Procedural aspects common to vertical agreements and abuse of a dominant position

The Competition Authority (“ADLC”) is vested with the power to enforce competition law and in particular the rules relating to vertical restraints and abuse of a dominant position.

The Minister for the Economy has injunction and settlement powers for the settlement of local anti-competitive practices provided that (i) the turnover generated in France by each of the companies concerned does not exceed 50 million euros euros (during the last financial year) and that (ii) their combined turnover does not exceed 200 million euros. On behalf of the Minister of the Economy, the Regional Directorates for Business, Competition, Consumption, Labor and Employment (DIRRECTE) can order companies to put an end to the anti-competitive practices observed and to settle the State an amount of up to €150,000 within the limit of 5 % of their turnover in France.

Commercial disputes involving the application of the rules on vertical agreements or abuse of a dominant position (codified in Articles L. 420-1 to L. 420-5 of the Commercial Code) fall within the exclusive jurisdiction of eight specialized commercial courts. (Marseille, Bordeaux, Lille, Fort-de-France, Lyon, Nancy, Paris and Rennes).

In France, two types of investigation (simple or under judicial control) can be initiated. Investigations can be conducted either by the ADLC or by the General Directorate for Competition, Consumer Affairs and Fraud Prevention (DGCCRF).

During a simple investigation, the agents of the ADLC or the DGCCRF can access any place used as professional premises, as well as any means of professional transport. They can request the communication of professional documents and keep a copy of them, question the employees concerned on condition that they inform them of the purpose of the questioning.

During a search authorized by a judge, officers investigate under the authority of the judge and usually in the presence of police officers. As part of this procedure, agents are authorized to access private and professional premises to conduct their investigations and seizure operations. They can obtain or take copies (on paper or electronically) of any document that could be useful to the investigation, in particular emails, unless they are covered by professional secrecy (for example, lawyer-client correspondence). Officers are also authorized to take statements from employees.

During the pre-litigation phase, the ADLC studies the evidence at its disposal. If the preliminary assessment leads him to consider that the observed practices are anti-competitive in nature, the general rapporteur sends the company concerned a notification of objections. From this dispatch, the notified parties have access to the ADLC's file (which includes all the available evidence) and can submit a statement of defense within two months.

In addition, the notified party may present its defense arguments at a hearing before the ADLC Board.

The ADLC then renders its decision, which may consist of:

• A decision of non-suit (there are no elements to continue the procedure);
• A transaction that allows the target company to be fined less;
• A fine which may be accompanied by an injunction or undertaking by the party concerned to modify its behavior in order to comply with the regulations. The ADLC may also order the publication of its decision.

Finally, in very rare cases (anti-competitive practices involving natural persons), the ADLC can refer the case to the criminal courts.

It should be noted that at the end of the pre-litigation phase, the ADLC may also decide not to open a litigation phase for the following reasons:

• Lack of interest in acting;
• prescription; Or
• Lack of evidence.

Transitional measures can be pronounced at the beginning of the procedure under specific conditions.

The ADLC can pronounce transitional measures to put an end to the practices or suspend an illicit action. The measures must be strictly proportionate.

In addition, as mentioned in question 3, the ADLC can:

• Order the company concerned to cease the anti-competitive practice and/or to modify its behavior by making commitments to comply with competition law for the future;
• Impose a fine of a maximum amount of 10 % of the turnover of the group to which the sanctioned company belongs, the highest turnover retained during the period when anti-competitive practices have been identified;
• Impose a fine of a maximum amount of 5% of the average turnover achieved by the party concerned per day of delay so that it complies with an injunction from the ADLC or a commitment made by it; And
• Order the publication of the decision in a newspaper and, sometimes, on the website of the company concerned.

The ADLC is not authorized to award damages to victims of anti-competitive practices.

The criteria used to calculate the fines imposed are set by law and were specified in a press release published by the ADLC in 2011.
The fine must be proportionate to the seriousness of the breach of the competition rules and the damage caused to the economy. The financial situation of the penalized company must also be taken into account, as well as the recidivism if necessary. The fines are individualized for each condemned company.

The commitment procedure is an effective tool for regulating commercial practices and enforcing competition law. The implementation of the commitment procedure assumes that no statement of grievances has been sent by the general rapporteur. The general rapporteur presents his preliminary assessment of the alleged practices to the companies that are the subject of an investigation. The latter must then formalize and submit their commitments within a maximum period of one month. Subsequently, the general rapporteur communicates these commitments to the requesting party, if applicable, and to the public prosecutor's office and publishes a summary of the case accompanied by the company's proposed commitments in order to allow third parties to make observations. .

All third-party observations must be communicated to the General Rapporteur within a maximum period of one month from the publication of the summary of the case. Investigated companies also have the opportunity to make oral submissions during a hearing.

Finally, the ADLC adopts a binding acceptance decision.

The ADLC monitors the implementation of these commitments regularly over a given period. The companies concerned must regularly provide the ADLC with reporting documents.

With regard to settlements, they can be implemented after the notification of grievances provided that the companies concerned agree not to contest the grievances. The transaction sets the minimum amount and the maximum amount of potential fines that may be imposed by the ADLC board. As part of the transaction, the parties may also propose to modify their behavior in order to comply with competition law.

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