likely to have abused its dominant position by adopting technical and commercial measures aiming at tying the sale of its coffee machines to its own capsules.
In 2017, Schneider Electric, who had refused to sell spare parts to third-party maintenance providers without the associated maintenance services performed by its own employees, has taken commitments before the FCA to ease the conditions under which these providers could buy its parts (decision No. 17-D-21 of 9 November 2017).
To assess whether exclusive dealing arrangements entered into by dominant undertakings are likely to lead to a foreclosure effect, the FCA takes into account several factors, such as the scope of the exclusive obligation, its duration, its technical or economic justification, the economic compensation given to the customer and the market positions of the competitors.
In its decision No. 16-D-14 of 23 June 2016, the FCA considered that the exclusive purchasing obligations of the Belgian group Umicore, a dominant supplier on the coated zinc covers and zinc rainwater drainage products markets in France, aimed at excluding competitors from the market.
In commitment decision No. 17-D-12 of 26 July 2017, Tereos, France’s leading sugar producer, faced the FCA’s competition concerns about the possible foreclosure of a local sugar beet procurement market. According to the FCA’s investigators, Tereos, the main beet purchaser on this market, was offering its cooperative partners complicated contractual terms. Tereos committed to take measures enabling the beet producers to benefit from a greater freedom in choosing the sugar groups they supply, in particular by clarifying that they were not linked to Tereos by exclusive supply agreements.
In order to determine whether a dominant undertaking has abused its dominant position by its low-price policy, French case law usually applies the Akzo test and the EU Commission’s Guidelines on abusive exclusionary conduct, according to which:
- prices above average total costs for a single product undertaking or average incremental costs for a multiproduct company are not presumed to be predatory;
- prices below average avoidable costs must, in principle, be regarded as abusive; and
- prices below average total or incremental costs but above average avoidable costs must be regarded as abusive if the prices are part of a plan for eliminating competitors or are likely to cause potential or actual eviction effects.
These principles have been recently recalled by the Paris Court of Appeal (in its Direct Energie/Engie judgment of 28 July 2016, No. 2016/11253 and its SNCF Mobilités judgment of 20 December 2018 No. 17/01304) and by the FCA, in particular in its decisions No. 17-D-16 of 7 September 2017 Engie and No. 18-D-07 of 31 May 2018 Vedettes vendéennes.
Price or margin squeezes
Price (or margin) squeeze occurs where a vertically integrated firm holding a dominant position on the upstream market charges prices on the upstream market which, compared to the prices it charges on the downstream market, do not allow an equally efficient competitor to operate profitably and on a lasting basis on the downstream market.
According to the FCA, a price squeeze has an anticompetitive effect when an equally efficient competitor can only enter the market by suffering losses and such effect can be presumed when the services provided by the dominant undertaking to its competitors are essential for them to compete against it on the downstream market.
In its assessment of a price squeeze, the FCA conducts a test comparing the difference between the revenues generated on the downstream market by the dominant undertaking and the costs incurred on this same market with the wholesale price it invoiced to its competitors for the access to the intermediary good (eg, decision No. 15-D-10 of 11 June 2015 TDF, confirmed by the Court of Appeal of Paris in its judgment of 12 October 2017, No. 15/14038).
Refusals to deal and denied access to essential facilities
The FCA applied the essential facilities doctrine for the first time in 1996 in its decision Héli-Inter Assistance (decision No 96-D-51 of 3 September 1996) and has since defined the cumulative conditions under which denying access to an essential facility is considered an abuse of a dominant position (in particular, Opinion No. 02-A-08 of 22 May 2002 Association pour la promotion de la distribution de la presse and, more recently, decision No. 14-D-06 of 8 July 2014 Cegedim):
- the essential facility is controlled by a dominant undertaking;
- access to the facility is necessary or essential to compete with the dominant undertaking on an upstream, downstream or adjacent market;
- the competitor is unable to reasonably duplicate the essential facility;
- the use of the facility is denied or granted under restrictive and unjustified conditions; and
- access to the facility by competitors is feasible.
Even in the absence of such essential facility, a refusal to supply can constitute an abuse, in particular if:
- the refusal relates to a product or service that is necessary to be able to compete on an adjacent market;
- the refusal is likely to eliminate all effective competition on the adjacent market;
- the refusal is likely to prevent the undertaking requesting supply from bringing innovative goods or services to the market; and
- the refusal cannot be legitimately justified.
In its decision No. 14-D-06 of 8 July 2014 (confirmed by the Court of Cassation in its judgment of 21 June 2017 No. 15-25941), the FCA considered that Cegedim had infringed article L420-2 of the FCC by refusing to sell its database to the clients of a competitor in a discriminatory manner and without a lawful and objective justification.
Predatory product design or a failure to disclose new technology
Product innovation can, in certain circumstance, be considered as predatory.
For example, in its commitment decision No. 14-D-09 of 4 September 2014, the FCA found that the several technical changes made by Nespresso to its coffee machines affected the compatibility of competing capsules. Therefore, this series of product design changes was likely to infringe article 420-2 by tying the sale of the Nespresso coffee machines to its own capsules.
In its decision No. 18-D-10 of 27 June 2018, the FCA has stopped the procedure initiated by Econocom, according to which IBM, HP and Oracle had implemented a strategy of eviction of third-party maintainers by refusing to allow them, or some of their customers, access to updates of microcodes necessary for the maintenance of the hardware, servers and storage solutions that they market.
Discriminatory selling conditions are expressly covered by article L420-2 and price discrimination may be found abusive by the FCA in two cases (eg, decision No. 13-D-07 of 28 February 2013 E-kanopi) when:
- the discrimination has as an object or may have as an effect the exclusion of a competitor by artificially strengthening the dominant undertaking on the dominant market or another market (exclusionary abuse); and
- the dominant undertaking artificially provides its customers with an advantage or disadvantage on their own market by unjustified difference in treatment (exploitative abuse).
In its decision No. 15-D-17 dated 30 November 2015, the FCA fined SFR for abusive price discrimination between its on-net and off-net phone calls on mobile services for non-residential customers markets of La Réunion and Mayotte insofar as this practice made an increase in competition more difficult on these markets.
Moreover, in its decision No. 17-D-13 of 27 July 2017, the FCA imposed a fine on the funeral company Comtet for practicing price discrimination by charging its competitors an extra fee that did not correspond to any additional service.
Exploitative prices or terms of supply
An excessive price may be an exploitative abuse if there is a lack of proportionality between the price of the product or service and the production cost or service value or this price seems to be excessive compared to those of undertakings in a similar situation (unless there is an economic justification). Cases relating to these kinds of practices are relatively rare.
Practices limiting the commercial freedom of the dominant undertaking’s economic partner (such as unilateral limitation of liability clause) may also be considered exploitative.
In a recent exploitative abuse case, the FCA recognised Google’s right to freely define its AdWords contents policy but, however, found that Google was likely to have abused its dominant position on the French search advertising market by implementing this policy in a non-objective, non-transparent and discriminatory way (decision No. 15-D-13 of 9 September 2015).
Moreover, in decision No.17-D-02 of 10 February 2017, Obut, the leading French manufacturer of petanque balls, was fined by the FCA for having abused its dominant position by imposing on its distributors a resale price policy in order to protect its own sales outlets from price competition.
In 2018, the FCA sanctioned Sanicorse for having imposed abusive price increases on its captive customers on the grounds that these increases were applied in a brutal, long-lasting and significant way and that Sanicorse could not provide objective and relevant justifications for these increases (decision No. 18-D-17 of 20 September 2018).
Abuse of administrative or government process
According to the FCA, a dominant undertaking is entitled to use legal and administrative proceedings to defend its interests. As a result, the mere fact that a dominant undertaking lodges patents and introduces legal recourse in order to protect its intellectual property rights cannot, in itself, be deemed as abusive.
However, a legal action can, exceptionally, be characterised as an abuse (eg, decision of the FCA No. 11-D-15 of 16 November 2011 Sogarel and the Coyote judgment of the Court of Appeal of Paris of 19 December 2018 No. 17/00219) if it is:
- manifestly without foundation (and cannot reasonably be considered as an attempt to assert the dominant undertaking’s rights); and
- part of a plan aiming at preventing, restraining or distorting competition on the market.
In this decision No. 17-D-25 of 20 December 2017, the FCA stated that the interference of a dominant undertaking in the decision process of a public authority could be considered as abusive if such interference is undue as it has no legal basis and aims at convincing the public authority to adopt a decision that it should not take. In application of this principle, the FCA imposed on the laboratory Janssen-Cilag, and its parent company Johnson and Johnson, a €25 million fine in particular for abusing its dominant position by repeating legally unjustified approaches to the French health agency for the purpose of convincing the authority to refuse to grant generic status to competing medicinal products.
Mergers and acquisitions as exclusionary practices
Mergers and acquisitions are assessed under merger control rules, and the FCA has not, to the best of our knowledge, ruled on whether such transactions could be regarded as abusive (which could potentially be the case when the merger control rules are not applicable).
It should be noted that, in the event of an abuse of a dominant position, the FCA may enjoin the undertakings involved to amend, supplement or cancel all agreements and all acts by which the concentration of economic power allowing the abuse has been carried out, even if these acts have already been subject to the merger control procedure (article L430-9 of the FCC).
No comprehensive list of potentially abusive conduct can be provided.
The other practices that may fall under the prohibition of article L420-2 include, in particular, termination of established commercial relationships on the sole ground that the partner is refusing to accept unjustified commercial conditions (listed as an example of abuse by article L420-2) or acts of defamation when a link is established between the defamation and the undertaking’s dominant position, resulting generally from the undertaking’s reputation or the confidence it enjoys from the market participants (conviction decisions of the FCA No. 13-D-11 of 14 May 2013 Sanofi, No. 16-D-11 of 6 June 2016 TDF and No. 17-D-25 of 20 December 2017 Janssen-Cilag and judgment of the Court of Cassation of 8 June 2017 No. 15-26151).
The FCA also requires operators who benefit from a legal monopoly to avoid any cross-subsidies between its public service activities and its competitive activities that could result in predatory or exclusionary prices (decision No. 17-D-09 of 1 June 2017 INRAP).
Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?
The French authority responsible for the public enforcement of the dominance rules is the FCA, which has decision-making power over abuses of dominant cases and also enjoys power of investigations.
In order to assess whether a practice falls within the scope of article L420-2, the officials of the FCA’s investigation services are authorised to carry out two types of inquiries:
- in a ‘simple’ investigation, the officials may access all premises or means of transport for professional use and places of performance of services, require communication and take copies of books, invoices and all other professional documents and also collect any necessary information, proof or justification; and
- in the context of investigations requested by the EU Commission, the Ministry of economy or the FCA’s general rapporteur and authorised by judges, these officials may conduct inspections at any premises, seize documents and any information medium and place any commercial premises, documents and information media under seal for the duration of the inspection of those premises.
It should be noted that the French Ministry of economy has the power to issue injunctions and to offer settlement when the abusive practices only affect a local market and do not concern facts covered by article 102 of the TFEU, on condition that the turnover generated in France by each of the undertakings concerned during the last financial year does not exceed €50 million and that their aggregate turnover does not exceed €200 million.
Moreover, the French commercial, civil and administrative courts are responsible for the private enforcement of the dominance rules (see questions 31 and 32) and the criminal courts also have jurisdiction to impose criminal sanctions to individuals (see question 27).
Sanctions and remedies
What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?
The FCA is notably empowered to:
- order the dominant undertaking to cease its abusive practices within a specified period of time;
- impose special conditions and enjoin the undertakings involved to amend, supplement or cancel, within a specified period, all agreements and all acts by which the concentration of economic power allowing the abuse of dominant position has been carried out or, if the dominant undertaking operates retail outlets, require that it should proceed with divestment of assets;
- accept the dominant undertaking’s behavioural or structural remedies to end the competition concerns; and
- impose a financial penalty (either immediately or in the event of non-compliance with the conditions imposed or the remedies accepted).
The maximum amount of the financial penalty that may be imposed is:
- for a company: 10 per cent of the highest worldwide turnover, net of tax, achieved in one of the financial years ended after the financial year preceding that in which the practices were implemented (if the accounts have been consolidated or combined, the turnover taken into account is that shown in the consolidated or combined accounts); and
- for other entities: €3 million.
The financial penalties shall be proportionate to the seriousness of the abuse, the damage to the economy, the situation of the dominant undertaking and the possible repetition of the practices.
The dominant undertaking has the possibility to propose commitments that will be made binding by the FCA if they are likely to put an end to its competition concerns. Moreover, when the dominant undertaking does not contest the allegations made against it in the statement of objections, the general rapporteur of the FCA may submit a settlement offer fixing the minimum and the maximum amounts of the contemplated financial penalty. If the dominant undertaking agrees to modify its conduct in the future, the general rapporteur may take this commitment into account in its settlement submission.
The highest fine ever imposed for an abuse of dominance was the €350 million fine pronounced by the FCA in 2015 against Orange, a French telecommunications group, in particular for putting into place fidelity rebate schemes in the electronic communications sector (decision No. 15-D-20 of 17 December 2015).
Besides the financial penalty, a natural person who has fraudulently taken a personal and decisive part in the design, organisation or implementation of abusive practices may be punished by a prison sentence of four years and a fine of €75,000 (article L420-6 of the FCC).
Can the competition enforcers impose sanctions directly or must they petition a court or other authority?
The FCA is empowered to impose sanctions directly to the abusive undertakings without petitioning a court or another authority (article L464-2 of the FCC).
What is the recent enforcement record in your jurisdiction?
The FCA issues several decisions each year relating to abusive practices. The processing of a case by the FCA takes on average 18 months after the lodging date of the complaint, but abuse of dominance cases may take longer.
The abuses that have been most commonly prosecuted in recent years are exclusionary practices such as predatory pricing, rebates schemes, refusals to deal and denied access to essential facilities, defamation and discrimination.
Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?
Any agreement or contractual clause referring to a practice prohibited by article L420-2 is invalid (article L420-3 of the FCC). This nullity may be declared by the courts having jurisdiction.
To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?
French law does not provide a basis for a court or other authority (except the FCA, see question 27) to order a dominant firm to grant access, supply goods or services or conclude a contract, but private enforcement is possible before French courts having jurisdiction in order to obtain compensation from the dominant undertaking or the invalidity of an agreement or contractual clause referring to a practice prohibited by article L420-2.
The plaintiff can bring either a follow-on or stand-alone action (depending on whether the alleged abuse has already been the subject of an infringement decision of the FCA or not).
To date, there have only been a few cases of actions for damages brought before French courts for abuses of dominance, but the number of private enforcement actions is expected to increase in the future with the transposition into French law in March 2017 of Directive 2014/104 of 26 November 2014 on antitrust damages actions aiming at removing practical obstacles to compensation for victims of infringements of antitrust law.
For example, in 2012, the Paris Court of Appeal found that the dominant telecommunications group France Telecom had abusively restricted market access possibilities and therefore granted a €7 million compensation to one of its potential alternative competitors for loss of chance (judgment of 11 December 2012 No. 11/03000).
In 2018, the Paris Court of Appeal also confirmed the judgment of the Paris Commercial Court, which had sentenced Orange to pay SFR damages amounting to approximately €50 million for the loss of revenue because of Orange’s abusive price squeeze practice (judgment of 8 June 2018 No. 16/19147).
Moreover, a system of class action has been introduced in French law in 2014, but its scope of application is restricted to consumers (article L623-1 of the FCC).
Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?
Companies harmed by abusive practices have a claim for damages before the national civil and commercial courts having jurisdiction on the basis of French tort law, which requires the demonstration of a fault, a damage and a causal link between them.
New article L481-2 of the FCC provides that an anticompetitive practice is presumed to be irrebuttably established once its existence and imputation have been established by a decision of the FCA that can no longer be subjected to ordinary review for the part relating to this finding.
According to new article L481-3, the harm suffered by the claimant includes in particular the loss incurred (due notably to the surcharge paid), the loss of profits, the loss of opportunity and the moral damage.
Damages are assessed by the judge on a case-by-case analysis, on the day of the decision, taking into account the evolution of the prejudice (new article L481-8).
To what court may authority decisions finding an abuse be appealed?
The FCA’s decisions finding an abuse may be appealed to the Paris Court of Appeal, which has sole jurisdiction in this matter, in order to obtain either the annulment of the decision or its reformation.
If the Paris Court of Appeal annuls the FCA’s decision without annulling the prior proceedings, the court is required to review both the facts and the law. By contrast, if the court annuls the decision for insufficient investigation, the case may be referred to the FCA for additional investigations.
Unilateral conduct by non-dominant firms
Are there any rules applying to the unilateral conduct of non-dominant firms?
French law provides several rules applying to the unilateral conduct of non-dominant firms, which include the prohibition of:
- the abusive exploitation of the state of economic dependency of a client or supplier if it is likely to affect the functioning or the structure of competition (article L420-2, paragraph 2 of the FCC);
- price offers or selling prices to consumers that are excessively low compared with production, processing and marketing costs if they have as an object or may have as an effect to eliminate an undertaking or one of its products from the market or to prevent it from accessing a market (article L420-5 of the FCC) and the resale of a product in the same condition at a lower price than its effective purchase price (article 442-2 of the FCC); and
- the imposition of a minimum resale price or trade margin (article L442-5 of the FCC).
Moreover, the liability of an undertaking may be engaged in cases of restrictive practices such as obtaining from a commercial partner any advantage that is clearly disproportionate compared with the value of the service provided or obviously abusive terms concerning prices or sale conditions under threat of a brutal termination of their business relationships (a list of these restrictive practices appears in article L442-6 of the FCC).
Update and trends
Are changes expected to the legislation or other measures that will have an impact on this area in the near future? Are there shifts of emphasis in the enforcement practice – for example, that enforcement is expected to focus on a particular business sector in the time to come, or that, more generally, economic considerations are given greater weight than in the past?
35 Are changes expected to the legislation or other measures that will have an impact on this area in the near future? Are there shifts of emphasis in the enforcement practice?
The FCA has announced that its priorities for action in 2019 will concern the digital, health, distribution and energy sectors as well as overseas territories.