mai 12 2023

French Ministry for Economy: key takeaways from recent competition settlements

Authors:

Other Author Victoire Sineau, trainee solicitor

This article was originally published by International Law Office

Introduction

The French General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) recently published a press release announcing a settlement reached in the furnishing fabric sector after a supplier was found in breach of competition law for prohibiting its retailers from selling online. This decision forms part of a notable trend in the DGCCRF's recent practice, making repeated use of its settlement procedure since the start of 2023 with six settlements announced in just three months. Given the quick wins the settlement procedure offers, these developments are worth noting for French businesses and their advisors, as not falling into line might prove to be costly.

French competition enforcement context and settlement procedure

In France, both the French Competition Authority (the "Authority") and the DGCCRF are responsible for enforcing competition and consumer laws, each having different spheres of responsibility, rules and practices.¹ The latter contributes to the detection of anti-competitive behaviour, particularly thanks to its national territorial investigation network with a local focus on smaller market issues.

Like the Authority, the DGCCRF can offer companies involved in anti-competitive practices the chance to settle their cases. While there are important differences in the procedures and practices applied by the two bodies, at a high level, the settlement procedures allow for swifter case closure. This is due to parties not disputing certain findings and foregoing certain aspects of standard procedures in return for a reduced financial penalty. At the European level, the Commission's settlement tool is well established for cartel matters and has taken small steps in the same direction for other antitrust cases.² The national law allowing the Authority to settle competition cases³ is similarly well established.⁴ Against this backdrop, recent decisions involving the unique settlement practice of the DGCCRF make for interesting reading.

Settlements and injunctions with DGCCRF

Since 2008, the DGCCRF has had the power to issue injunctions and reach settlements in the case of local anticompetitive practices.⁵ In most cases, both settlement and injunction procedures are implemented simultaneously. Injunctions are intended to put an end to the illegal behaviour and may also require changes to corporate documents such as contract terms, articles of association or internal rules and regulations.⁶

For the DGCCRF to apply its settlement procedure, as a general rule, the case in hand must:

involve national practices potentially infringing French competition rules but be unlikely to affect trade between EU Member States;⁷
be relatively local in scope; and
relate to companies whose turnover is less than €50 million individually and €200 million collectively.

The DGCCRF's action in this area is, in practice, very important because it can swiftly put an end to local anticompetitive practices which risk being a significant issue for market players and consumers and allows for an efficient allocation of public resources. In this context, the DGCCRF normally proceeds as follows:

The DGCCRF informs the companies concerned about its investigation and the evidence collected, as well as the measures being considered against them (ie, an injunction and/or a payment by way of settlement).
Parties have two months to submit comments after which the DGCCRF notifies its decision to the businesses involved. This decision may direct the companies to take actions to stop the anti-competitive practices and/or propose a settlement amount. A settlement payment cannot exceed €150,000.⁸
The company has one month to accept the terms of the proposed settlement. If a company declines the offer, the DGCCRF must forward the case to the Authority, which assesses whether the facts justify a penalty as part of a full contentious procedure.

Recent settlements reached with DGCCRF

As mentioned above, there has been a noticeable line of settlement cases coming from the DGCCRF in recent months. These include the following:

On 23 March 2023, a settlement decision with a furnishing fabric supplier relating to its terms of sale and a strict online sales prohibition. As a result of the investigation, the supplier deleted the problematic clause, and the case was settled with a €75,000 fine.⁹
On 14 March 2023, that two companies active in the building renovation sector were liable for illegal bid-rigging practices accepted its settlement offer.¹⁰
On 19 January 2023, that two coach transport companies in the Saône-et-Loire department, which signed an agreement restricting participation to tenders, accepted its settlement procedure.¹¹
On 6 January 2023, three settlements were reached with:
- three companies active in the non-ferrous metal recycling sector, which concluded an unlawful transfer agreement containing non-compete and no-poaching commitments, accepted its settlement procedure;¹²
- three companies which were part of an exclusive distribution network of a brand of spring water in Mayotte, accepted its settlement procedure;¹³ and
- a consortium of companies in the public transport sector in Avignon, whose constitution restricted competition, accepted its settlement procedure.¹⁴

This recent flurry contrasts with previous years, where only one settlement was announced in 2022, two in 2021, one in 2020 and five in 2019. This uptick might be indicative of a greater willingness by the DGCCRF to leverage this tool in its tool kit, which offers advantages to itself as well as the parties

Comment

The settlement procedure offered by the DGCCRF presents several advantages for companies including the following:

Costs – The ability to close proceedings faster and therefore to save costs. This applies equally to the DGCCRF.
Confidentiality – The DGCCRF's practice is not to publish the names of companies accepting the settlement procedure. Furthermore, a company which accepts the settlement procedure, does not have to accept the facts or existence of any infringement – indeed, certain public notices explicitly state that the company maintains its stance of non-involvement. As such, exposure to liability for damages is reduced and reputations are often relatively clean.
Caps – The amount of a settled fine is subject to limits as set out above and will be considerably lower than one subsequently imposed by the Authority in a fuller case. Several decisions handed down by the Authority have indeed shown that refusing a DGCCRF settlement can lead to a much higher fine.¹⁵

Nevertheless, questions about the benefits of the procedure remain. For example, whether settling a case with the DGCCRF could be used against a company to justify a fine uplift in front of the Authority based on recidivism. Moreover, before accepting a settlement with the DGCCRF, companies need to remember that they will almost certainly be faced with an injunction to put an end to the practice as well as paying the settlement sum. If the injunction is not complied with and or the settlement sum not paid, the case will be referred to the Authority and the companies risk a fuller fine.

¹ See page 5 of Presentation of the DGCCRF and Institutional ecosystem | Autorité de la concurrence (autoritedelaconcurrence.fr).

² See European Commission fact sheet.

³ La "procédure de non-contestation des griefs" established by article L. 464-2 III of the Commercial code and guidelines.

⁴ Several entities sanctioned in bakery equipment distribution sector | Autorité de la concurrence (autoritedelaconcurrence.fr).

⁵ Article L 464-9 of the French Commercial Code – but this has only recently started being used frequently.

⁶ DGCCRF, press release relating to anti-competitive practices in the public transport sector.

⁷ Although see comments on the recent furnishing fabric case below.

⁸ Or 5% of the last known annual turnover achieved by each company in France (if this figure is lower than €150,000).

⁹ This decision is also particularly noticeable due to the settlement procedure being applied to a practice which in the past, has been found capable of restricting trade between Member States (ie prohibition on online sales).

¹⁰ DGCCRF press release relating to anti-competitive practices identified in the building renovation sector.

¹¹ DGCCRF press release relating to anti-competitive practices in public road transport markets in the Saône-et-Loire department.

¹² DGCCRF press release relating to anti-competitive practices in the non-ferrous metal recycling sector.

¹³ DGCCRF press release relating to anti-competitive practices identified in the consumer goods distribution sector (spring water) in Mayotte.

¹⁴ DGCCRF press release relating to a settlement procedure in the public transport sector.

¹⁵ See: