Cartels & Leniency In France

 
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This article first appeared in the second edition of The

International Comparative Legal Guide to: Cartels &

Leniency; published by Global Legal Group Ltd, London www.iclg.co.uk

1 The Legislative Framework of the Cartel

Prohibition

1.1 What is the legal basis and general nature of the

cartel prohibition, e.g. is it civil and/or criminal?

Anticompetitive agreements and practices are prohibited by

Article L. 420-1 of the French Commercial Code (the

"Code"). It applies to any undertakings, in the form of

either companies or individuals, and may lead to

civil/administrative and, in certain cases, to criminal sanctions

(see the answer to question 3.2).

1.2 What are the specific substantive provisions for the cartel

prohibition?

The cartel prohibition applies to any concerted practices,

agreements and alliances, express or tacit, which have as their

object or may have as their effect to prevent, restrict or distort

competition in a market, and in particular with the aim to:

limit access to markets by, or competition from, other

firms;

interfere with price setting by market forces, by artificially

increasing or decreasing prices;

limit or control production, markets, investment or technical

development; or

share markets or sources of supply.

However, under the so-called "de minimis" rules, the

French competition authority may decide not to instruct cases

concerning agreements or practices:

between actual or potential competitors ("horizontal

agreements") whose combined market share does not exceed 10

per cent; or

between companies that are not actual or potential competitors

("vertical agreements") whose respective market shares do

not exceed 15 per cent.

1.3 Who enforces the cartel prohibition?

The competition authority in charge of generally enforcing

anticartel measures is now the French Competition Authority

(Autorité de la concurrence) (the "Competition

Authority").

The law on the modernisation of the economy (the

"LME"), enacted on 4 August 2008 and implemented by an

ordinance of 13 November 2008, creates the Competition Authority to

replace the Competition Council (Conseil de la

Concurrence) (the "Council"), an independent

authority set up in 1986.

Investigations may be carried out either by the Competition

Authority or by the Directorate General for Competition, Consumer

Policy and Repression of Fraud (Direction

Générale de la Concurrence, de la Consommation et de

la Répression des Fraudes) ("DGCCRF"), an

administrative agency under the authority of the Ministry of

Economy.

The Competition Authority has wider means and powers than the

Council, in particular as regards investigations, while the

Minister of Economy is now entitled to settle and order measures as

to socalled "micro anticompetitive practices" (see the

answer to question 6.1).

The members of the Competition Authority have not been appointed

yet and the Competition Authority is thus not yet active at the

time of drafting this article. The first meeting is planned to be

held at the very beginning of January 2009.

1.4 What are the basic procedural steps between the opening of

an investigation and the imposition of sanctions?

The Competition Authority may be in charge of a case following

either a referral from the Minister of Economy, or a complaint from

a company or even acting ex officio, at the instigation of

the head reporting officer (rapporteur

général).

Pursuant to Article L. 463-2 of the Code, if it results from the

investigation that the practices at stake may be anticompetitive,

the head reporting officer issues a statement of objections, by

letter with acknowledgment of receipt, to the complainant, the

ministers concerned by the affected sector of activity, the

concerned parties and the State Commissioner (Commissaire du

Gouvernement). The notified parties can then consult the file

and present any observations within two months.

An official report is then sent to all notified parties, along

with the documents which the head reporting officer relies on and

the observations, if any, made by said parties. Each party can in

turn submit its observations in reply within two months. Finally,

the matter is brought before the Competition Authority which will

issue:

a decision declaring that there are no grounds for

prosecution;

a decision adjourning the proceedings in case another national

competition authority is dealing with the same facts; or

a decision pronouncing on the anticompetitive nature of the

facts and possibly imposing a sanction.

1.5 Are there any sector-specific offences or exemptions?

Article L. 420-4 of the Code provides for a specific exemption

in the agricultural sector. Practices consisting for undertakings

in organising agricultural or agriculturally-based products under a

single trademark or trade name, setting common production volumes

and quality as well as common business policy, including agreements

on a common sale price, may be exempted, provided they (i) ensure

economic progress, (ii) provide users a fair share in the resulting

profit, (iii) do not allow the undertakings involved to eliminate

competition for a substantial part of the products concerned, and

(iv) are indispensable to achieve said economic progress.

In addition, certain agreements, especially when their purpose

is to improve the management of small or medium-sized enterprises

may be exempted by decree, upon obtaining the Competition

Authority's approval.

Finally, pursuant to Article 90 of Act No. 82-652 of 29 July

1982, agreements between cinema enterprises to ensure programming

of films in cinema houses can be allowed by the director of the

National Cinematographic Industry (Centre National de la

Cinématographie) under certain conditions.

1.6 Is cartel conduct outside France covered by the

prohibition?

The French cartel prohibition covers any anticompetitive

agreements and practices which may distort competition in a market

located in France, regardless of the place of signature of the

agreement, the head office of the parties, or even their

nationality. In addition, in decision No. 04-D-45 of 16 September

2004, the Council held jurisdiction to examine anticompetitive

agreements entered into by French firms acting in France, but with

effects outside of France.

2 Investigative Powers

2.1 Summary of general investigatory

powers.

Table of General Investigatory Powers

Please Note: * indicates that the

civil/administrative investigatory measure requires the

authorisation by a court or another body independent of the

competition authority.

2.2 Specific or unusual features of the investigatory

powers referred to in the summary table.

French civil/administrative procedure comprises ordinary and

judicial investigations.

In ordinary investigations, the officers of the Competition

Authority or the DGCCRF may access business premises to request

copies of business documents, while judicial investigations enable

said officers to conduct searches and seize any documents from

either business or domestic premises under the warrant of a

judge.

2.3 Are there general surveillance powers (e.g.

bugging)?

This is not applicable under French civil/administrative

procedure rules.

2.4 Are there any other significant powers of

investigation?

The investigators may ask the authority to which they are

answerable (i.e. either the Competition Authority or the DGCCRF) to

appoint an expert to conduct any necessary expert assessment

involving all the parties, such as an analysis of the relevant

market or a study of documents.

2.5 Who will carry out searches of business and/or

residential premises and will they wait for legal advisors to

arrive?

Ordinary searches inside business premises are carried out by

(i) investigators of the Competition Authority, or (ii) by

authorised public officers under the supervision of the Ministry of

Economy, while judicial investigation inside residential premises

may be performed by both types of officers under the supervision of

the judge who authorises such measures.

The ordinance implementing the LME (see the answer to question

1.3) allows companies subject to unannounced investigations to call

an external lawyer, whose presence was previously merely tolerated.

However, investigators remain under no obligation to wait for legal

advisors to arrive.

2.6 Is in-house legal advice protected by the rules of

privilege?

Only communications between a member of the Bar and its client,

such as legal opinions sent by an attorney to its client or

exchanges of correspondence between them, are covered by

attorney-client privilege, and do not thus have to be surrendered

to investigators. Therefore, in-house legal advice is not protected

by the rules of privilege, even if an internal memorandum merely

restates an advice given by the company's attorney.

2.7 Other material limitations of the investigatory

powers to safeguard the rights of defence of companies and/or

individuals under investigation.

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