On 10 February 2012, France’s competition authority, the Autorité de la Concurrence (the “Authority”), published two sets of procedural guidelines on settlement of antitrust investigations. The first relates to settlement procedures generally whilst the second focuses on compliance programmes in the context of such settlement procedures. Together, these two documents provide useful guidance for companies on the potential benefits of settlement and of presenting remedies for compliance, including up to a 25% reduction in fines. Such a reduction may offer substantial benefits to companies, who may be fined up to 10% of their group worldwide turnover for infringing competition law.
Settlement of Antitrust Investigations
The objective of the settlement procedure is to allow a party under investigation to choose to cooperate with the Authority rather than challenging the allegations made against it. Parties may apply for the settlement procedure upon the receipt of a statement of objections relating to anti-competitive agreements or practices, or an abuse of a dominant position. Settlement reduces the time and expense incurred by the Authority in building a case against the infringing company, and therefore justifies a reduction of the fine imposed by contributing to the efficiency of competition regulation. If the company meets the settlement criteria included by the Authority in its latest guidelines, it may have its fine reduced by up to 10%. The European Commission’s equivalent settlement procedure offers the same reduction in penalty for participating companies.
To benefit from the offered reduction in penalties, the company’s contribution to the procedure must be genuine. This implies that the company must unreservedly agree not to challenge either the factual or legal arguments which will support the decision of the Authority. In other words, the company must clearly and unequivocally declare that it does not dispute the facts, that it accepts the legal qualification given to them by the Authority and that it concedes that they are attributable to the company in question.
If the company later challenges the allegations made against it, either in part or in whole, it will lose the benefits it would otherwise have been entitled to for settling the investigation. However, the company may still submit arguments on the assessment of amount of the fine. In particular, companies that settle can challenge the seriousness of the offences, the harm caused to the economy, the individual situation of the company and the effect of any recidivism.
Procedurally, the investigation is kept separate from the ultimate decision making process. This, however, inevitably introduces some uncertainty as the penalty is fixed by the ultimate decision making body, whereas settlement is negotiated beforehand with the Rapporteur Général presenting the case to the decision making body. Companies engaging in the settlement process are therefore not certain of the precise benefits they will receive. The Authority’s latest guidelines try to increase predictability in this respect: they are binding and the Authority must justify any deviation in its final decision with reference to the specific circumstances or public interest considerations of the case.
Where a company engages with the settlement procedure, it may also present remedies or undertakings to the Authority to resolve antitrust concerns, such as setting up an antitrust compliance programme, in order to receive further reductions in the applicable fine . The purpose of the compliance programme is to ensure full conformity with competition law rules, limit the risks in the event of non-compliance, and to react properly and promptly when an illegal practice is discovered. The Authority insists on the importance of all these elements and considers that only programmes which seek to both prevent infringements from being committed and to detect and handle infringements can be effective. An undertaking to set up a proper compliance programme will therefore justify an additional reduction in fine of up to 10% in the context of a settlement procedure.
The Authority states that no single one-size-fits-all compliance programme exists, but that programmes should be tailored to meet each company’s individual characteristics and needs in order to best deal with the competition risks it faces. In particular, a compliance programme should be tailored to the company’s size, activity and markets, organisation, governance and culture.
Nonetheless, the Authority highlights five conditions which it feels are indispensable for an effective compliance programme:
- the adoption of a clear, firm and public commitment to comply with competition law rules;
- a compliance officer;
- an effective information, training and awareness measure;
- an effective control, audit and whistle-blowing system; and an effective oversight system (notably to handle requests for advice, review infringement reports and study the course of action to be taken, and to include internal penalties such as disciplinary action).
The Authority recognises that small- or medium-sized enterprises may need to modify these conditions when creating their programme.
It is worth noting that the financial benefits of a compliance programme are not limited to remedies offered in a settlement procedure. If a company detects the existence of a cartel through a compliance programme, puts an end to all cartel activity and lodges an application for leniency, it will potentially be entitled to full immunity from fines or a reduction of its fine. However, it is important to note that the existence of a compliance programme by itself will not affect the assessment of the fine to be imposed: it will be neither a mitigating nor aggravating factor (although in any event the risk of individuals’ criminal liability should be borne in mind).
By combining a successful settlement with a satisfactory undertaking to establish an effective compliance programme, a party is potentially able to reduce a fine by up to 20%. However, this reduction can be further increased if the company presents further undertakings, such as amending infringing contractual clauses or modifying pricing grids. These additional undertakings can add another 5% to the fine reduction, thereby bringing the potential total fine reduction to 25%.
The French Authority’s positive view of compliance programmes differs markedly from the view of the European Commission whether connected or not to settlement procedures. The Commission has specifically stated that the existence of a compliance programme will under no circumstances result in mitigation of a fine or other preferential treatment for companies engaging in anti-competitive conduct, as if the company is under investigation then it is clear that the compliance policy has failed and therefore deserves no reward.
However, the Authority’s more lenient approach may encourage French companies to seriously consider the benefits of establishing a comprehensive compliance programme. More importantly, the purely financial benefits that result from compliance programmes in the event of an investigation should not overshadow the long-term importance of establishing an effective compliance programme, which is to prevent an infringement of competition law in the first place.