On 16 January 2020, the Paris Court of Appeal confirmed the 2018 decision of the French Competition Authority ("FCA") to fine several producers and wholesalers active in the sale of liquid fertilizers for domestic cultivation for having imposed vertical restraints.
| what you need to know - key takeways |
- The Court considered that a precise definition of the relevant market is not necessary when establishing the existence of an anticompetitive agreement, as long as the sector can be sufficiently identified.
- When there is enough direct and explicit evidence as to the existence of a price-fixing agreement, it is not necessary to prove that the retailers effectively applied the prices.
- In order to determine whether an undertaking is "single-product" and should be entitled to a discount in its fine, the total turnover of the undertaking composed of the infringer and its parent company, when both are held liable, should be taken into account.
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In its decision of 20 December 2018, the FCA fined a number of producers (including Canna France ("Canna")) and wholesalers of liquid fertilizers for domestic cultivation for arrangements amounting to resale price maintenance.
Canna, which was fined EUR 152 000, appealed the FCA's decision, but its arguments were entirely rejected by the Paris Court of Appeal.
Canna argued that the FCA should have defined the relevant market on which the practices occurred. However, the Court noted that such a definition is not crucial for the purposes of sanctioning an anti-competitive practice, especially when the sector in which the conduct took place can be identified with sufficient precision.
Canna also criticised a lack of evidence set out by the FCA to demonstrate the practices concerned. It argued, in particular, that it had not monitored the implementation by wholesalers of its resale prices which, it claimed, were merely recommended prices. However, the Court decided that there was enough evidence in the file that showed that the parties had actually agreed on the implementation by the wholesalers of the resale prices set out by Canna for its products.
Canna finally criticised the manner in which the FCA had applied its fining guidelines. According to these guidelines, any fine should be mitigated when it is imposed on an undertaking which only produces the product affected by the practice (so-called "mono-product" firms). The rationale for this discount is to prevent too high a proportion of the company's total turnover being taken into account in calculating the fine. The Court agreed with the FCA that, where the company in question is found jointly and severally liable with its parent company, the question of whether the company is mono-product must be assessed across not only the infringing company, but also taking account of its parent company's activities.
With thanks to Marie Florent of Ashurst for her contribution.
