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France

Ellisphere decision highlights benefits of French leniency regime¹

On 12 April 2023, the French Competition Authority ("FCA") fined Ellisphere, a company active in data collection and financial risk assessment, ?3.5 million for engaging in collusive practices for more than 30 years. The other party involved in the collusive conduct, Bureau Van Dijk ("BvD"), was acquired by Moody's Corporation ("Moody's") in October 2017, which subsequently applied for leniency and was fully exempted from any financial penalty.

Background

BvD and Ellisphere are active in the economic intelligence sector and sell subscriptions to databases such as Diane, Astrée, Amadeus and Orbis providing business information about French and foreign companies (including financial data, information on the identity of administrators and managers, etc.). The two companies have developed specific and complementary skills, Ellisphere focusing on the collection of information on French companies while BvD developed software for data collection.

The cartel conduct

As a result of their interrelated activities, Ellisphere and BvD entered into cooperation agreements as of 1989, by which they explicitly agreed on: (i) a common pricelist for the products they coedited; and (ii) a customer allocation scheme. These contracts were renewed on a regular basis since then. A steering committee was also set up to monitor price revisions and to ensure that the previously agreed rules were upheld.

As an illustration of the anticompetitive object of these contracts, the FCA referred to the following provisions:

• Evidence of price-fixing: "The parties undertake to sell Amadeus and Orbis at the prices defined in annex 2 and 3. Any revision of the price will be done by an addendum to this contract or by exchange of mails accepted by the parties.",
  
  
• Evidence of customer allocation: "In each country, a client will be attributed to the concerned Information provider or BvD according to the following criteria:
  
  
  • if the contract is subscribed following a trial installation, to the company having made the exhibition
    
    
  • if the contract is subscribed without a trial installation, to the company having obtained the contract.".

Snapshot: Other French developments

• The French Competition Authority warns against companies taking advantage of the inflation by making "excessive profits". Benoît Coeuré, head of the FCA, reminded companies that the authority has the means to impose severe sanctions (see press report in English, here).
  
  
• On 16 February 2023, the Paris Court of Appeal overturned a decision issued by the FCA fining a pharmaceutical company ?444 million for disparagement. The Court considered that the information that was regarded as disparaging by the FCA was in fact in the interest of public debate. (Judgment available in French only.)
  
  
• In a ruling (available in French only) handed down on by the Paris Court of Appeal on 5 April 2023, it was held that agents of the FCA may not, during a dawn raid, request that additional mailboxes be handed over to them post completion of the dawn raid. The Court held that undertakings would otherwise not be able to benefit from the guarantees relating to seized documents set out by the provisions of the French Code of Commerce governing dawn raids.
  
  

In July 2019, Moody's submitted a leniency application to the FCA, following a marker application to the European Commission. The Commission issued a non-proceeding letter in January 2021, whereby it stated it would not take any further action in light of the FCA's handling of the matter. In May 2021, after providing the relevant information to evidence the anti-competitive conduct, Moody's was granted conditional eligibility for total immunity from a fine by the FCA.

Comment

This case is the first application of the FCA's leniency program following the transposition of Directive 2019/1 of 11 December 2018 ("ECN+ Directive"), which aimed at harmonising various procedural aspects of competition law across Member States in the European Union.

The changes in the FCA leniency programme resulting from the transposition of the ECN+ Directive are not substantial, but the procedure has been significantly simplified. In lieu of the report by a case handler and the leniency notice issued by the College of the FCA (ie, the FCA's decision-making body), the Chief Case Handler (Rapporteur general) now interacts directly with the applicant. Based on the information provided, the Chief Case Handler determines whether the applicant is eligible for partial or full exemption from a financial penalty. This contributes to reducing the administrative burden for applicants which, in turn, spurs companies to resort to leniency procedures.

The FCA granted full immunity from financial penalties to Moody's in light of the extent and level of detail of the information provided by Moody's (which mainly comprised contracts, addendums, steering committee minutes, emails and letters exchange between the parties).

Ellisphere opted for the settlement procedure and decided not to contest the objections raised by the FCA. Ellisphere was eventually fined ?3.5 million, after benefitting from a reduction under the FCA's settlement procedure, which amounted to 7% of its worldwide turnover.

This case illustrates the potential benefits that can flow from making a leniency application following the acquisition of a company and of the importance of detecting potentially anti-competitive practices in the context of a transaction due diligence process (with Moody's successfully obtaining full immunity).

Germany

The German "Beer Saga" - Higher Regional Court adopts ?50m fine against Carlsberg

In 2014, the Federal Cartel Office ("FCO") imposed fines amounting to c. ?338 million in its proceedings concerning illegal price fixing agreements for beer.² The fines were imposed on a veritable "who's who" of German breweries, including Veltins, Warsteiner, Bitburger, Krombacher, Radeberger, Cölner Hofbräu P. Josef Früh and Carlsberg. AB InBev successfully applied for leniency and did not receive a fine.

The FCO concluded that in 2006 and 2007 the companies had exchanged information and agreed prices for their draught and/or bottled beers.

German Beer Basics: Pils vs Kölsch

While most of the brewers reached settlements with the FCO, Carlsberg and a group of regional Kölsch brewers appealed the decision to the Higher Regional Court of Düsseldorf. Kölsch is brewed according to the "Kölsch Konvention", one of the most strictly defined beer styles in Germany. According to the Konvention, it is a pale, highly attenuated, hoppy, bright (ie, filtered and not cloudy) top-fermenting beer.

But the difference between Kölsch and Pils in this case in not just a matter of taste. For the Kölsch brewers, the Higher Regional Court found that the factual evidence presented by the FCO for their involvement in the anti-competitive information exchange or outright price fixing was insufficient. In particular, the Court doubted the credibility of one of the main witnesses. It therefore completely acquitted the Kölsch brewers³ - a novelty in a cartel fine case - and its judgment was later upheld by the Federal Supreme Court ("FSC").

Most Pils breweries, on the other hand, settled the case with the FCO. Only Carlsberg appealed the decision. It achieved a major victory at the Higher Regional Court in April 2019, when the Court held that the offence was time barred. Carlsberg's victory was short-lived, however, as the FCO successfully appealed the judgment before the FSC, which overturned the judgment in July 2020 and referred the case back to the Higher Regional Court. In May 2023, the Higher Regional Court found Carlsberg to be guilty of a violation of Article 101 TFEU⁴ and its German equivalent (s.1 of the Act against Restraints of Competition ("ARC")) and imposed a fine of ?50 million.⁵

At the heart of the case lies a very important practical question: how should undertakings that engage in anti-competitive information exchange be penalised under German law?

The Higher Regional Court's 2019 decision...

In its 2019 decision, the Higher Regional Court confirmed the FCO's findings that Carlsberg's representatives had attended a meeting in March 2007, during which sensitive information had been exchanged: AB InBev announced that it would raise its prices for a beer crate by 50 cents. The other participants discussed whether a price increase in such "small steps" would be sufficient or whether a more large-scale increase by one euro per crate was more appropriate. They also debated whether such an increase would be realistic without the buy-in of Krombacher, the most popular German beer brand, which was not represented at the meeting. After March 2007 the brewers further discussed and agreed on price increases in bilateral meetings, in particular with Krombacher. However, Carlsberg did not participate in these meetings. For Carlsberg, the meeting in March 2007 had been a "one-off".

Based on these facts the Higher Regional Court concluded that the meeting in March 2007 did not amount to a concerted practice (and thus was not an infringement of competition law). In the eyes of the Court, the results of the meeting remained open and lacked an ultimate decision on how to proceed. In particular, with Krombacher not being present in the meeting, the Court could not establish a concerted practice because it could not find a causal link between the information exchange and Carlsberg's conduct on the market. Instead, the Court sought to construe the meeting as an attempt to reach an agreement on prices, which in itself constituted a concerted practice. However, given that this attempt had no lasting impact on the market and because the 10-year limitation period (which began in March 2007) expired before the Higher Regional Court could deliver a judgment. Accordingly, the Court terminated the proceedings against Carlsberg.

Snapshot: Other German developments

• The German Government has referred a proposal for reform of the ARC to Parliament, that would, inter alia, substantially increase the powers of the FCO to order a disgorgement of economic benefits for any violation of competition law (a non-official English translation of the proposal by the University of Düsseldorf is available here).
  
  
• The FCO has ensured that the animal welfare initiative "Initiative Tierwohl" (a sustainability initiative among the big German supermarket retailers) abolishes a compulsory premium due to competition law concerns (see here).
  
  

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Footnotes

1. The full text of the decision (in French) is available here and the FCA's press release (in English) is available here..

2. See press releases of 2 April 2014 (here) and 13 January 2014 (here).

3. Judgment of 8 September 2021 - V-4 Kart 4/16 OWi (see here (in German))

4. Treaty on the Functioning of the European Union.

5. Decision of 2 May 2023 - V-6 Kart 1/20 (OWi) (see here) (in German))

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