The enforcement of Article L.420-1 of the French Commercial Code and Article 101 TFEU, which prohibit anticompetitive practices and cartels, is one of the prime missions of the FCA. In 2018, the Authority issued four decisions sanctioning cartels, fining 18 undertakings for an aggregate amount of €205 million. These figures show a slight decrease compared to 2017 (seven cartel decisions, and one notable €302 million fine against PVC manufacturers) but are in line with the previous year (€203 million). In any case, the lesser number of cartel decisions should not be interpreted as a sign of diminished interest from the FCA, and tackling cartels remains one of its priorities when allocating resources: the Authority was also active on the investigation front this year and leniency applications reached a peak in France. The following cases are worth exploring.i Significant cases
The largest fine of the year was a cartel sanction, namely a €189 million fine handed down to six household appliance manufacturers, among the largest in the sector since they account for about 70 per cent of the sales of white goods in France. The FCA found that they had agreed on recommended retail prices, which increased the cost for distributors and ultimately affected consumers, hampering the otherwise downward trend of prices in the sector. All participants submitted settlement requests and consequently had their fines reduced; one had its fine lowered pursuant to its leniency application, with an additional reduction for active cooperation in the investigation. As is often the case, the Authority favoured settlement because all companies opted for it, but will sometimes not grant it where just one participant refuses to settle. The amounts were high despite settlement, which can be explained by the nature of the infringement – a secret cartel – but also by the fact that it affected consumer goods, meaning the Authority considers the damage to the economy to be much higher. Finally, the case is particularly noteworthy in that the FCA made use of the notion of single, repeated infringement for the first time. As participation to the cartel had been interrupted for a year and a half, the infringement was not continuous; nonetheless, since the practices before and after the interruption were similar and followed the same objective, the infringement was single and repeated. In such cases, the period of interruption cannot be taken into account for the calculation of the fine; however the fact that the enforcer considers the infraction to be single and repeated can be crucial with regard to the limitation period, since the Authority will be able to catch and sanction much older practices than it would have if they had been regarded as two separate infringements.
In another notable case this year, the FCA fined 11 wholesale distributors of veterinary products as well as their professional organisation for a total of €16 million. It found that the three biggest companies of the sector had entered into non-aggression pacts. In addition, all distributors and their organisation had taken advantage of the bluetongue health crisis and the mandatory vaccination campaigns that followed by agreeing on cost levels they submitted to the government to maximise their compensation and on the prices they charged veterinarians for vaccines.
The FCA also looked into bid-rigging practices among companies offering security services for tobacco shops. Following a DGCCRF investigation, several companies were found to have submitted cover quotes, but the FCA only fined one since other participants had agreed to the settlement procedure offered by the DGCCRF. The case goes to show how it has become quite common for the DGCCRF to bring cases to the attention of the FCA, pursuant to Article L.464-9 of the French Commercial Code, which allows for referrals from the DGCCRF to the Authority. In 2018, four of the 13 sanction decisions issued by the FCA resulted from referrals by the DGCCRF after companies refused to settle before it.
As regards judicial appeals, the Court of Appeal of Paris (CAP) issued its ruling on the Welded Mesh cartel of Réunion. In 2016, the Authority had fined four construction companies and two logistics companies €5 million for taking part in a cartel on the markets of welded mesh and metal frames. The CAP confirmed the bulk of the decision, with a slight alteration as to fines. The Authority had applied the aggravating circumstance of belonging to a large group to two participants, and therefore equally increased their fines by 15 per cent. The Court ruled that the assessment of this circumstance should not only take into account the individual situation of an undertaking, but also compare it to other participants. In the case at hand, although both companies did belong to a large group, one of them was much larger than the other. It followed that the FCA should have increased their sanction by different proportions instead of using the same rate. The CAP therefore diminished the fine increase of one of them from 15 per cent to 7 per cent.ii Trends, developments and strategiesNew procedural notice on settlement procedure
The FCA issued its procedural notice on the settlement procedure in December 2018. The French settlement procedure was created in 2015, replacing the 'no contest of objections' procedure. Pursuant to Article L.464-2, III of the French Commercial Code, an undertaking that does not dispute the reality of the objections notified to it can be offered a settlement proposal at the discretion of the FCA, which sets out a minimum and maximum amount for the fine that could possibly ensue. The new notice provides guidance as to the conditions of eligibility and the conduct of proceedings before the investigation services. It specifies that no document transmitted by the parties during the settlement procedure will be included in the investigation file, even in the event that it does not result in a successful settlement; in addition, where the settlement negotiations are in fact successful, the report cannot be disclosed to other parties to the procedure nor to third parties.Leniency applications from cartel participants
The head of the FCA's investigation services noticed a surge in leniency applications in cartel proceedings this year. Only one company had reportedly applied in 2017, but that number jumped to seven in 2018. The trend could be explained by the increasing number of small and medium-sized companies applying for leniency, whereas the procedure had only previously seemed to attract larger groups. In addition, the rapporteur noted that applications increasingly came from French companies, indicating the development of a compliance culture in France.iii Outlook
The FCA's investigation services were particularly active this year and opened investigations into several key sectors. Some of the most notable probes made public this year could lead to important cases in the years to come. In January, unannounced inspections were carried out in the local subsidiaries of several companies working in the sector of production, import and distribution of tobacco products in January; however, the FCA has since dropped the investigation. In March, the investigation services of the FCA carried out dawn raids in the cosmetics distribution sector, in a joint operation with the investigation and prosecution services of the Belgian authority. Finally, the offices of companies in engineering and technology consulting, IT services and software publishing were probed in November, and several luxury watch retailers were raided in January 2019.