On July 30, 2021, the Competition Authority (the “ FCA “) Published the final version of its new notice of procedure on fines (the” Notice of fines »), Which repeals and replaces the previous opinion of May 16, 2011.
This new opinion was the subject of a public consultation of the parties concerned, who were invited to comment on the draft Opinion on fines published on June 11, 2021.
This project went well beyond the simple adaptation of the method of determining fines required by the AFC to take account of legislative changes within French ordinance n ° 2021-649 of May 2, 2021, relating to the transposition of Directive (EU) n ° 2019/1 of 11 December 2018 (the ” Order “). It illustrates the FCA’s choice to fundamentally reform its decision-making practice and impose heavier penalties on non-compliant companies.
Some provisions of the draft seemed to require clarification (or even deletion), so the outcome of the public consultation was eagerly awaited.
Nevertheless, in particular, the changes made to the draft, published on June 11, are very limited. The implementation of the new opinion on fines will therefore necessarily lead to a considerable and systematic increase in the amount of fines decided by CAF.
The main changes introduced by the new fine notice are as follows:
1. Taking into account the value of the products indirectly linked to the infringement to determine the basic amount
The new opinion on fines specifies that in order to determine the basic amount of the fine, the FCA will take into account as a reference “all categories of products or services having a value directly or indirectly linked to the infringement of the fine. ‘business “. Therefore, according to the interpretation of the expression “indirect” relationship, the basic amount of the fines could increase substantially (point 22).
In addition, the new notice on fines does not really specify this concept, so that the AFC enjoys a great deal of latitude. More specifically, the notice on fines does not specify whether the products used as inputs in the finished products, or the products located in related markets, upstream or downstream of the actual market in which the infringement was committed, could be considered to have an “indirect relationship” to the offense.
2. Possibility for the FCA to increase fines for deterrence purposes
At the stage of determining the basic amount, the new opinion on fines provides that the FCA will have the possibility of “by adding to the base amount an amount between 15% and 25% of the value of salesIn order to dissuade companies from participating in such practices. This possibility is reserved for “the most serious horizontal agreements and abuses of a dominant position, such as price fixing, market sharing and production limitation agreements “(paragraph 31).
In this regard, it is fortunate that the new opinion on fines has abandoned the possibility of applying such an additional amount as well “in the case of other offenses“. This provision, which was foreseen in the initial draft, would have allowed the FCA to apply this surcharge to any type of anti-competitive practice, without a single exception.
3. Taking into account the environmental impact in the assessment of the seriousness of the practices
From now on, to assess the seriousness of the facts, CAF will be able to take into account the seriousness of the competition factors concerned, which includes a the environment. This addition completes the list of competitive factors, traditionally taken into consideration by CAF to assess the seriousness of the facts, which includes elements such as price, quality, cost, production, etc. (point 28).
In the absence of further clarification, the FCA will likely have a great deal of latitude in assessing the seriousness of an offense relating to an offense involving environmental factors.
4. Deletion of the criterion on “the significance of the economic damage”
The new opinion on fines takes note of the economic damage test the elimination introduced by the Ordinance, which CAF had to take into account when determining the amount of the fines imposed on the perpetrators of anti-competitive practices. Thus, this criterion is no longer mentioned. As such, the fines will only be determined according to the gravity and duration of the offense, the situation of the company and its recidivism.
5. Increase in the multiplier factor linked to the duration of the offenses
The new notice on fines provides that “the amount determined on the basis of the value of sales […] is multiplied by the number of years of participation in the infringement “. This is a major and far-reaching methodological change. From now on, this means that a coefficient of 1 will be applied to each full year of participation in the infringement (point 34). ” considerably increase the financial fines since previously, the first year had been assigned a coefficient of 1, the following years, a coefficient of 0.5.
Regarding periods of less than one year, the new opinion on fines specifies that a “pro rata temporis of the duration of the company’s participation in the infringement“will be taken into consideration. This is a slight relaxation of the initial project which provided for assigning to periods less than 6 months a coefficient of 0.5 and to periods between 6 months and 1 year, a coefficient of 1 .
6. Expansion of the categories of mitigating circumstances
The new notice on fines modifies the categories of mitigating circumstances (specified in a non-exhaustive manner) in return for which the AFC may reduce the basic amount of the fine (point 38). Thus, the following factors may be taken into account as mitigating circumstances:
- The fact that the practice has been “requested” (and not just “authorized” or “encouraged”, as provided for in the 2011 Opinion) by the public authorities;
- The fact that the company implemented, during the proceedings, reparation measures specifically benefiting the victims of the practice, in particular their payment of compensation due in execution of a transaction within the meaning of article 2044 of the Code civil.
7. The increasing possibility in the fines determined taking into account illegal gains
In the penalty individualization section, it is now indicated that “the Authority may also decide to increase the sanction as long as the estimated illegal gains made by the company or association of companies concerned as a result of the infringement (s) in question exceed the amount of the financial sanction that the Authority could inflict“(point 42).
The new fine communication builds on the 2006 European Commission fine-setting guidelines, which contain a similar provision.
However, in the absence of further clarification, it is legitimate to wonder how the FCA will assess these illicit gains in practice. It is not excluded that such an assessment of illegal gains could have an impact in the context of subsequent private actions, victims of anti-competitive practices then being able to find an additional element in the assessment of their own damage.
8. Consideration of the conviction of a foreign authority as a repeat offense
The new opinion on fines explicitly provides that in order to assess the existence of recidivism, the AFC may take into account a previous infringement sanctioned before the end of the new practice by a national competition authority of another. Member state.
This provision may raise some practical difficulties in establishing the existence of recidivism, because of the differences in the qualification of offenses that may exist between French law and other national competition laws.
9. Amendments to the legal regime applicable to professional orders
Finally, the new Notice on fines incorporates the new provisions of Article L. 464-2 of the French Commercial Code, resulting from the Ordinance (see our June 2021 newsletter here for more information) and relating to the applicable regime. business associations. It is expected that when the offender is a professional body:
- The maximum amount of the fine can be up to 10% of the worldwide annual turnover (instead of 3 million euros).
- However, when the infringement of the professional order concerns the activities of its members, the maximum amount of the fine is equal to 10% of the sum of the worldwide turnover of each member of the association active on the market. concerned (point 50).
However, it is specified that if a fine is imposed not only on a professional order but also on its members, the turnover of the members to whom a fine is imposed must not be taken into account in the calculation of the fine imposed. to the professional body (paragraph 25).
The new opinion on fines specifies that a professional order may invoke specific financial difficulties affecting its ability to pay a fine imposed without taking into account the turnover of its members in order to request a reduction in its amount (paragraph 59). However, when a fine is imposed on a professional body which is not solvent, given the turnover of its members, the AFC may order it to appeal to its members to cover the amount of the fine. (point 60).
Finally, if the mentioned contributions are not paid as provided to the professional order, within a time limit set by the AFC, the Authority may directly demand payment of the fine from any company whose representatives were members of the professional order at the time of the offense (s) (point 61). When this is necessary to ensure full payment of the fine, the Authority may also demand payment of the outstanding amount of the fine by any member of the professional order active on the market in which the infringement (s) occurred. committed. However, members who are able to demonstrate that they have not implemented the contested decision of the professional order and who were unaware of its existence or actively dissociated themselves from it before the opening of the procedure should be excluded. .
Summary of the main steps in determining the amount of the fine (in bold the new features introduced by the new press release)
1. Base amount
3. Final adjustments