On 21 December 2017, the French Competition Authority imposed a €30 million fine on Brenntag for obstructing an investigation by refusing to provide information, or by providing information late or incomplete.
In 2002, the French Competition Authority opened an investigation into Brenntag’s conduct after a complaint by French chemical producer Gaches Chimie alleging that Brenntag's prices were discriminatory and predatory, and that it had pressured suppliers not to do business with Gaches Chimie. Gaches Chimie also alleged that Brenntag had initiated an anticompetitive agreement on technical fees between chemical distributors. The French Competition Authority also received other complaints concerning anticompetitive practices in the same sector, but the present case only concerns the unilateral and vertical practices.
During the investigation, the French Competition Authority considered that there were several difficulties in its dealings with Brenntag. First, the company provided incomplete, imprecise and late information, preventing the Authority from understanding the content of the agreements between Brenntag and its suppliers. Secondly, Brenntag refused to provide information and material documents (notably invoices and account records).
Finally, in light of Brenntag's refusal to provide the information requested, the French Competition sent requests for information to Brenntag AG, the parent company of Brenntag, through the Bundeskartellamt. The purpose of this request was to obtain certain contracts entered into on an exclusive basis by Brenntag AG, which were provided.
In light of these difficulties, the French Competition Authority sent a notice of obstruction to Brenntag in January 2017 and to Brenntag AG in July 2017.
In its response Brenntag argued for the annulment of two requests for information used as the basis for the obstruction claim and arguing the following:
- they were prepared by a case handler who was not empowered to issue them:
- the scope of the investigation was insufficiently defined and unspecific;
- compliance would generate and excessive amount of work for the company; and
- Brenntag also sought to justify its refusal to respond on the basis of its right not to incriminate itself.
These arguments were dismissed by the French competition authority as inadmissible and groundless.
The maximum level of fine that can be imposed by the French Competition Authority for procedural breaches is 1% of worldwide turnover (before taxes) accrued during the financial year preceding the one during which the infringing conduct was committed. In practice, the French Competition Authority specified that to set a proportionate fine, it would take into account the seriousness of the behavior, the particular circumstances of the case, as well as the impact of the conduct of the investigation and more generally the consequences for economic public order.
As regard the seriousness of the infringement, the French Competition Authority noted that the extent of the withholding of information constituted a stalling tactic which prevented it from understanding the functioning of the market and the merits of the complainants' allegations. It noted that to date the French Competition Authority still had not been provided with essential information to investigate the existence of an infringement.
The French Competition Authority noted that it is entitled to take into account, when determining the fine, the need for the fine to provide a certain level of deterrence. Noting that, since Brenntag had turnover of €10.3 billion in 2015 and that the maximum fine could have been €103 million, the French Competition Authority indicated that the necessity to ensure sufficient deterrence meant that the fine should amount to EUR30 million.
With thanks to Sarah Chikh of Ashurst for her contribution.
