Competition News November 2017

Author:Ms Emmanuelle van den Broucke and Alexia Delaunay
Profession:Dentons
 
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Floor covering cartel: The French Competition Authority issued a penalty of €302 million following a settlement.

On October 18, 2017, the French Competition Authority penalized the three main producers of PVC and linoleum floor covering and their professional trade union (SFEC) with up to €302 million for the organization of a cartel whose severity, duration and degree of sophistication are remarkable. From a procedural perspective this decision is also significant, because it is the first settlement decision taken as part of a cartel since the entry into force of this procedure.

A particularly harmful cartel: The French Competition Authority recognized several anti-competitive practices between the three manufacturers relating to many aspects of the trade policy, including pricing. During secret meetings, the competitors discussed minimum price increases per floor covering category as well as dates for when such increases would take place. For 23 years, and through the use of dedicated telephone lines, these secret meetings also included the exchange of very sensitive and varied information (including exchanges on the salaries and bonuses of their employees). With the help of their professional trade union, these companies also signed a non-competition agreement according to which they were entitled to communicate the individual environmental performance of their products only through the use of collective records established by the trade union. A lot of sensitive trade information was also exchanged through the trade union.

Issues related to the settlement procedure: Given that the sanctions were imposed following the settlement procedure, the French Competition Authority is exempt from justifying these sanctions in light of the methodology defined in its Sanctions press release. The lack of transparency of the sanctions in this matter is strengthened by the presence of two leniency applications submitted after inspections and of seizures, of which the Authority gives no information (not even concerning the rank of the applicants) aside from the fact that the companies benefitted from "substantial" sanction reductions. Despite the accumulation of the transaction and leniency procedure, the sanctions seem nonetheless high: One of them represented half the company's annual sales in France. The effective benefit of leniency applications after a seizure is therefore questionable. Furthermore, more transparency on the way in which a sanction...

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