France: The French Competition Authority Publishes Draft Guidelines On The Calculation Of The Amount Of Fines

Last Updated: 15 March 2011
Article by Thomas Oster and Anne-Claire Jeux

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 gravity of the offence and the economic harm. For cartels, that is to say the most serious offences, this proportion will vary between 15% and 30%.

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 additional year.

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 2010.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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