Five years after the introduction into French law of a leniency scheme directed at encouraging companies that have taken part in anti-competitive practices to end and denounce those practices, the Competition Council has, for the first time, applied the scheme to a cartel (Decision 06-D-09 of 11th April 2006). On the very same day, the Council issued guidelines in which it clarified the procedure as well as the benefits that repenting companies can expect from the scheme.
The leniency scheme accords a total or partial exoneration from pecuniary sanctions incurred by companies or entities participating in vertical (for example, among manufacturers and distributors) or horizontal (among competitors) collusion to set prices, to establish production or sales quotas, or to organize a repartition of the market. This exoneration is available whether collusion has occurred at local, national or European level. Since 2002, the maximum sanction under French competition law has increased to 10% of the company’s highest worldwide gross turnover during the period in which the collusive practices took place.
The Council’s guidelines are intended to provide real guidance and to offer companies a guarantee of relative uniformity in relation to the application of the leniency procedures with European Commission practice, thereby providing a certain degree of judicial security.
The Council has confirmed that it will grant a total exoneration from pecuniary sanctions incurred by any company that demands leniency and satisfies the following conditions: (1) the company commits itself to cooperate fully with the DGCCRF’s agents during investigations; (2) it has not put pressure on other companies to participate in the infractions; (3) it has not informed other companies of its leniency request; and (4) it commits itself to ceasing, without delay, its participation in illegal practices or at least suspending those practices until the leniency decision is rendered. In this regard, the Council seems to display more pragmatism than the European Commission by accepting a company’s continued participation in the collusive practices in order to maintain confidentiality and to preserve the effectiveness of the inquiry. It should be noted that companies that have actively participated in collusive practices through the use of pressure cannot benefit from the leniency scheme.
In addition, in order for the repenting company to obtain a total exoneration from sanctions, neither the Council nor the DGCCRF should already hold information about the practices in question, unless that information is insufficient to implicate the company.
If it is only possible to grant total immunity from sanction to the first company denouncing the collusion, the Council can always permit partial exonerations to any and all other companies that provide the Council with additional elements of proof that add significant value to the information already acquired. Even if only in principle, the reduction of the fine (calculated by virtue of the date and the company’s rank in the order of leniency requests presented) cannot exceed 50% of the amount of the sanction that would have been imposed upon this company if it had not benefited from leniency. However, the Council has retained the ability to grant more substantial immunity from fines.
The Council has received fewer than 20 leniency requests since 2002 and the majority of these requests have been received from subsidiaries of American companies. A certain number of questions remain among companies that are considering presenting a leniency request, in particular the increasing demands of consumer associations seeking damages collectively. The companies have a legitimate fear that victims (consumers or other competitors) may use their cooperation with competition authorities in relation to the leniency program to subsequently seek damages through the civil courts. The Council makes it clear in its statement that total or partial exoneration from pecuniary sanctions does not insulate a company from civil consequences arising from its participation in collusion. However, the Council wanted to send companies a strong signal by committing itself, as much as possible, to the confidentiality of the process (subject to the Council’s obligations, notably in regard to the European competition network) and by not turning cases over to the prosecutor’s office, which is authorised by the Commercial Code, if at the time of the inquiry, it appears that a physical person from the company (a director for example) has repented from having actively participated in putting the incriminating practices into action.
All that remains, is for the DGCCRF to convince companies, for whom providing this kind of information has not yet necessarily become standard practice, to make use of this leniency instrument.
The original version of this article (in French) is published in La Semaine Juridique, Editions enterprises et affaires, n° 19 (JCP E 2006, act. 221),11th May 2006.