On 16 May 2011, the French Competition Authority published its notice on the method relating to the setting of financial penalties for undertakings or organisations guilty of infringing competition rules. The final version of the notice includes significant changes to the initial draft published on 17 January this year in response to the the public consultation which closed on 30 March 2011.
The Competition Authority recognises that the notice is binding on it with regard to undertakings under prosecution and is thus enforceable against it. The notice equates to a directive, in the meaning of administrative case law, even if the Authority reserves the right to depart from the calculation method in certain circumstances and on adequate grounds.
A major change is the introduction of a two-way process regarding the setting of fines. The Authority’s investigatory services must now inform the undertaking or organisation concerned of the main legal and factual elements liable to impact on calculation of the fine, to enable them to respond. This information will be provided in the report or, if no report is made, at the latest in a note accompanying the statement of objections.
The Authority recalls the importance it attaches to compliance programmes as part of the effort to prevent breaches of competition rules. It announces the publication of a framework document in which it will set out the general principles applying to compliance programmes and of a procedural document on the question of commitments given in settlement procedures.
The basic amount of the fine
- Turnover in France
To determine the basic amount of the fine, the initial draft took into account the value of sales by the undertaking relating directly or indirectly to the breach and excluding value added tax (“VAT”) as well as other taxes. The value of sales is now defined as the value of all categories of products or services relating to the breach, that is, the turnover in France on the sale of the products or services in question. When the breach results from an agreement to limit sales on French territory, the Authority may also take into account sales made in the European Economic Area.
- Economic studies
The Authority specifies the value it ascribes to the economic studies produced by the parties. It thus commits to take them into account in measuring some aspects of the damage that may have been caused to the economy, provided they comply with certain conditions, and to include the results of its analysis of the studies in its decision.
The clarification of the fact ors taken into acc ount in individualising fines
The notice list examples of factors liable to be taken into account for individualising fines. It allows the Authority to increase or reduce the fine in order to take into account factors such as the “single-product” or “multi-product” nature of the undertaking, or its belonging to a large or economically powerful group.
The reduct ion of the time period for reiteration
In order to identify a reiteration of practices, the Authority examines whether there is a final decision identifying an identical or similar breach before the end of the new practice. It also takes into account the time that elapsed between the previous breach and the beginning of the new practice. If more than 15 years (not 20 years, as provided for in the initial draft) have gone by, the Authority will not oppose the reiteration. It has therefore not retained the 10-year prescription period suggested by several contributions to the public consultation. In return for this reduction in the period, the fine may now be increased for repetition by between 15 and 50%, rather than 5 to 50% as per the initial draft.
The Competition Authority will only take account of any reductions granted for leniency or settlement reasons after checking the statutory ceiling, so as to ensure the affected parties enjoy the effective benefit of the reductions.
Calling on association members
In relation to trade associations, the Authority examines whether or not the association has, beyond its immediately available resources, the possibility of calling on its members for the funds necessary to pay the fine.
Calls for tender
In the initial draft notice, the basic amount of the fine for practices implemented during calls for tender was supposed to be calculated by applying a coefficient determined according to the gravity of the facts and the importance of the damage to the economy to the calculation basis chosen by the Authority as relevant to the case in hand. The Authority will now use as its calculation basis the total turnover realised in France by the organisation or undertaking concerned or by the group it belongs to.