Restraints of trade and dominance in France: overview

A Q&A guide to restraints of trade and dominance in France.

The Q&A gives a succinct overview of restraints of trade, monopolies and abuses of market power in France. In particular, it covers the regulatory authorities and the regulatory framework, the scope of rules, exemptions, exclusions, statutes of limitation, notification, investigations, penalties and enforcement, third party damages claims, EU law, joint ventures and proposals for reform.

For information on merger control, regulatory framework and regulatory authorities, relevant triggering events and thresholds in France, visit Merger control in France: overview.

This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Restraints of Trade and Dominance Q&As visit www.practicallaw.com/restraintsoftrade-guide. For a full list of jurisdictional Merger Control Q&As visit www.practicallaw.com/mergercontrol-guide.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-guide.

Alain L Vincent and Cyrille Gaucher, Hughes Hubbard & Reed LLP
Contents

Restraints of trade

Scope of rules

1. Are restrictive agreements and practices regulated? If so, what are the substantive provisions and regulatory authority?

Regulatory framework

Restrictive agreements and practices are prohibited under the French Commercial Code (FCC), if their purpose is to prevent, restrict or distort competition in a relevant market (or if the agreements or practices could have such an effect) (Article L420-1 and following, FCC). This prohibition can result in an administrative fine, criminal liability and civil damages.

This prohibition applies in particular to written or tacit agreements, and concerted practices, which:

  • Restrict access to a market or other undertakings' freedom to compete.

  • Prevent the determination of prices through market self-regulation by influencing variations in these prices.

  • Restrict or control production, sales, investment or technical progress.

  • Partition markets or sources of supply.

Regulatory authority

The French Competition Authority (FCA) has overall jurisdiction over the regulation of restrictive agreements and practices. However, the Ministry for Economy has parallel jurisdiction over local restrictive agreements and practices that are below certain thresholds.

Criminal, civil and administrative courts can enforce the FCC's provisions. However, unlike the FCA or the Ministry for Economy, they cannot impose administrative fines (but only, mainly, criminal penalties or damages).

The FCC also prohibits a number of unilateral restrictive practices (Article L442-6, FCC), such as engaging in fictitious commercial co-operation and imposing unjustified terms and conditions. These do not fall within the FCA's jurisdiction, but within the civil courts' jurisdiction (with possible intervention of the Ministry for Economy).

See box, The regulatory authority.

 
2. Do the regulations only apply to formal agreements or can they apply to informal practices?

These regulations apply to agreements (written or oral) and to informal practices, provided that these agreements or practices are the result of a wilful intent to distort competition.

 

Exemptions

3. Are there any exemptions? If so, what are the criteria for individual exemption and any applicable block exemptions?

Under the Commercial Code (FCC), The prohibition on a restrictive agreement or practice can be lifted if the agreement or practice either (Article L420-4, FCC):

  • Results from a legal requirement.

  • Contributes to economic progress, provides substantial benefits to consumers and does not give the undertakings concerned the ability to eliminate competition. This exemption is not widely used in France as it requires an in-depth analysis of the conditions to be met.

The Competition Authority (FCA) uses the EU Block Exemption Regulations as a guideline for determining whether there is a prohibited restrictive agreement or practice.

 

Exclusions and statutes of limitation

4. Are there any exclusions? Are there statutes of limitation associated with restrictive agreements and practices?

Exclusions

The Commercial Code (FCC) provides for a de minimis rule. The prohibition of an agreement or practice does not apply if the aggregate market share of the undertakings that are party to the restrictive agreement or practice does not exceed either:

  • 10% for any affected market in which the parties are actual or potential competitors.

  • 15% for any affected market in which the parties are not actual or potential competitors.

However, the de minimis rule does not apply if the restrictive agreement or practice is in the context of a public tender process or if it contains a hardcore restriction. The FCC contains a non-exhaustive list of hardcore restrictions, such as price fixing, partition of the market or restrictions on passive sales (Article L464-6-2, FCC).

Statutes of limitation

The Competition Authority (FCA) cannot act in relation to facts that are more than five years old if no investigation has been instigated during that five-year period (FCC). The FCA can no longer act at all on a restrictive agreement or practice if the facts investigated are more than ten years old.

The statute of limitation is three years for criminal proceedings and five years for civil proceedings.

An investigation by the European Commission or another member state will also suspend the statute of limitations.

 

Notification

5. What are the notification requirements for restrictive agreements and practices?

Notification

No notification is required. The parties are responsible for determining whether the restrictive agreement or practice is prohibited, is exempted or falls under the de minimis rule.

Informal guidance/opinion

It is not possible to obtain informal guidance from the Competition Authority (FCA). However, according to a European Commission notice on informal guidance (2004), it is possible to ask the European Commission for informal information relating to novel questions (guidance letters), which are intended to help companies carry out themselves an informed assessment of their agreements and practices. These guidance letters are not Commission decisions and do not bind European Competition Authorities. However, European Competition Authorities can take into account guidance letters issued by the Commission in their assessment of a case.

Responsibility for notification

See above, Notification.

Relevant authority

See above, Notification.

Form of notification

See above, Notification.

Filing fee

See above, Notification.

 

Investigations

6. Who can start an investigation into a restrictive agreement or practice?

Regulators

The Competition Authority (FCA) can start an investigation at the request of the Minister for Economy or on its own initiative, if either:

  • A complaint of a third party is not sufficiently supported by evidence to trigger an investigation but nevertheless requires further enquiries.

  • A complaint of a third party reveals competition issues in a different market than the one that the complaint concerns.

  • It considers that it is in the general interest to start an investigation despite the absence of a complaint.

The Ministry for Economy can also start an inquiry on its own initiative, provided that both:

  • The investigation concerns local businesses below certain thresholds.

  • It informs the FCA, and the FCA decides not to pursue this matter itself.

Third parties

Third parties (companies or professional organisations, or individuals) can instigate an investigation by lodging a complaint with the FCA or the Ministry of Economy's Directorate General for Competition, Consumers and the Prevention of Fraud (DGCCRF).

A complaint to the FCA must follow formal rules and contain, as a minimum:

  • A reference to the legal provision that forms the basis of the complaint.

  • A description of the facts revealing the restrictive agreement or practice.

  • Identification of the parties involved.

If the FCA rejects a complaint, the decision can be appealed before the Paris Court of Appeal.

 
7. What rights (if any) does a complainant or other third party have to make representations, access documents or be heard during the course of an investigation?

Representations

The complainant and the other parties involved cannot make any representation during the Competition Authority's (FCA) initial inquiry. Once the FCA gives notice to the complainant and the other parties involved of the conclusions of its inquiry (griefs), the parties have two months to consult the file and respond to the FCA's conclusions.

Document access

The complainant and the other parties involved can access the file only after the FCA has given them notice of its conclusions.

Be heard

The complainant and the other parties involved do not have a right to be heard, although the FCA can hear them during the initial inquiry. All oral depositions must be followed by a written transcript signed by the person heard.

The complainant and the other parties involved can also be heard at their request during the FCA's deliberations (decision stage).

 
8. What are the stages of the investigation and timetable?

There is no timetable for an investigation. On average, investigations last about two years, but complicated cases last considerably longer.

The stages of the investigation are:

  • The Competition Authority (FCA) examines the complaint (if any) and decides whether to pursue the investigation.

  • The FCA makes its investigation.

  • The FCA notifies its conclusions. If the FCA concludes that there is no restrictive agreement or practice, it will call for the investigation to be dropped. If the FCA finds that there is a restrictive agreement or practice, it will notify its findings (griefs).

  • The interested parties have two months to consult the file and present observations.

  • The FCA then issues a report containing an analysis of the facts and the restrictive agreement or practice.

  • The interested parties then have a further two months to produce a response.

  • The FCA then convenes to deliberate in private (but interested parties can be present) and take a decision (that is, sanction or dismiss the case, or suspend its decision pending further investigations).

  • The FCA's decision can be appealed before the Paris Court of Appeal within one month (although a decision to suspend cannot be appealed).

  • The FCA can also use a simplified procedure that does not require the FCA to issue a report (see above).

 

Publicity and confidentiality

9. How much information is made publicly available concerning investigations into potentially restrictive agreements or practices? Is any information made automatically confidential and is confidentiality available on request?

Publicity

The Competition Authority's (FCA) decision is published on its website. However, the procedure before reaching a decision is not publicised and is kept confidential. It is a criminal offence to breach an investigation's confidentiality.

Automatic confidentiality

No information is automatically kept confidential.

Confidentiality on request

An investigated party can request confidential treatment of sensitive trade or business information, provided that the non-disclosure of this confidential information does not weaken the defence rights of the other investigated parties. If the FCA decides to grant confidential treatment, it provides the other investigated parties with a redacted version of the information and a summary of the evidence produced by the investigated party.

 
10. What are the powers (if any) that the relevant regulator has to investigate potentially restrictive agreements or practices?

Only authorised public servants from the Ministry for Economy and authorised public servants of the Competition Authority (FCA) can investigate restrictive agreements or practices. Investigative powers vary according to the type of investigations carried out:

  • Simple investigation (without court supervision). Investigators can only:

    • enter premises, land and vehicles used professionally between 8.00 am and 8.00 pm;

    • enter the same premises at any time when they are open to the public or when there are on-going production, manufacturing, packaging or commercialisation activities within them;

    • enter the same premises when they are of residential use between 8.00 am and 8.00 pm, provided that the owner gave his consent or if not, that the investigation has been authorised by an order of the judge (juge des libertés et de la détention);

    • request books, invoices or any other professional documents;

    • make copies of these documents;

    • have access to software and electronic stored data;

    • obtain further information and explanations from employees at their workplace;

    • verify the identity of the person being controlled;

    • be assisted by any authorised and qualified person.

  • Investigation under court supervision. These investigations are only possible if they have been instigated by the Minister for Economy or by the rapporteur general of the FCA. They must be authorised by an order of the judge (juge des libertés et de la détention).

    The investigators have extended powers. They can search, seal and seize documents and hardware (for example, hard drives and CD ROMs) at professional and private premises. Any "dawn raids" must start between 6.00 am and 9.00 pm (they can continue after 9.00 pm), and must be conducted in the presence of police. Legal counsel can assist their clients during a dawn raid.

    Investigators must record in minutes all the steps taken during the investigation and list all documents and hardware seized. These minutes must be signed by the investigators, the police and the investigated party's representative.

 

Settlements

11. Can the parties reach settlements with regulators to bring an early resolution to an investigation? If so, what are the circumstances for doing so and the applicable procedure?

The settlement procedure allows companies to voluntarily admit competitive infringements notified by the Competition Authority (FCA) and take commitments (structural, behavioural or of compliance), in return for a reduction from 10% to 25% of the financial penalty.

The company undertakes in clear, precise and unconditional terms not to challenge the reality of the challenged practices, legal qualification and its accountability.

When the FCA notifies the infringements, the company has a period of two months from the notification to request a settlement procedure.

 
12. Can the regulator accept remedies (commitments) from the parties to address competition concerns without reaching an infringement decision? If so, what are the circumstances for doing so and the applicable procedure?

The Competition Authority (FCA) can accept commitments from investigated parties to end restrictive agreements or practices. An acceptance binds the committing parties.

On 2 March 2009, the FCA published guidelines that set out its practice regarding its decisions relating to commitments. The FCA will not accept commitments in the case of serious infringements that damage the economy. This is particularly the case for cartels. The FCA usually accepts commitments if the competition issues can be remedied easily (for example, in the case of unilateral or vertical practices that aim to restrict access to the market). Cases must not involve practices whose nature and effect are very serious and require financial penalties or practices that have already damaged the economy.

The FCA first forms its preliminary views on the restrictive agreement or practice and communicates this to the investigated parties. The investigated parties must then indicate if they wish to present commitments and the FCA gives them at least one month to do so. The FCA conducts a market test to verify that the commitments are sufficient and necessary to remedy the infringement.

 

Penalties and enforcement

13. What are the regulator's enforcement powers in relation to a prohibited restrictive agreement or practice?

Orders

The Competition Authority (FCA) can order the parties to either:

  • Cease the restrictive agreement or practice.

  • Change the restrictive agreement or practice by amending the agreement.

The FCA can impose a daily fine until the parties comply with its order.

Fines

The FCA can fine any investigated party a maximum of 10% of its highest annual worldwide pre-tax turnover since the financial year preceding that during which the prohibited practice took place. If the investigated party is not a company, the fine is limited to EUR3 million. If the FCA uses the simplified investigation procedure, the fine is limited to a maximum of EUR750,000.

On 16 May 2011, the FCA published a notice on the method used to calculate fines (Notice on the Setting of Financial Penalties).

Personal liability

Individuals who take an active part in a prohibited restrictive agreement or practice can incur criminal liability. The following penalties apply:

  • Up to four years' imprisonment.

  • A fine of up to EUR75,000.

Immunity/leniency

A fine can be reduced or extinguished if the information provided to the FCA by a party helped establish both the:

  • Existence of the restrictive agreement or practice.

  • Identity of the participants.

On 2 March 2009, the FCA published guidelines relating to its leniency programme (Procedural notice relating to the French Leniency Programme issued on 2 March 2009). It was revised on 3 April 2015.

Impact on agreements

Agreements or contractual provisions that are held to be restrictive are void. The FCA does not have jurisdiction on this aspect. The parties can raise issues relating to the nullity of the agreement or the specific provision before the commercial court, as the FCA does not have jurisdiction over this matter. In practice, the entire agreement is void if the restrictive provision is essential to the agreement as a whole.

 

Third party damages claims and appeals

14. Can third parties claim damages for losses suffered as a result of a prohibited restrictive agreement or practice? If so, what special procedures or rules (if any) apply? Are collective/class actions possible?

Third party damages

Third parties can claim damages due to a competition law infringement. Claims are based on general tort or contract law, depending on the facts.

Special procedures/rules

A judicial action for damages based on a restrictive agreement or practice must be brought before one of the eight civil or commercial courts that have specific jurisdiction over these matters.

Collective/class actions

The law related to consumption known as (Loi Hamon, 17 March 2014) introduced class actions into French law. Class actions can be brought before a civil court in the event of harm resulting from anti-competitive practices.

Bringing class actions is reserved to approved consumer protection associations recognised at national level.

Class actions are connected to public action (follow-on system). In other words, class actions can only be initiated on the basis of a decision by domestic or European authorities or jurisdictions that have established anti-competitive practices.

Class actions can be brought within five years from the date of the Competition Authority's (FCA) decision or the date of approval of the decision.

 
15. Is there a right of appeal against any decision of the regulator? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties, or only to the parties to the agreement or practice?

Rights of appeal and procedure

The investigated parties or the Minister for Economy can appeal a Competition Authority (FCA) decision before the Paris Court of Appeal, within a month of the notification of the decision. The appeal does not suspend the effect of the decision unless the first president of the Court of Appeal decides that it does.

The investigated parties can appeal interim measures decided by the FCA before the Paris Court of Appeal, within ten days of the notification of the measures. The Paris Court of Appeal has one month to rule on the appeal.

The investigated parties, the president of the FCA or the Minister for Economy can appeal a decision of the Paris Court of Appeal before the French Supreme Court, within one month of the notification of the decision.

Third party rights of appeal

Third parties cannot appeal against the FCA's decisions.

 

Monopolies and abuses of market power

Scope of rules

16. Are monopolies and abuses of market power regulated under administrative and/or criminal law? If so, what are the substantive provisions and regulatory authority?

Regulatory framework

Monopolies and abuses of market power are regulated under the Commercial Code (CC), which prohibits both (Article L420-2, CC):

  • Abusive exploitation of a dominant position by one or more undertakings.

  • Abuse of economic dependency of a client or a supplier.

The CC also prohibits abusively low prices that evict competitors from the market or prevent access to the market (Article L420-5, CC).

Regulatory authority

The Competition Authority (FCA) has (non-exclusive) jurisdiction over these matters.

 
17. How is dominance/market power determined?

French law does not define the concept of dominance. The method for determining dominance is very similar to that used at EU level. It involves a determination of the relevant market and the market shares of competitors, and other factors that cause dominance, for example entry barriers.

 
18. Are there any broad categories of behaviour that may constitute abusive conduct?

The following types of behaviour are abusive (Commercial Code):

  • Refusal to sell.

  • Tying sales.

  • Discrimination in applying conditions of sale.

  • Termination of a commercial relationship because the other party does not accept unjustified conditions.

 

Exemptions and exclusions

19. Are there any exemptions or exclusions?

In theory, abuses of dominant position can be exempted on an individual basis (see Question 3). In practice, this is extremely rare as an abuse is, by definition, difficult to justify.

 

Notification

20. Is it necessary (or, if not necessary, possible/advisable) to notify the conduct to obtain clearance or (formal or informal) guidance from the regulator? If so, what is the applicable procedure?

It is not possible to notify.

 

Investigations

21. What (if any) procedural differences are there between investigations into monopolies and abuses of market power and investigations into restrictive agreements and practices?

See Questions 6 to 9 and Question 11.

 
22. What are the regulator's powers of investigation?
 

Penalties and enforcement

23. What are the penalties for abuse of market power and what orders can the regulator make?
 

Third party damages claims

24. Can third parties claim damages for losses suffered as a result of abuse of market power? If so, what special procedures or rules (if any) apply? Are collective/class actions possible?

Third party damages

See Question 14.

Special procedures/rules

See Question 14.

Collective/class actions

See Question 14.

 

EU law

25. Are there any differences between the powers of the national regulatory authority(ies) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law?

There are no material differences between the powers of the Competition Authority (FCA) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law.

 

Joint ventures

26. How are joint ventures analysed under competition law?

Joint ventures are specifically analysed under the merger control rules.

 

Inter-agency co-operation

27. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to infringements of competition law? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information)?

The Competition Authority (FCA) must co-operate with the European Commission and other EU national competition authorities in Europe.

 

Recent cases

28. What are the recent developments or notable recent cases concerning abuse of market power?

The following are recent cases concerning abuse of power:

  • Nespresso/ single-portion espresso coffee machines. In September 2014, the Competition Authority (FCA) received two referrals from two single-portion coffee machines manufacturers who complained of exclusionary practices by Nespresso, consisting in linking the purchase of Nespresso brand capsules to that of Nespresso-brand coffee machines. The FCA obtained an undertaking from Nespresso to lift barriers to entry for other coffee capsule makers that are compatible with Nespresso coffee machines, and to lift barriers to their growth. This undertaking re-establishes conditions of fair competition. This is a major application of the undertaking procedure before triggering any litigious procedure.

  • Home and personal-care products sold in supermarkets. In December 2014, the FCA fined home-care and personal-care manufacturers for having implemented concerted practices on both markets consisting in co-ordinating their commercial policies and price increases for supermarkets.

These two fines are among the most significant fines handed down by the FCA (EUR345.2 million and EUR605.9 million on each market concerned).

This decision illustrates the increase of financial penalties given by the FCA who has wide discretion when determining on a case-by-case basis the amount of the sanctions. The FCA is clearly imposing larger fines, which have a dissuasive effect.

 

Proposals for reform

29. Are there any proposals for reform concerning restrictive agreements and market dominance?

There is currently a law for economic growth and activity (Loi Macron) in discussion before the French Parliament, which contains a provision on abuse of dominant position that give more powers to the Competition Authority (FCA).

If a retail store is in a dominant position (a market share of more than 50%) that raises competition concerns, the FCA can notify the dominant company(ies) and give it(them) a two-month period during which they can propose undertakings. When no, or insufficient, undertakings are proposed, the FCA can take action in order to eliminate the competitive concerns.

To simplify procedures before the FCA, this law in discussion also provides the following measures, it:

  • Reinforces the FCA's powers to investigate (the agents can now ask the telecommunication operators to communicate data).

  • Allows the FCA to reject a claim if the claim can be examined by the Minister for Economy (see Question 6).

Additionally, it is proposed that when a company does not challenge the infringing facts, the general rapporteur of the FCA can now propose a settlement fixing the maximum amount of the penalty. This will take into account the undertakings taken by the company. If the terms of the settlement are accepted, the FCA can enforce this settlement under a simplified process.

 

Online resources

French Competition Authority (FCA)

W www.autoritedelaconcurrence.fr

Description. The FCA website is the main official website in relation to French competition law matters. It contains links to other official websites, which contain more limited information on French competition law. There is no other public website strictly dedicated to French competition law. The FCA website contains limited material available in English (unofficial translations with no legal value).

Directorate-General for Competition, Consumer Affairs and Fraud Control (DGCCRF)

W www.economie.gouv.fr/dgccrf/concurrence

Description. The official website of the DGCCRF. Decisions taken regarding local restrictive agreements and practices (since the beginning of 2013) are published here. The website is in French only.



The regulatory authority

French Competition Authority (Autorité de la Concurrence) (FCA)

Head. Bruno Lasserre
Contact details. 11, rue de l'Echelle
75001 Paris
France
T +33 1 5504 0000
F +33 1 5504 0022
W www.autoritedelaconcurrence.fr

Outline structure. The FCA's structure can be viewed on its website (www.autoritedelaconcurrence.fr/user/standard.php?id_rub=13).

Responsibilities. The FCA is responsible for enforcing rules relating to merger control, restrictive agreements and practices, and abuse of dominant position.

Procedure for obtaining documents. Documents are available on the FCA's website.



Contributor profiles

Alain L Vincent, Partner

Hughes Hubbard & Reed LLP

T +33 1 4405 8000
F +33 1 4553 1504
E alain.vincent@hugheshubbard.com
W www.hugheshubbard.com

Professional qualifications. France, Bar Admission

Areas of practice. Anti-trust and competition; corporate and business transactions; corporate governance; corporate law; franchising and distribution; joint ventures; mergers and acquisitions.

Non-professional qualifications. MA in Comparative Jurisprudence, New York University, 1973; Diploma of the Institute of Comparative Law School of Law, New York University, 1971; MA in Law, University of Paris Law School, 1969

Languages. French, English

Professional associations/memberships. International Bar Association; New York University Law School Alumni Association; Association Française d'Etude de la Concurrence (AFEC).

Publications

  • REACH: Consortiums and Competition Law, Revue du Droit de l'Environnement Industriel, March 2008.
  • Free Movement of Goods: The Conflict Between EU Principles of Free Movement and Health Protection in Foodstuffs may be Arbitrated by the Principle of Precaution, Les Échos, June 2005.
  • French and European Competition Law, Les Échos, September 2004.

Cyrille Gaucher, Counsel

Hughes Hubbard & Reed LLP

T +33 1 4405 8000
F +33 1 4553 1504
E cyrille.gaucher@hugheshubbard.com
W www.hugheshubbard.com

Professional qualifications. France, Bar Admission

Areas of practice. Anti-trust and competition; corporate and business transactions; corporate governance; corporate law; franchising and distribution; joint ventures; mergers and acquisitions.

Non-professional qualifications. CPE, Middlesex University, 2000; Postgraduate Degree in Maritime and Shipping Law (honours), University of Lille, 1997; MA in Law, University of Strasbourg, 1995; Diploma in English Law, London School of Economics and Political Science, 1994

Languages. French, English

Professional associations/memberships. Association Française d'Etude de la Concurrence (AFEC).


{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1248008192542", "objName" : "Restraints of trade and dominance in France overview", "userID" : "2", "objUrl" : "http://uk.practicallaw.com/cs/Satellite/resource/7-572-2047?null", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "223c8752:15b1c8f8233:-cac", "analyticsSessionCookie" : "223c8752:15b1c8f8233:-cab", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }