The French Competition Authority (the “Authority”) has been very active and recently published several sets of important guidelines. On May 16, 2011, it published guidelines on fines and on Feb. 10, 2012, it published guidelines on settlement proceedings and compliance programs. It also has rendered a very important decision in the leniency context, detailing new ways to calculate fines and demonstrating the need for companies to consider applying for leniency in cartel cases. We highlight below these recent developments of interest to companies and competition practitioners in France.
French Competition Authority Fines Four Laundry Detergent Manufacturers for Cartel Activity. On Dec. 8, 2011, the French Competition Authority fined four major laundry detergent manufacturers up to M€ 367.95 (the total amount of fines would have been M€ 713.57 without reductions due to leniency applications) for participating in a cartel through a trade association. This proceeding was initiated through applications for leniency by each party to the cartel before the Authority, as well as before the European Commission (“Commission”) in a separate proceeding that resulted in fines against Unilever, Procter & Gamble, and Henkel totaling M€ 315.2. In France, the Authority imposed its fines after finding that Unilever, Procter & Gamble, Henkel, and Colgate Palmolive held regular secret talks on their pricing and promotion policies and imposed a monitoring device of compliance with the cartel rules. Significantly, the Authority held that the benefits of the leniency and settlement procedures can be combined in certain circumstances (e.g., when the objections notified on the concerned company differ in one or more significant aspects from the content of its leniency application) and applied its new methods related to the setting of the financial penalties (cf. Notice on the Method Relating to the Setting of Financial Penalties of 16 May 2011).
French Settlement Procedure. On Feb. 10, 2012, the Authority released a framework document concerning its settlement procedure. The settlement procedure enables companies to waive their right to challenge the charges notified by the Authority’s investigation services in return for a reduced fine. The notice explains how to implement such a procedure, in particular how a company must waive its right to challenge the charges notified. In the framework of such a procedure, the companies can also change their behavior in the future by making structural (separate accounts, spinning off, etc.) or behavioral (modifications to contractual clauses, general terms of sale, price scales, etc.) commitments or by setting up antitrust compliance programs. Following the decision of the Authority regarding the detergent cartel referenced above, the benefits of the leniency procedure can be combined with the settlement procedure, in particular if the objections notified on the company in question differ in one or more significant aspects from the content of its leniency application. The settlement procedure grants a 10% reduction in the financial penalty, which may be combined with additional 5 to 15% reductions depending on the commitments made by the companies.
French Antitrust Compliance Programs. On February 10, 2012, the Authority released a framework document aimed at encouraging antitrust compliance programs whereby companies express how they comply with European and French competition rules. Such programs must seek two objectives: (1) prevent the risk of committing infringements and (2) provide the means of detecting and handling misconduct. Therefore, programs should provide informational measures (training, awareness) and operational initiatives (internal and external monitoring, audit, and alert mechanisms). The document does not provide a template compliance program but outlines five key features for establishing credible, efficient, and size-tailored programs. Although the existence of a compliance program is neither a mitigating circumstance nor an aggravating factor, implementing one may help companies to discover infringements and encourage them to submit an application for leniency, which may grant a complete or partial immunity. The commitment to establish or improve an existing compliance program within a settlement procedure may allow a reduction of the financial penalty up to 10%, to which other discounts may be added for a total reduction of up to 25%.
The Authority’s new framework will need time to be enforced and adapted and also may be challenged before the Court of Appeals and the Supreme Court. In the context of the European Competition Network and of the International Competition Network, it might be a subject of discussion among competition agencies and authorities. Of course, the new framework should influence companies in their organization, compliance, and defense strategies.