On 17 January, the French Competition Authority ("The
Authority"), has unveiled its draft guidelines on the method
of setting pecuniary penalties imposed pursuant to anticompetitive
practices (cartels, bid-rigging and abuse of dominant position).
This draft, entitled "Communication on the determination
of pecuniary penalties" is open to a public consultation
until 11 March 2011. It follows the Folz, Raysseguier and Schaub
report, requested in February 2010 by the Minister of the
Economy1 in order to suggest improvements to ensure a
better predictability of penalties.
The draft guidelines are inspired by both the principles
identified in this report and the good practices in terms of
penalties promoted at the European level. It also responds to a
need for consistency in the calculation of penalties with the
method used by the European Commission but also, and most
importantly, with the method used by the Paris Court of Appeal. The
recent "steel cartel" case has recently emphasized the
discrepancy of approaches between the Authority and the Court of
Appeal, as far as the calculation of fines is concerned, the latter
having divided by eight the fine imposed by the Authority.
The aim of the draft guidelines is to enhance transparency in
the determination of pecuniary penalties in order to facilitate the
debate during the contradictory phase preceding the decision. The
general pattern of the draft is based on the Community guidelines
on the method of setting fines, while remaining strictly within the
framework set by article L.464-2 of the Commercial Code. This
article establishes four criteria for assessing pecuniary
penalties: the gravity of the facts, the significance of the harm
caused to the economy, the situation of the undertaking sanctioned
or the group to which the undertaking belongs and the possible
repetition of practices prohibited by competition rules.
The Authority mentions in its draft guidelines that it will
first assess the basic amount of the pecuniary
penalty for each undertaking. For such purpose, it will retain a
proportion of the value of the sales of the products or services
concerned by the practice for each undertaking involved. This
proportion of the value of the sales will vary between 0% and 30%
depending on the gravityof the offence
and the economic harm. For cartels, that is to say the
most serious offences, this proportion will vary between 15% and
If the offence has continued for more than a year, the
proportion chosen by the Authority will be applied to the total
value of the sales achieved during the reference year for the first
year of commission of the offence and half this value for each
The basic amount may then be adjusted upwards or downwards, to
take into account the individual behaviour and situation of each
undertaking. Mitigating circumstances (e.g.: offences allowed or
supported by public authorities, undertaking having deviated from
the anti-competitive agreement, etc) or aggravating circumstances
(e.g.: role of ringleader of the undertaking, reputation of the
undertaking which had an effect of exemplarity, etc.) can be taken
into consideration, as well as the fact that the undertaking
concerned only operates in one market ("mono-product"
undertaking), is a small or medium business (SME) or belongs to a
group. Recidivism will also be taken into account, in accordance
with the legislator's wishes, by a fine increase which may be
comprised between 5% and 50%.
Then, the Authority will take into account, where applicable,
the exemption or reduction granted on the basis of its
leniency program or settlement
procedure. It will subsequently verify that the final
amount does not exceed the statutory cap (equal,
for the standard procedure, to 10% of the highest worldwide
turnover excluding taxes achieved during any fiscal year ended
since the year preceding the beginning of the practices). Finally,
the Authority will consider, when required by an undertaking,
whether specific financial difficulties impact the firm's
ability to pay the whole or part of the penalty and justify a
corresponding reduction of the penalty.
The Authority remains silent at this stage on whether the
implementation of compliance programs must be taken into account as
a mitigating or aggravating circumstance when determining the
amount of the fines. It has nevertheless announced that it will
publish a separate communication on this topic.
The draft guidelines do not constitute a rupture from the actual
practice since the Authority had already started to implement this
method in its most recent decisions. Nevertheless, the effort of
transparency shown by the Authority constitutes a significant step
forward which is welcome.
1. Folz, Raysseguier and Schaub report of 20 September
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