Last week the French Competition Authority (FCA) got in its “end-of-year mood” as it handed down three major fines in two days: two cartels fines to meal voucher issuers (€415 million) and stewed fruit makers (€58 million) on 18 December and a fine for abuse of dominance to Google (€150 million) on 20 December taking once again a very hard stance when it comes to competition law infringements.
There is no free lunch!
The FCA imposed a total fine of approx. €415 million to the four historic French meal voucher issuers representing close to 100% of the market together and to the Centrale de Règlement des Titres (CRT) which processes and reimburses meal vouchers to their customers on their behalf.
The investigation started with complaints made by several market players and ended with a record fine for two sets of practices:
- monthly exchanges of confidential commercial information (market shares data) via the CRT between 2010 and 2015;
- several agreements between 2002 and 2018 aiming at (i) restricting the access to the meal voucher market by new players by adopting non-objective and non-transparent CRT membership conditions and (ii) preventing the dematerialisation of meal vouchers outside the CRT.
The FCA highlighted the concentrated nature of the sector and the duration of the practices (18 years) and insisted on the fact that the practices at stake allegedly deprived companies and employees of the benefits associated with digital innovation.
A quite indigestible fine one might find, which explains why all issuers have already announced they would challenge the fine before the Paris Court of Appeal.
Tempting fruits... Forbidden fruits…
The FCA also fined seven stewed fruit makers for a total of €58 million for price fixing and market sharing practices. As often, the cartel was brought to the attention of the FCA in 2014 following a leniency application which was then followed by a dawn raid in 2015. The FCA cooperated closely with the Dutch competition authority (ACM) (the leniency applicant was a Dutch company).
The practices, national in scope, lasted from October 2010 to January 2014 and concerned consumer products (stewed in cups and flasks). The seven companies represented almost the entire market for stewed fruit sold private label brands (90%) and to the out-of-home catering channel (100%). The practices at stake covered:
- agreement to increase prices and coordination regarding the level of price increase;
- definition of a common justification for such price increases;
- allocation of volumes and customers;
- ensuring compliance with the cartel rules and implementing of a compensation mechanism for companies losing sales volumes.
These practices concerned private label products sold to large retailers as well as products sold to out-of-home specialised distributors. According to the FCA, the cartel prevented the latter from obtaining the best prices during tenders.
The functioning of the cartel was secret and rather sophisticated with certain individuals using dedicated phones or their private mail boxes. Secret meetings would take place in hotels or restaurants.
In terms of fining policy, it is worth mentioning that the FCA increased one participant’s fine for having played an active role in the cartel organisation (in-between role, drafting of cartel documents, meetings logistic) and also took into account the fact that certain undertakings were controlled by large groups (up to 65% increase). However, the FCA also decreased another participant’s fine for having been the maverick during the first two years of the cartel.
Despite a rather low cartel enforcement during the rest of 2019 year, those two major fines show that the FCA remains very active in enforcing anticompetitive practices. This also is a signal that the antitrust risk for large groups is very high with the FCA systematically holding parent companies jointly and severally liable for the practices of their wholly owned subsidiaries and increasing the level of fine to take into account the financial capacities of such groups.
Christmas day for Google Ads’ users?
On 20 December, the FCA also fined Google for a total of €150 million for abuse of dominant position on the search advertising market.
Following the suspension without notice of its Google Ads account, in 2015 an advertiser referred the matter to the FCA launching a request for interim measures and a complaint for anti-competitive practices. While rejecting the request for interim measures on the grounds that the conditions of urgency were not met, the FCA continued to investigate the merits of the case. Interestingly, 2019 was marked by a second interim measures case launched against Google by an advertiser. However, in this case the FCA did impose interim measures on Google asking the latter to make Google Ads’ commercial terms more transparent (referencing payment terms and conditions for suspending accounts) (January 2019, see here).
As a quick reminder, a web user on Google search obtains two types of results: (i) On-line web-wide algorithmic results and (ii) Advertising results. The Google Ads platform is governed by rules defined by Google, which specify the conditions under which an advertiser can broadcast advertising. To be able to open an account, each advertiser must agree to comply with Google terms and conditions and must comply with it on a daily basis at the risk of having their account suspended.
According to the FCA, Google regulates its platform at its best interest through non-objective, non-transparent and discriminatory rules:
- The rules are vague: there is no clear definition, which gives Google the flexibility to interpret them depending on the situation.
- Google has frequently changed its way to interpret the rules. This instability keeps advertisers in a state of legal and economic uncertainty, as they are exposed to changes in Google's position, which may result in unexpected suspension of their accounts.
- The content of the rules has changed several times without notice to the advertisers leading to suspension of accounts.
- The rules are applied in a discriminatory manner. Several websites have been suspended while others with similar content were not.
In light of its dominant position, the FCA considered that Google must define objectives, transparent and non-discriminatory rules.
That’s the reason why, on top of the €150 million fine, the FCA imposed injunctions on Google requesting it to clarify the rules of its advertising platform Google Ads and the procedures for suspending accounts. Google will also have to implement measures to prevent, detect and deal with breaches of the Google Ads rules. Finally, the summary of the decision should be accessible via the homepage of the search engine Google.com and Google.com for a period of one week.
The interim measure decision of January 2019 against Google was a strong signal from the FCA that it would investigate further Google Ads’ practices. That’s now done and Google is expecting another one in March concerning an alleged breach of the EU Copyright Directive (see here). There are strong grounds to believe that the FCA will boost its enforcement in the digital sector in 2020, following the consensus reached in 2019 by the G7 competition authorities and the Commission concerning the competition issues raised by the digital economy. The FCA has developed a strong knowledge of these topics through a number of opinions and reports over the last few years (incl. big data, online advertisement, algorithms).