€1.25 billion in fines, 20 decisions, 19 opinions: 2015 was undeniably a busy year on the antitrust front for the French Competition Authority (FCA).  We look back below at one year of antitrust enforcement in France, focusing on eight key trends.

  1. Cartel Fines Rise to Record Level

The FCA hit hard in 2015.  It imposed €1.25 billion in fines on 66 companies, a 20 percent increase from its previous record in 2014, which can be explained by:

  • The sheer size of some of the cases;
  • The FCA’s substantial changes to its methodology for calculating fines in 2011, which has resulted in substantially increased fines — despite the FCA’s affirmations to the contrary.

This trend toward increased fines was nevertheless contained, thanks to two phenomena:

  • Given the challenging economic environment, the FCA took greater account of companies’ inability to pay than previously. For instance, in the parcel delivery case, which was the biggest case of the year in terms of fines (€672 million), the FCA reduced the fines of six of the 20 companies by 90 percent, on the basis of their inability to pay;
  • Despite the FCA’s wide discretion when setting fines, the Paris Court of Appeal and the French Supreme Court did exercise control over the methodology for the calculation of fines. In the photovoltaic solar power case, the Paris Court of Appeal recalled that the FCA’s power to increase the fine in case of recidivism is subject to the existence of a close link between the two cases at stake. It also confirmed the case law of the French Supreme Court in the restoration of historic monuments case: Affiliation to a large group shall not result in an automatic increase of the fine.
  1. Cartel Enforcement: Focus on the Food Industry

In 2015, the FCA issued four cartel decisions, three of which concerned the food industry.  In March, the FCA imposed a €192.7 million fine on 10 dairy producers who had engaged in anti-competitive agreements on private label dairy products.  Two weeks later, it issued another decision in the bakery flour sector.  The penalty was, however, significantly less (€1.1 million on three millers only), because the investigation services of the FCA had a weak case.  Finally, in May, the FCA dealt with practices in the poultry sector.  In view of the severe crisis hitting this sector and industry’s innovative collective commitment to establish an interbranch organization aimed at saving the sector, the FCA showed mercy and decided to substantially depart from its usual method for establishing fines.  As a result, it imposed very moderate fines on these companies (€15.2 million for 21 manufacturers).

All of these cases have a common feature: The companies fined were all under very strong price pressure, both upstream due to record increases in the price of raw materials and downstream from very powerful supermarkets.  These circumstances were specifically taken into account in the poultry case, in which the FCA “flirted” with the concept of crisis cartel.

  1. The FCA Reinforces its Leniency Program Through the Adoption of New Guidelines

The French leniency program confirmed its effectiveness as the principal tool for revealing cartels in France.  Leniency applications triggered three out of the four cartel cases adjudicated by the FCA in 2015 (dairy products, bakery flour and parcel delivery).  These three cases account for 70 percent of the total amount of fines imposed in 2015 and 98 percent of the fines imposed in cartel cases.

Despite these figures, the overall volume of leniency applications in France is still considered insufficient.  Therefore, in order to enhance the attractiveness of the program, the FCA reviewed its leniency guidelines in April 2015.  Key new features of these guidelines include:

  • Clarification of the role of the leniency adviser, who is the program’s gatekeeper;
  • Adoption of rate ranges for fine reductions depending on the order of arrival of the applicant. This measure is intended to increase transparency on the benefits of cooperation;
  • Publication of a press release after each dawn raid, in order to ensure all businesses in the affected sector have equal access to leniency;
  • The extension of the program to “hub-and-spoke” practices, which consist of indirect exchanges of information through a common trading partner (for instance, a supplier).
  1. Introduction of a New Settlement Procedure

The Macron law, which introduces a number of innovative provisions into French competition law, replaces the former “no challenge” procedure (“non-contestation des griefs”) with a brand new settlement procedure.

Under the new procedure, once the FCA sends a statement of objections to an undertaking, the latter may decide not to challenge the FCA’s objection (and possibly offer commitments to modify its behavior).  In return for this cooperation, the FCA’s investigation services may make a settlement offer setting a minimum and maximum amount of fine — as opposed to a mere percentage of reduction of the (unknown) final fine, as in the former “no challenge” procedure.  If the undertaking accepts this offer, the College of the FCA, i.e. the FCA’s decisional body may either: (1) set a fine within the limits established in the settlement offer, or (2) send the case back to the investigation services, for the application of the “normal” procedure.

The aim of the reform is twofold: (1) increase transparency for businesses and (2) reduce the risk of appeals for the FCA. More precisely:

  • When taking the strategic decision to settle, undertakings will now be able to better evaluate the benefit of a settlement with the FCA since the settlement agreement will specify the range of a possible fine.  This is a significant improvement to the previous procedure, under which companies negotiated a mere reduction rate but had no visibility on the amount of the fine.
  • This increased transparency will enable the FCA to better manage the companies’ expectations.  This should result in fewer appeals before the Paris Court of Appeal.
  1. Abuse of Dominance: Record Fine for Orange

Up until December, the FCA’s enforcement activity in the field of abuses of dominance remained quite low, with only three rather unremarkable decisions being issued, for a total amount of fines of only €20 million.

But the FCA hit hard at the end of the year, with a fourth decision imposing its highest fine ever on an individual company for abusive practices.  On Dec. 17, the FCA fined Orange €350 million for a number of abusive practices (discrimination, exclusivity, loyalty rebates) on the markets for fixed and mobile telecommunications services provided to business clientele.  Interestingly, the FCA noted in its decision that the fine-setting process was conducted “in accordance with the spirit of the upcoming settlement procedure, created by the Macron law.”

  1. Increased Regulatory Powers for the FCA

The enactment of the Macron law in August 2015 also marks a new step toward increased regulatory powers for the FCA.

First, the law entrusts the FCA with the mission of producing opinions on compulsory tariffs for legal professions (legal auctioneers, commercial courts clerks, court bailiffs, insolvency administrators and notaries).  The FCA announced the creation in 2016 of a dedicated service to deal with this mission.

Second, the law takes on board a number of proposals formulated by the FCA in a number of recent opinions.  The list of proposals turned into law includes:

  • A legal duty to inform the FCA before the conclusion of a joint purchasing agreement between supermarkets (which the FCA had already suggested in an opinion published in March 2015);
  • The liberalization of the market for long-distance coach transport (which the FCA recommended in an opinion dated Feb. 27, 2014).
  1. A Busy Year on the International Front

2015 was also marked by a novel cooperation initiative among national competition authorities and the European Commission in the Booking.com case.  On April 21, 2015, the FCA issued the first decision adopted in coordination with two other national competition authorities (the Italian and the Swedish authorities), under the patronage of the European Commission.  This decision, which follows the EC’s refusal to deal with the case, renders legally binding in the three aforementioned jurisdictions the commitments Booking.com offered.  This is a unique example of cooperation among European competition authorities — even though certain national competition authorities, including the German Federal Cartel Office, have not followed the initiative, thus reducing its impact at EU-wide level.

The FCA is also currently working with the German regulator on a joint initiative on “big data.”  The study should be published at the beginning of 2016, and will focus on the relationship between competition law and data in a digital environment.  In addition, the FCA also undertook a joint investigation against Adidas with the German regulator.  Both authorities eventually closed their respective investigations, following Adidas’ commitment to withdraw from its contracts any clause prohibiting its distributors from using online marketplaces.

  1. Upcoming Implementation of the “Damages” Directive and Jurisdictional Clarifications on Follow-on Actions

The deadline for the implementation of Directive 2014/104 harmonizing the rules that govern actions for damages for infringements of competition law is Dec. 27, 2016.  Meanwhile, the case law has made a number of clarifications regarding follow-on actions under French law. 

The Conflict Court (Tribunal des Conflits) has ruled that follow-on actions against companies involved in public bid rigging should be dealt with by administrative courts.  The French Supreme Court applied the CDC case law of the European Court of Justice and confirmed that, unless expressly stipulated, a jurisdiction clause does not cover disputes relating to an action for damages arising from a cartel.  Finally, the Paris Commercial Court awarded €350,000 in damages to the company DKT, on the basis of a commitment decision of the FCA.  This case confirms — unsurprisingly — that, although they do not contain any formal admission of infringement, commitment decisions do not provide immunity from private actions.

Antitrust Enforcement Outlook for 2016

  • The food sector will remain high on the agenda in 2016:
    • The FCA should inter alia continue its ongoing investigation in the processed fruit sector;
    • The EU Court of Justice will issue its judgment in the French endive case, which is a reference for a preliminary ruling from the French Supreme Court.  The judgment will address the issue of whether the EU common agricultural policy enables companies to depart from EU competition law;
    • Finally, further to a highly controversial wave of joint purchasing agreements between French supermarkets in 2015, the FCA will review the creation of a common purchasing entity between Auchan and Systeme U.
  • The health sector is unlikely to be spared in 2016.  The FCA will pursue several investigations in the dental, optical and pharmaceutical sectors.  In addition, it recently announced that it would publish an opinion on the hearing aid sector at the end of 2016.
  • The first settlement cases are anticipated.  The new settlement procedure applies to all cases where the objections were sent after Aug. 7, 2015.  The first settlement decisions shall therefore be adopted in the course of 2016.  The FCA already announced that it will publish settlement guidelines at the end of 2016.
  • The responses to the EC’s consultation on empowering national competition authorities to be more effective enforcers are due.  Even though the FCA does not appear to be a prime target of the consultation – as it is a rather mature enforcer with a sophisticated set of procedures and it enjoys wide powers – the consultation may lead to interesting developments, which will be worth following in 2016.

Takeaway for Companies Doing Business in France

While the European Commission is certainly the most visible competition law enforcer in Europe, most of the enforcement is actually carried out by the national agencies.  In that respect, the French regulator has grown to become one of the most sophisticated national competition authorities in Europe and does not shy away from going after foreign companies.  Many international groups have already learned it the hard way, including for instance recently (1) DHL (Germany) and TNT (Netherlands), in the parcel delivery case in December 2015, or (2) Procter & Gamble Co. (US), Henkel (Germany) and Reckitt Benckiser (UK) in the home and personal care product cartel in late 2014.  This increased operational risk calls for an adjustment in compliance and detection efforts.  In this respect, the use of targeted risk mapping exercises and internal audits (including in a post-acquisition context) have proved to be very efficient tools to stay ahead of the game.