17 May 2011: Antitrust enforcement: new guidance on antitrust fines

communiqué

The French Autorité publishes the method according to which its sets financial penalties
in cases of cartels and abuses of dominance

> Version française

The aim of the notice is twofold: i) enhancing transparency on the method followed by the Autorité in order to set financial penalties in antitrust cases; ii) providing upfront guidance on which parties can rely when arguing their case before the Autorité takes its decision.

The notice explains in detail how the Autorité sets financial penalties on a case-by-case basis, pursuant to the four criteria provided by the law, namely: i) the seriousness of the infringement; ii) the importance of the harm done to the economy; iii) the situation of the undertaking or of the group to which the undertaking belongs; and iv) reiteration.

The Autorité’s guidance takes into account, within the framework of the French Code of Commerce, the “Principles for convergence”agreed upon by all the competition authorities of the European Union (EU) in order to ensure the effective and consistent implementation of European competition rules.

Background

On 17 January 20111 , the Autorité published a draft notice describing the method that it follows when setting financial penalties intended to punish antitrust infringements and to deter market players from breaking the law.

Until 11 March 2011, it launched a wide public consultation, in the course of which it gathered 22 contributions coming from a broad range of stakeholders (other competition authorities, business associations, consumer organizations, antitrust bar, specialized economists, academics, etc.). On 30 March, it held a public roundtable in Paris, in order to give all interested parties the opportunity of informing themselves on the main comments received during the consultation2 and of exchanging views.

The final notice builds on these comments, as well as on the “Principles for convergence” agreed upon in May 2008 by the European Commission and by the 26 other European NCAs3, pursuant to two years of benchmarking and common thinking, in order to guarantee the consistent and effective implementation of European competition rules.

A transparent and pragmatic approach

The notice explains the different steps of the method followed by the Autorité when applying the criteria provided by the French Code of Commerce4. It also incorporates the main guidelines of the Autorité’s decisional practice and the main teachings of the case-law of French review courts as well as of European courts in relation to antitrust fines.

In practice, the Autorité assesses, in a first step, the seriousness of the infringement and the importance of the harm done to the economy. It then sets the basic amount of the financial penalty on the basis of this assessment. This basic amount corresponds, for each undertaking, to a proportion of the value of their sales of products or services relating to the infringement during a reference year which is usually their last business year of participation in the infringement. This proportion is fixed on a case-by-case basis, on a range comprised between 0 and 30%5. The Autorité then takes into account the duration of the infringement.

In a second step, the basic amount is adjusted downwards or upwards, in order to take into account the specific behavior and the individual situation of each infringer. Mitigating or aggravating circumstances may be taken into account, as well as other elements of individualization such as the fact that the concerned undertaking carries out its activities in one sector (“mono-product” undertaking) or that it enjoys significant economic power and financial resources. Reiteration is also taken into consideration.

In a last step, the Autorité checks that the final amount does not exceed the applicable legal maximum6, before taking into account the reductions that have been granted on account of leniency7 and of a settlement8, and, where an undertaking makes a request to that effect, assessing whether or not specific financial difficulties affect its individual ability to pay.

The notice therefore provides guidance on the way the Autorité proportions financial penalties, in a transparent and pragmatic manner, in view of the specific circumstances of each case.

A useful public consultation

The comments and suggestions made by stakeholders in the course of the public consultation have enabled the Autorité to complement its final notice on a number of points on which an overall consensus has emerged. In particular:

  • the status of the notice is clarified: it is binding on the Autorité, to which it can therefore be opposed by undertakings;
     
  • measures are taken in order to stimulate an upfront debate with the parties on the main factors that are liable to influence the setting of the penalty;
     
  • a clear definition of the base used to set the penalty (value of the products or services to which the infringement relates) is incorporated in the document;
     
  • the notice gives guidance on the conditions in which economic studies may help to assess the importance of the harm done to the economy;
     
  • further detail is included on the various factors that are liable to be taken into account at each step of the assessment;
     
  • lastly, the document stresses that the reductions granted on account of leniency and of a settlement are taken into account once the legal maximum has been checked, in order to guarantee interested parties the actual benefit of these reductions.

As announced by the Autorité on 17 January, the Notice will be complemented by a procedural notice relating to the settlement procedure as well as by a framework document on antitrust compliance. These two documents will be submitted to public consultation later this year.

1See the Autorité’s press release of 17 January 2011.
2Consult the program of the roundtable and the full discussion are available on the Autorité’s website.
3Pecuniary sanctions imposed on undertakings for infringements of antitrust law: principles for convergence, document published by the ECA (Association of European Competition Authorities) in May 2008, pursuant to two years of work of a group co-presided by the French Conseil de la concurrence and its Italian counterpart, the AGCM.
4Section I of Article L. 464-2 of the Commercial Code.
5In the case of hardcore cartels, which are the most harmful infringements to competition rules, as is stressed notably by the OECD, by the French and European case-law, as well as by antitrust economists, this proportion is fixed on a range comprised between 15 and 30 %, in consideration of the harm done to the economy.
6Section I of Article L. 464-2 of the Commercial Code.
7Section IV of Article L. 464-2 of the Commercial Code.
8Section III of Article L. 464-2 of the Commercial Code.


> Consult the full text of the Notice on the Setting of Financial Penalties.

> Questions & Answers on Financiel Penalties.

> Press Contact : Virginie Guin / Tel. : 01 55 04 02 62 Mel; André Piérard / Tel. : 01 55 04 02 28 Mel
 
Print the page