France: Paris Court Of Appeal Confirms € 367.95 Million Fine In Detergent Cartel Case

On 30 January 2014, the Paris Court of Appeal confirmed a decision of the French Competition Authority ("FCA") imposing fines totalling € 367.95 million on four laundry detergent manufacturers, Colgate Palmolive, Henkel, Procter & Gamble and Unilever, for illegal price-fixing and for coordinating their commercial and promotional strategies between 1997 and 2004. Among the many grounds of appeal, the Court of Appeal dismissed arguments in relation to the principle ne bis in idem and the inapplicability of the 2011 French Guidelines on fines.

On 8 December 2011, the FCA adopted a decision imposing fines totalling € 367.95 million on four manufacturers for their participation in a price-fixing cartel, for the illegal exchange of confidential information and for collusion concerning their promotional activities on the laundry detergent market between 1997 and 2004. The products concerned by the cartel included laundry detergent in the form of powder, liquid and tablets sold to large retail groups. The investigations were triggered by an application for immunity made by Unilever in 2008 pursuant to the French Leniency Notice (see VBB on Competition Law, Volume 2011, No. 12, available at www.vbb.com).

In its judgment, the Court of Appeal first dismissed claims brought by Henkel and Procter & Gamble that challenged the FCA's decision for violating the ne bis in idem principle. According to appellants, the FCA should have taken account of the European Commission's April 2011 decision finding them to have infringed Article 101 TFEU for operating an illegal cartel on the laundry detergent market in eight Member States, including France. In addition, they argued that the conduct at issue in the French and the EU proceedings constituted a single continuous infringement and as a result, that the French proceedings should have been dropped or, at the very least, that the amount of the fines imposed by the FCA should reflect the fact that the Commission had already fined the complainants on the same grounds.

In dismissing this aspect of the appeals, the Court of Appeal underlined the fact that the FCA and the Commission had adequately coordinated their actions, as the former had inquired with the latter on whether or not the proceedings at national and EU level were distinct. The Commission had responded by letter in April 2010 that the infringements pursued by each authority were distinct and that the FCA was in a better position to investigate the alleged infringement on the French territory.

In addition, the Court of Appeal found that, in any event, the ne bis in idem principle did not apply to the case as the -French and the EU proceedings concerned separate cartels as they did not share the same facts and the same participants or protect the same legal interest. The Court of Appeal found that (i) the practices investigated by the French and the EU proceedings differed, as the former concerned laundry detergents in the form of powder, liquid and tablets whereas the latter only related to laundry detergent in the form of powder; (ii) the cartel in the French proceedings lasted from 1997 to 2004 while that in the EU proceedings lasted from 2002 to 2005; (iii) Colgate Palmolive was only concerned by the French proceedings and not by the EU proceedings; and (iv) the Commission found that the companies operated a cartel aimed at indirectly fixing prices as opposed to the FCA finding that the companies directly fixed prices. As a result, the Court of Appeal dismissed the claim based on the ne bis in idem principle.

Concerning the amount of the fines, the Court of Appeal dismissed the claims of the companies that the fines imposed by the Commission for operating an illegal cartel in eight member States (including France), and the way they were calculated, should have been taken into account by the FCA when calculating the amount of the fine to be imposed. Thus, for instance, the fact that the Commission calculated the basic amount of the fine for Henkel based on 16% of its turnover whereas the FCA based it on 20% did not violate the principle of equal treatment as the facts of the cases differed.

Finally, the Court of Appeal rejected the companies' argument that the FCA had breached the principle of non-retroactivity by relying on the 2011 French Guidelines on fines for events which took place between 1997 and 2004. The Court of Appeal held that the provisions of the guidelines merely codified already established practices and simply transcribed the legal framework of the French Commercial Code.

The Court of Appeal accordingly dismissed the appeals in their entirety.

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