On 19 January 2010, the Paris Court of Appeal (the "Court") significantly reduced the fines imposed by the French Competition Authority (the "Authority") on steel companies found to have been involved in cartel activities.

The amount of the fines was decreased from a total of approx. €575 million to less than €75 million.

The Court confirmed the anticompetitive practices assessment made by the Authority, but reproached the Authority for not having taken sufficient account of the companies' mitigating behaviour. It found that the Authority had clearly failed to consider the major effect that the economic crisis had had on the steel industry and overplayed the economic harm caused by the cartel.

The Court also considered that the fines imposed were disproportionate to the companies' turnover. Interestingly, the Court used an unusual methodology to determine the amount of the fines. It started from the 10% maximum legal ceiling and then reduced the fine with mitigating circumstances.

Nevertheless, the Authority has criticized the Court's decision on various grounds. The Authority claimed that this cartel was the most significant, complicated and damaging that it has ever encountered and that the Court should not have minimized the cartel's economic harm.

In addition, the Authority is now facing a problem of credibility. The Court's decision is in stark contradiction with the Authority's usual policy which consists of imposing dissuasive fines against companies involved in cartel activities.

This may, however, not be the end of the matter. Both the President of the Authority and the French Minister of Economy could bring the case before the French Court of Cassation within one month from the notification of the Court's decision.

To view Community Week Issue 456 - 29 January 2010 in full, please click here.(http://www.sjberwin.com/publicationDetails.aspx?mid=1&rid=1&ast=4&adv=1&cid=2712)

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