France: Competition News January 2017

Last Updated: 6 February 2017
Article by Emmanuelle van den Broucke

New decisions in France with regard to compensating the prejudice suffered by victims of anti-competitive practices

Any person who claims to be the victim of anti-competitive practices and wishes to seek compensation for the prejudice they consider to have suffered must prove before the civil courts that the three conditions of third party liability under general laws –negligence, competitive harm, and direct causal link– have been met.

In these type of proceedings, it is often the characterization and assessment of the competitive harm which proves to be the most delicate and complex stage, notably when the person who suffered from anti-competitive practices is a competitor. To quantify the loss of earnings of a competitor who is victim of an anti-competitive practice, it is necessary to compare his real position with the hypothetical situation he would be in if the offence had not been committed.

The Paris Court of Appeal tried its hand at this difficult task in its two decisions of December 7 and 14, 2016.

In the first case, Aviscom, a company operating a website of obituary notices and condolences, suffered from the anti-competitive behavior of the newspaper La Montagne. The aforementioned newspaper, along with other newspapers of a competing company, mentioned only the reference of the website of this competing company in the death announcements it published; furthermore, it imposed undertakers a joint publication of the death announcement in the press and on the internet.

Aviscom argued before the Court of Appeal that the material prejudice it suffered was caused by the loss of opportunities to capture the market of obituary notices, the loss of its entire investments and the time needed to recapture the market. The Court of Appeal did not agree to take these elements into account and considered the loss of opportunities to capture additional market shares to be the only prejudice suffered in direct connection with the prohibited practice. However, according to the Court of Appeal, the actual lost opportunities cannot be assessed from this "loss of opportunities" and in the case at hand, Aviscom has not provided any elements that establish its market shares in the affected area since the end of the coupled sales practice. The Court of Appeal finally granted Aviscom a mere €5,000 for the competitive damage suffered instead of the €50,000 initially awarded by the Lyon Commercial Court.

In the second case, Switch, an online travel agent, requested compensation for the competitive harm it had suffered following the French Competition Authority's sanction of the French railway company SNCF and Expedia for anti-competitive agreement, via their joint subsidiary VSC, on the market of travel agency services for leisure trips. According to the Paris Court of Appeal, Switch established a direct and definite prejudice due to SNCF's anti-competitive practice consisting in its loss of earnings resulting from the definite loss of ability to propose its travel agency products to rail clients using SNCF who, after having visited the website voyages-sncf, were offered substitutable non-rail products by VSC.

For the assessment of the prejudice suffered by Switch, it was necessary to establish VSC's undue volume of business corresponding to clients wishing to benefit from travel agencies services, and who, due to the practices in issue, were captured at the expense of competitors including Switch, and to allocate to said volume a share equivalent to its market share and finally to calculate the margin which should have been made by Switch. On the basis of an economic report and other appraisals precisely documenting Switch's prejudice, the Court of Appeal awarded Switch €6.9 million as compensation for the competitive prejudice suffered. 

Even if the European directive on actions for damages is aimed at facilitating such cases in national courts, the main obstacle in France still remains the fact of being able to document the prejudice. Some claimants therefore prefer, whenever possible, to take legal action in more favorable countries such as the UK, the Netherlands or Germany.

Paris Court of Appeal: A non-justified pricing differentiation in terms of rebates applied by a dominant operator is discriminatory

In December 2015, La Boule Obut, a leading company in the market of pétanque balls, communicated its new marketing conditions applicable as from January 1, 2016 to one of its resellers, Pétanque Loungue.

The new rebate system comprises three levels:

  • Level 1: which is the less favorable, consists of the category of "engravers of pétanque balls,", which includes Pétanque Longue, and other categories of resellers, to which the lowest non-negotiable rebates are granted.
  • Level 2: concerns some retailer groups and non-expert individual retailers who are granted partially negotiable rebates that are higher than those of level 1.
  • Level 3: which is the most advantageous, includes several categories such as "specialized resellers" which are entitled to the highest rebates.

Furthermore, La Boule Obut considerably increased its prices for 2016 compared to those of 2015 (e.g. the RCC type ball increased from €106 to €158.33).

Alleging a price discrimination against La Boule Obut, Pétanque Longue lodged a complaint with the French Competition Authority and, in parallel, referred the matter to the Commercial Court which dismissed its claim. Pétanque Longue therefore lodged an appeal before the Paris Court of Appeal.

The Court of Appeal held on December 7, 2016 that La Boule Obut, in a dominant position on the market, is free to choose its pricing strategy as long as it does not discriminate among its clients. Such discrimination exists when pricing differentiations do not constitute the counterpart of a cost difference but are intended to disadvantage a category of operators with no objective reason.

In the case at hand, the Court of Appeal held in particular that no quantitative threshold in terms of volume of orders and no difference in terms of services provided by the resellers justify such difference in treatment. On the contrary, the Court of Appeal noted that the pricing differentiation is justified by La Boule Obut's will to discourage the activity of ball engravers by including them in level 1 of their rebate system. Furthermore, according to the Court, the sharp increase of wholesale prices, notified 15 days before the end of 2015 to be applied in 2016, may constitute a sudden partial termination of the established business relations.

Since the disturbance has been identified as manifestly unlawful, the Court of Appeal forbade La Boule Obut from enforcing its new commercial conditions on Pétanque Longue in 2016 until the French Competition Authority decides on the merits of the case. Until the Authority's decision, La Boule Obut will have to keep its pricing practices in check.

The French Competition Authority authorizes the takeover by Vinci Airports of Aéroports de Lyon, subject to commitments

By a decision on October 31, 2016, the French Competition Authority authorized the exclusive takeover of Aéroports de Lyon by Vinci Airports, a subsidiary of the concession and public works company, Vinci, following the notification of the transaction on September 6, 2016.

Given that the management and operation of Aéroports de Lyon will be entrusted to Vinci Airports after the transaction, the French Competition Authority granted its authorization subject to several commitments from Vinci Airports so as to avoid the latter from giving advantage, as a contracting entity, to the other companies of the Vinci group with regard to the award of works, supply, and service contracts for the Lyon airport.

Vinci Airports therefore undertook to ensure transparency in the procurement by inviting a representative of the Greater Lyon Chamber of Commerce and Industry, one of the local public shareholders of Aéroports de Lyon, to its procurement committee and by ensuring a strict separation between the procurement committee and the other entities of the Vinci group answering invitations to tender. It will also have to submit to an independent authority the list of invitations to tender made and selected candidates for all works, supply, and service contracts above €90,000 excluding tax.

These commitments shall be applicable until 2047, i.e. until the end of the concession term, to guarantee the maintenance of competition, notably with regard to small and medium enterprises in the region.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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