CN06 - The French Competition Authority revises its notice on the method for setting fines

Ten years after the publication of its first notice describing the method followed when setting financial penalties, the FCA updated this document in late July 2021, in particular by incorporating new features transposed from the ECN+ Directive.

Key takeaways

• The revised version of the notice introduces substantial changes, stemming from the ECN+ Directive as well as the evolution of decision-marking practice and case-law over the past ten years, both at French and European levels.
• The new notice contributes to the convergence of rules applicable to the determination of financial penalties at the European level.
• The new notice also appears to provide the FCA the ability to impose higher fines than it was previously able to, thereby strengthening the deterrent power of the sanctions it can deliver.

On 30 July 2021, following a public consultation opened mid-June 2021, the French Competition Authority ("FCA") published a new version of its notice on its methodology for setting fines outside of settlement procedures (the "Notice"). The Notice repeals and replaces the previous version, dated 2011. 

The Notice has been amended based on the decision-making practice and case law adopted by the FCA, the European Commission and relevant courts over the last ten years. It also takes into account legislative and regulatory changes resulting from Ordinance No. 2021-649 of 26 May 2021, which transposed the ECN+ Directive into French law, and therefore furthers the convergence of French law with the principles applied by the European Commission when determining financial penalties in competition proceedings. 

The Notice refers in particular to the new maximum fine that can be imposed by the FCA on associations of undertakings; i.e. 10% of their total worldwide turnover, where the infringement does not relate to its members' activities, or 10% of all members' aggregate worldwide turnover, where the infringement relates to its members' activities. This should be contrasted with the EUR 3 million cap which previously applied. The Notice also provides details of the procedure for recovering fines of this nature.

In addition, in line with the ECN+ Directive, the Notice removes references to the concept of 'damage to the economy' from French law and states that the relevant criteria for determining the basic amount of a fine are the gravity of the facts and the duration of the infringement. 

With regard to these criteria, it is worth highlighting two notable changes which are likely to enhance the deterrent and punitive capacity of the fines imposed by the FCA:

• First, the Notice introduces the ability for the FCA to increase the proportion of the value of sales taken into account for the most serious cartels and abuses of dominance (which is still between 0% and 30%) by a sum of between 15% and 25% of the value of sales (known as the 'entry fee').
• Second, the Notice aligns the coefficient used to take account of the duration of an infringement with the one applied by the European Commission. Each full year of implementation of an anticompetitive practice will henceforth count as one year, as opposed to half a year as was previously the case, while periods of infringement lasting less than one year will be assessed on a pro rata basis.

With respect to the individualisation of the basic amount of the fine, new mitigating circumstances are provided for in the Notice.They may be applied when the offending undertaking or association of undertakings: (i) has put an end to the infringement as from the first intervention of the FCA; (ii) has effectively cooperated with the FCA beyond its legal obligation to do so and outside of the scope of a leniency application; or (iii) has already compensated victims for the damage suffered as a result of the anticompetitive practices implemented.

In addition, the Notice clarifies that, where the estimated illegal gains achieved by the offending undertaking or association of undertakings as a result of such practices exceed the amount of the fine that could be imposed on it, the FCA may increase the basic amount of the fine. Again, the objective is to preserve the dissuasive nature of financial penalties that the FCA may impose.

The last substantive amendment introduced in the Notice deals with recidivism. The Notice specifies that, when assessing recidivism, the FCA may take into account infringement decisions adopted at both national and European levels, either by competition authorities or courts.

In conclusion, beyond the useful clarifications it provides, it is noteworthy that the revised version of the notice should allow the FCA to impose more severe financial penalties on undertakings having engaged in anticompetitive practices than in the past. This is despite the fact that the FCA is already known as one of the most active competition authorities in the world.