RÉPUBLIQUE FRANÇAISE
The New French Competition Authority: mission, priorities and strategies for the
coming five years1
Bruno Lasserre
President of the Autorité de la concurrence
I. INTRODUCTION
France is today at a turning point in its history of enforcing competition law and
policy. Its institutional framework was overhauled just a few months ago after a brisk reform,
completed in less than a year. The bifurcated system in place for 20 years that scattered
powers and means between an independent enforcement agency, the Conseil de la
concurrence (―Competition Council‖), and the Ministry of Economy, Industry, and
Employment, was swept away. A single independent Autorité de la concurrence
(―Competition Authority‖) has replaced it, vested with the full spectrum of competition
enforcement powers.
The future will be key as the new Authority takes shape, frames its mandate,
objectives, and strategies, and focuses on delivering tangible consumer welfare results while
safeguarding a friendly environment for businesses that put competition at the heart of their
trade.
II. FROM COMPETITION COUNCIL TO COMPETITION AUTHORITY: A
SINGLE AND STRONGER INDEPENDENT COMPETITION ENFORCER
March 2nd, 2009 marked the advent of the Competition Authority, which was created
by way of transformation of the Competition Council. This new name reflects a profound
change in its status, powers, and means.
After more than 20 years of successful competition enforcement by the Council, which
was an independent public body vested with the power to adjudicate antitrust cases and to
give opinions on competition matters as well as on bills, or draft bills, having an impact on
competition, the executive branch indeed decided to expand the Council’s mission and
1
The current paper is an amended version of an article initially published in Trustbusters: Competition Policy
Authorities Speak Out, D. S. Evans and F. Jenny Eds., Competition Policy International, 2009.
revamp its procedures.2 The process leading to this reform was very symbolic: the president
of the Republic in person gave the initial impetus, while the parliament later insisted that the
political aspects of the new system — creating the new Authority and making it responsible
for merger review — be included in a law, and not in a mere governmental ordinance as
initially envisioned by the administration.
A. An Organization Balancing Enhanced Efficiency and Enhanced Fairness
1. Enhanced Efficiency
The new Authority benefits from an enhanced institutional standing. Its independence
features prominently in the law, which also lays out its mission of enforcing competition law
and policy at the national level, as well as contributing to antitrust enforcement on the
European and international scene. Its president, appointed by the president of the Republic
following congressional hearings, has been empowered to discuss, on a regular basis,
activities, results, and perspectives with both chambers of the parliament. This change3 is an
excellent ―plus‖ as compared to the previous system because independence and accountability
now go hand in hand.
The Authority takes over the current organization of the Council while incorporating
the teams formerly in charge of carrying out dawn raids within the Ministry of Economy.
Thus, France now enjoys a single independent competition agency, able to cooperate or
exchange information not only with the European Commission and various National
Competition Authorities (―NCAs‖) of the European Competition Network (―ECN‖), but also
with foreign competition agencies.
2. Enhanced Fairness
Due process and rights of defense remain guaranteed by a fully fledged system of
internal checks and balances. Antitrust cases are launched and prosecuted by the Investigation
Services acting under the direction of the General Rapporteur with no involvement of the
College whatsoever. The College then adjudicates all aspects of the case, with no involvement
at all by the Investigation Services in the decision-making process. This separation of
functions, which is not imposed by the European Convention of Human Rights (―ECHR‖),
has proved extremely beneficial because it guarantees an intense debate both with the parties
and within the organization that ultimately leads to rich, strong, and fair decisions.
As compared to the previous system, the College may now benefit on a number of
procedural issues (e.g., protection of business secrets) from the additional backup of a
Hearing Officer, whom parties can turn to in cases in which the Investigation Services has
2
Law n° 2008-776 of August 4, 2008 of Modernization of the Economy, and Ordinance n° 2008-1161 of
November 13, 2008 of Modernization of Competition Regulation (available at http://www.legifrance.gouv.fr)
3
See Bruno Lasserre, Planning for the Future: Which Status and Which Means for Competition Authorities ?,
Conference organized by La Lettre des juristes d’affaires and Revue Lamy de la concurrence for the 20th
Anniversary of the French Competition Council, Paris, March 15, 2007 (available at
http://www.autoritedelaconcurrence.fr/doc/intervention_lasserre_2007_03_15_lamy.pdf).
2
issued a statement of objections. Given the internal separation between the investigative body
and the adjudicative body, the Hearing Officer (which is a first among European NCAs)
unlike its Brussels counterpart has not been given a decision-making power on procedural
issues because that would have been a step back insofar as it would have deprived the parties
of the benefit of a collective decision taken by the College. The Hearing Officer is therefore a
procedural expert who can follow the investigative process and help resolve issues as they
arise before providing feedback to the College.
B. A Single Enforcer for Mergers and Antitrust
1. Reinforcement of Existing Powers
The Authority is now solely responsible for making competition work on the markets
by overseeing mergers as well as by enforcing rules prohibiting cartels, anticompetitive
agreements, and abuses of dominance. This full jurisdiction translates into a comprehensive
toolkit, including the power to carry out all dawn raids and investigations necessary to enforce
competition law, to grant interim relief in urgent cases, to issue cease-and-desist orders and
injunctions, to craft behavioral and/or structural remedies (including imposing fines when
faced with practices that have damaged consumer welfare), to reach a settlement, to accept
voluntary commitments aimed at swiftly restoring competition to the marketplace, and to
monitor the implementation of its decisions by market players.
2. Addition of New Powers
Leaving individual case management aside, the Authority has acquired greater abilities
to select strategic cases and to focus on high value projects, thanks to a mechanism that allows
its General Rapporteur to take over investigations envisaged or conducted by the local
network of the Ministry of Economy when they signal a potentially important case, and to
hand over local practices to this network that do not affect interstate commerce and do not
warrant antitrust enforcement. If these cases are not taken over by the Authority and if they
only concern small- and medium-sized companies, the local branches of the Ministry will be
able to offer them – but in no way impose – an administrative settlement. The Authority thus
is the only French organization empowered to enforce French antitrust rules and to apply EU
antitrust rules (articles 81 and 82 of the EC Treaty).
In the same vein, the Authority has gained the power to deliver on its own motion, and
not only upon governmental, legislative, or private request, public opinions on any
competition issue, including legislation and draft legislation. It has also become entitled to
make recommendations to the government. Finally, it may carry out sector enquiries without
necessarily having to start litigating against individual market players at the end of the
process.
As for mergers, the Authority takes over the power hitherto exercised by the Minister
of the Economy, namely to adjudicate all reviewable mergers pursuant to an expedited
assessment (―phase 1‖), unless they give rise to competition concerns that have not been
remedied during this time frame or otherwise warrant an in-depth examination (―phase 2‖).
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This evaluation, which focuses exclusively on competition issues (including possible
efficiency gains) remains subject to full judicial review, as under the current system. As for
the Minister of the Economy, he keeps the right to evoke strategic mergers (i.e., mergers
raising issues of public policy other than competition) and to rule on these exceptional4 cases
without being allowed to override the competition analysis of the Authority. Hence, market
players are certain that the competitive assessment of the deal made by the Authority is final.
In a nutshell, by bringing antitrust, mergers, and advocacy under the same roof, the
new law guarantees firms and consumers that French competition law and policy will be
enforced in a unified way.
III. LOOKING AHEAD AT FRENCH ANTITRUST POLICY
The Authority’s top priorities must remain consumer welfare, consumer welfare, and
consumer welfare.
A. Vigorous Enforcement in All Cases that Significantly Hurt Consumers—and Only in Such
Cases
1. Continued Deterrence
Ever since 2004, the Competition Council has made it a core priority to step up cartel
enforcement, which had previously remained rather limited compared to other jurisdictions.
Detection was hugely facilitated by the setting up of a corporate leniency program in 2006.
The program was updated in 2007 after the adoption of a common European leniency
program, mainly to incorporate a summary procedure intended for international cartel
applicants. Intense prosecution triggered either by leniency applications or proprio motu
investigations led to an unprecedented number of convictions, featuring landmark cases such
as the Mobile Phones cartel (2005), the Perfumes and Heating Systems cartels (2006), the
Toys cartel (2007), and the Air Fuel cartel (2008), as well as a number of major bid-rigging
cases in the construction and public work industries (2006 and 2007).
The Authority’s latest cartel decision, the Steel Trade case in which total fines of
Euro 575 million were imposed, once more illustrates that cartels are immensely detrimental
to consumers as well as to the economy and society as a whole. But they are not only that:
they are unconscionable. Free-market economy translates into companies becoming rivals in
cleverness, innovation, and competitiveness in order to attract customers. Competition
translates into consumers enjoying greater choice, better quality, and lower prices. In contrast,
cartels mean that the vast mass of clients and consumers are illegally deprived of all these
benefits, which are instead captured by a handful of corporations.
4
Report n° 413 of the Senate of June 24, 2008, made in the name of the Special Committee on Economic
Modernization by Mr L. Béteille, Mrs E. Lamure and Mr Ph. Marini, p. 334 (available at
http://www.senat.fr/rap/l07-413-1/l07-413-11.pdf).
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For example, in the Steel Trade case, the Authority found that all of the main market
players on the French steel wholesale trade market had colluded to fix prices in common and
to allocate markets and clients on the entire territory between 1999 and 2004. During all those
years, the thousands of small- and medium-sized companies that depend on them — ranging
from building constructors to key makers — were deprived of the benefits of competition and
charged with overprices amounting to hundreds of millions of Euros. None of them was able
to resist the very comprehensive and sophisticated schemes set up by the cartelists in order to
make certain that nobody would slip through (e.g., national, regional, and local meetings,
including those through the specialized professional trades that provided logistical support to
the cartel; dissimulation through cover offers; monitoring and control mechanisms; sanctions
in case of deviation, etc.). None of this should happen again!
The French Competition Authority will remain uncompromisingly committed to
uncovering cartels and punishing all those rogue firms that collude to artificially fix prices,
share markets, or ration demand. Market players must anticipate that trying to make money
off the backs of French consumers does not yield profits and entails ever-greater risks of
detection, prosecution, and fines. As for consumers, they should be aware that the Authority
will not let them down. The Authority’s determination to make certain that competition works
for the benefit of each and every consumer is the backbone of its mission and legitimacy.
But cartels are not alone: the Council had long made it clear that whenever robust
evidence proves that other types of anticompetitive agreements (as well as unilateral
strategies) have significant hurtful effects for consumer, prosecution is warranted.5 The
landmark unilateral conduct decisions in the France Telecom and Corsican Cement cases
(2007) are there as reminders that consumers may also be victimized by firms acting alone,
and that, in such cases, fines must be set at a level that guarantees adequate deterrence. The
Authority will build on that strong record of not letting go unpunished business strategies that
are intended to exclude or tame efficient competitors, as well as those that actually do (or
potentially can) foreclose worthy competitors from the marketplace.
2. Greater Predictability
Nevertheless, it is high time the Authority enhanced yet further openness and legibility
in that respect. For instance, the French Code of Commerce states that, as in the European
Union, fines are set within a ceiling of 10 percent of the highest worldwide turnover and at a
level that is proportionate to the individual situation of the offender, to the gravity of the
infringement, to the significance of the damage caused to the economy, and, where applicable,
to recidivism. This framework guarantees proportionality while allowing the Authority to
exercise the discretion necessary to ensure deterrence. However, the Authority has everything
to gain — and nothing to lose — from setting out in greater detail the criteria by which it
makes use of this discretion. Guidance on fines is a ―win-win‖ for everyone from market
players to competition enforcers. The Authority will therefore move forward on the project of
preparing a procedural notice on the setting of fines.
5
See Bruno Lasserre, Remedies and Sanctions for Unlawful Unilateral Conduct: The French Experience,
Fordham Competition Law Institute’s 34th Annual Conference on International Antitrust Law and Policy,
September 27 and 28, 2007 (available at http://www.autoritedelaconcurrence.fr/doc/fordham_2007.pdf).
5
However, in a system based on the rule of law, competition authorities do not have the
last word. Predictability also depends on the way national judges set out to control antitrust
fines once the Authority’s guidelines have been adopted. This works perfectly well at the EU
level: the Court of First Instance and Court of Justice are, of course, not bound by the
Commission’s guidelines, but they have decided to apply them when controlling the legality
of antitrust fines — and they routinely do so.
B. Robust Economics and Strict Rules
1. Effects-Based Analyses of Competitive Pros and Cons
The Authority’s mission is to make certain that competition works in the marketplace.
It is not to interfere in the way firms conduct their business as long as their behavior is not
incompatible with antitrust law. Competition authorities work for consumers, but at the same
time they work with companies. Their legitimacy stems not only from their ability to best
protect consumer welfare, but also from their capability to foster merit-based competition.
The Authority will make it a priority to build on the Council’s great track record of
feeding tailor-fit, effects-based analyses into its decisions unless faced with a hardcore cartel
or a case in which the anticompetitive object of the practice at stake is evident. The
Competition Council has long had a number of economists among its ranks, be it on the
prosecution or the adjudication side of the house. In the last years, it has stepped up its policy
of recruiting experts in antitrust economics, in industrial economics, or in complex industries
such as high tech, telecoms, energy, or pharmaceuticals. A stand-alone, full-function
Economic Service has also been created run by a dedicated Chief Economist, all of which
ensures that economic issues are never treated lightly.
The Authority will continue to move along that path. Its antitrust enforcement must be
intelligent and balanced. It must stay clear of prejudice and bias. Per se rules must be strictly
limited, both rules of per se illegality (which entail a clear risk of turning good cases into bad
law) and of per se legality (which risk turning bad cases into bad law). As has been often
stated elsewhere, actual and potential effects on consumer welfare are the way forward,
although some cases are manifestly less complex or more straightforward than others.
Strategies that benefit consumers should not be hindered by antitrust policy. Even
conduct that is simply neutral for consumer welfare should not be chilled by misconceived
enforcement. In addition, merit-based competition should not be impeded by illegitimate
antitrust claims. Therefore, the Authority will carry on striving to apply a unified, consistent,
and predictable policy towards unilateral conduct cases based on the following ingredients:
(a) a high standard of proof (first of all for the agency itself); (b) a balanced sharing of the
burden of proof, in which the agency must come up with robust and cogent evidence that the
conduct of the dominant firm, considered in its market context, is likely to hurt consumer
welfare by excluding (either actually or potentially) efficient competitors from the
marketplace, while the firm is always welcome to come up with relevant and convincing
evidence that its conduct is justified by likely efficiency gains; and (c) a careful assessment of
the scenario at stake, on the basis of sound economic tests, of the facts of the case and of all
the available evidence. Of course, being consistent and predictable does not mean being
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mechanical: if market circumstances evolve, the Authority’s analyses may well have to be
adapted or fine-tuned.
2. Global Guidance
Although this approach rests on a principled decisional practice, the Authority will
need to publicize clearer guidance on its methods and priorities. This is obviously not
something the Authority can do in isolation. Convergence is utterly needed throughout
Europe, and further focus on better practices is also something that would be useful among
the international antitrust community. It has been long advocated that given its role at the core
of the ECN, the European Commission should release guidance on Article 82 of the EC
Treaty. It is not difficult to imagine the many points on which such a document, now public,
can add a huge value. Although the Authority is not legally bound by it, it is likely to follow
its spirit and act in light of its legal and economic tests. This should not come as a surprise
given the Authority’s attachment to EU law. The French Competition Council has
traditionally been very active in the network, be it in terms of national cases applying EU
competition law (with 162 cases put on the network out of a total of 995 EU and national
cases, and 51 decisions applying EU law out of a total of 316 national decisions6) or in
contribution to the operation and work of the advisory committee consulted by the
Commission on draft antitrust decisions as well as on draft hard and soft law, pursuant to
Article 14 of Regulation n° 1/2003.7 The Authority will continue to do so in the coming years.
Coming back to common guidance on unilateral conduct cases, it must be emphasized
that the Authority’s efforts to converge toward better practices should also incentivize firms
and their lawyers ! France has long made known its willingness to discuss efficiency gains
with market players, but up to now there have been relatively few robust claims of efficiency
gains in antitrust cases, especially in vertical restraints cases. Therefore, market players need
to beef up their cases.
IV. LOOKING AHEAD AT FRENCH MERGER REVIEW
The transfer of merger control from the Minister of the Economy to the independent
Competition Authority is certainly the flagship measure of the amended competition
enforcement regime. Bringing to life this new French merger control will undoubtedly be the
biggest challenge for the Authority.
A. Efficient and Predictable Processes
1. Making the Most of the Two Phases of the Review Process
6
Statistics available at http://ec.europa.eu/competition/ecn/statistics.html.
Regulation of the Council (EC) n° 1/2003 of December 16, 2002 on the implementation of the rules on
competition laid down in Articles 81 and 82 of the EC Treaty (available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:001:0001:0025:EN:PDF).
7
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The French conception of merger review is closely in line with the international
consensus. Yet, there is always room for progress. Looking beyond the texts, the
implementation of the new law should translate into further efficiency gains in terms of
procedural efficacy, fairness, and timeliness for the merging firms as well as for the
Authority.
As the Authority set forth in its recent Opinion on the reform of the French
competition regulatory framework, ―Competition law is a tool intended to make free
enterprise work for consumers,‖ among other things through merger control, which is ―a
system of ex ante review that imposes, in a free economy, to clear all mergers that do not
harm competition and to block only those whose anticompetitive effects cannot be adequately
remedied‖8. The Authority will take the necessary steps to ensure that the two-stage review
process (phase 1/phase 2) provided by the French Code of Commerce better serves that
purpose in the coming years. This procedural framework should be used more clearly as a
means of swiftly differentiating between mergers that do not give rise to significant
competition concerns and must therefore be cleared expeditiously (without imposing undue
delays, red tape or other administrative burdens on the merging firms), and mergers that are
likely to cause significant consumer harm and thus warrant a more intensive assessment. The
Authority will explore all suitable ways of providing additional flexibility in that regard. In
cases in which it is evident from the start that the deal raises no competition concern
whatsoever, there should be room for quicker clearance without necessarily delaying the
decision until the 25th and last working day imparted for a phase 1 assessment. Likewise, in
cases in which it is clear that the operation raises no novel legal and economic issue, there
should be room for focusing or streamlining the decision instead of unfolding the full
reasoning behind it. But companies cannot have it all: either the Authority dwells on market
definitions, market power, and so on, and its decision becomes a part of the case law, or it
hands out a brief decision, or even just a letter acknowledging that the operation does not give
rise to any significant concerns, in which case firms cannot expect any precedent to be set.
However, this flexibility must work both ways. The fact that a merger gives rise to
competition concerns should not necessarily mean that it is headed for a 65-working-days
phase 2. As speed is of the essence in merger cases, the Authority should not allow itself to be
imprisoned by rigid thought processes. The French Code of Commerce allows firms to come
up with proposals of remedies from the very first day of phase 1. Firms are strongly urged to
take advantage of this opportunity. In the past, much too often, companies waited until the last
days of the procedure to make minimalist offers of remedies — but the experience of the
Competition Council shows that this is a ―lose/lose‖ game ! It would be far more interesting
for market players to take a proactive part in the shaping of a suitable solution instead of
doing too little, too late, and then being confronted to remedies that have been unilaterally
crafted and imposed by the agency. On the Authority side, it should not hesitate to clear
operations within the phase 1 time frame if it can conclude that the proposed commitments lift
any competition concerns. The new law will help greatly, as it enables the merging parties to
ask for a suspension of periods (for a maximum of 15 working days in phase 1 and
20 working days in phase 2) in order to finalize an offer of remedies.
2. Achieving Efficiency Gains All Across the Board
8
Opinion n° 08-A-05 of the Competition Council of April 18, 2008, relating to the draft reform of the French
competition regulation framework (available at http://www.autoritedelaconcurrence.fr/pdf/avis/08a05.pdf).
8
Much more needs to be done if the Authority wants to fully materialize the efficiency
gains made possible by the reform. The new law creates a one-stop shop for merging firms
who will now deal with the Authority all the way through, from pre-merger discussions
(which will remain available under the Authority’s open door policy) all the way to clearance.
The Authority will set up a dedicated merger unit, mixing first-class experts with younger
talents, who will handle cases from beginning to end. However, we do not intend to replicate
the redundant system that existed when France had two merger agencies. Apart from the core
concepts, analytical tools, and procedural instruments of merger review (market power,
effects, efficiency gains, remedies, etc.) being increasingly intertwined with those of antitrust
law, there must be no gap or inconsistency between the Authority’s handling of mergers and
its antitrust policy. Merger teams will, of course, benefit from the skills of the Chief
Economist, who will advise on the merits, particularly in complex cases. But all in-house
―knowers,‖ including antitrust case handlers, must be available to give a hand to phase 2
cases, which often require additional experience of a given sector. All these inputs will be
provided under close supervision and scrutiny, and given the manageable size of the
Authority, will translate into internal dialogue, peer review, checks and balances, and
ultimately, well-informed and well-reasoned conclusions.
Entrusting merger control to a focused, agile, and expert Authority will benefit not
only the investigative but the adjudicative process. The new law combines the best of two
traditions. Phase 1 decisions, which were taken by the Minister of the Economy in the
previous system, can now be made by the president or a vice president acting alone — a
useful tool for speeding up unproblematic cases, bearing in mind that the person who makes
the decision can always discuss it first with members of the College to exchange experience
and diagnoses. As for phase 2 cases, having the Authority onboard means that parties
systematically have the benefit of a fully fledged hearing with the College on all aspects of
the case. But the subsequent phase 3, which encapsulated all the shortcomings of the previous
system (in which the Council after having heard the parties gave an opinion on the merits and
on possible remedies to the Minister of the Economy, with the parties then being obliged to
start a new discussion with the ministry) has been eliminated in the new system. This means
that phase 2 cases are not only going to be discussed collegially with the Authority, but also
decided collegially by the Authority. This is clearly a move in the right direction because the
social and economic acceptance of merger control rests on its intellectual legitimacy, which
must be earned over and over again in each case through a frank and constructive debate on
the competitive pros and cons of the merger with the parties.
Last, but certainly not least, the Authority’s strategic work plan will include a good
deal of thinking on predictability: which deals should require Authority notification ? When ?
What data should be submitted ? Under what form should the data be handed over ? At what
stage of the process ? — and so on. In the short term, the Authority will take over the Merger
Guidelines issued by the Ministry of the Economy in 2005 and amended in 2007 that cover a
number of issues ranging from competence and procedures to substantive analysis and
remedies. These have proved relevant and useful on many points and have brought seriously
needed guidance to the marketplace. The Authority sees them as an integral element of the
overall stability of its system and approach. However, moving beyond yesterday’s
achievements is necessary if the Authority is to build tomorrow’s successes. That is why the
Authority will update the Merger Guidelines as soon as it has acquired sufficient experience
under the new regime, possibly in the coming months.
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All of this will naturally be done while keeping a close eye on new developments
abroad. An increasing number of mergers are transnational, or in any case multijurisdictional.
Convergence on better practices, and where relevant and feasible, coordination on case
handling, may help significantly. Considerable work has been done since 2001 by the
International Competition Network (―ICN‖), within which the previous two French
competition agencies had traditionally been very active since its inception. Most of the
Authority’s practices reflect this general consensus, but for instance, its first contacts with the
business community indicate that a simplified notification template focusing on a few core
questions and requesting only a limited number of business documents and data (to be
supplied in readily available formats) would be useful besides the Authority’s standard
template. The Authority has started thinking about that.
B. Continued Modernization of a Substantive Approach
1. Modern Tests, Rigorous Methods of Evaluation, and Legible Decisions
The Authority’s merger control framework underwent a significant reform in 2001,
which led to setting up a compulsory, suspensive two-phase procedure triggered by turnover
thresholds. Since then, France has acquired significant experience, which denotes a very
modern and unprejudiced approach to mergers. The Authority’s substantive test centers on the
substantial lessening of competition, whatever form it may take. The Authority’s competition
assessments are meant to integrate all market circumstances and economic parameters,
including changes likely to modify the conditions of competition on the relevant markets in a
foreseeable future. It never reaches conclusions on a theory of competitive harm without
having fully evaluated the arguments and evidence brought forward by the merging parties as
well as the remedies offered to alleviate its concerns. Therefore, the Authority has extremely
few adverse findings, with 95 percent of all operations being cleared without conditions and
the remainder being allowed to go forward subject to remedies.
However, this statement of account does not mean that the Authority should rest on its
laurels — quite the contrary. Switching from a government administration to a slim authority
specially commissioned to look at competition cases and to come up with competition
solutions means that greater reactivity and accountability will be brought at the very heart of
the organization and its interventions. The decision maker (the president or a vice president
delegated by him) and the case team headed by the new Chief of the Merger Service (who is
an expert with a strong merger background as well as a broader competition enforcement
experience) will constantly interact throughout the process. Authority decisions will be fully
informed by the specific economic circumstances of the case and mastered by the case
handlers, with the firms guaranteed that the cases are fully adjudicated by the enforcers
themselves (i.e., by the people who have received a mandate to do so).
The chief concern in the coming months will be to make certain that merger decision
after merger decision, the Authority develops a practice that matches in terms of quality and
legibility the one that has been developed over the last years by the Council in the field of
antitrust. The Authority’s approach to market power and counter-power, its assessment of the
economic scenarios at stake, its analysis of efficiency gains, and its conception of remedies
will need to be set out in predictable terms from the outset, although it will of course resolve
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issues as they arise and refrain from theorizing before having sufficiently experimented with
them.
There is one particular field where some progress could be made. By and large,
everyone in the world of competition enforcement is now convinced that grounding cases on
actual and potential welfare effects of corporate behavior and changes in market structure is
not only needed, but also vital to intellectual and institutional legitimacy. However, this does
not mean that enforcement authorities have fully come to terms with modernization. Although
the Authority now knows what it should be looking for when reviewing cases, it can still
move forward on the related (but different) issue of how to effectively look at it. The
Authority has done a great deal of work on the standard of proof, which was not an easy task,
given the need to make prospective analyses, and the great results the Authority has achieved
should not be underestimated. However, having a rigorous standard of proof and making it
known that the Authority has carefully thought about the economic tests it applies are only
part of the job. Enforcers hear a lot about economic stories in its hearing rooms. But rather
than being carried away by stories, they should stick to facts. There are many stories in the
files. Enforcers must make certain that the one they are reading is actually the one being told
by the case.
The Authority will therefore intensify its thinking and efforts on the methods and
criteria it uses when evaluating factual evidence, specifically economic and econometric
evidence. Competition enforcers should be competition experts (i.e., both able to understand
competition parameters and experienced in applying competition rules to all markets and
markets conditions). But they cannot and should not become specialists of particular
industries. When they handle a given case, they have a lot to learn from the industry and/or
from technical or scientific experts. Nevertheless, they must remain in the driver’s seat.
The toolkit of any serious competition enforcer (be it an administrative body such as
the Authority or a judge) should include guidance on how to assess expert evidence — in the
Authority’s case, economic and econometric pieces of evidence. Are they conceptually sound
? Who says so ? Have they been tested in practice ? Are they relevant to the specific case
under review ? Do they provide robust insight on what the company or companies involved
are trying to achieve ? Do they make a consistent picture when put together ? Achieving
further systematization on these issues should be a very stimulating and fruitful challenge for
the Authority’s case handlers, managers, and College.
2. Playing a Part in the Broader Merger Community
The Authority is part of a broader network that brings together all European
competition authorities, each of them doing what is best done at its level. The Authority
intends to be an integral component of this network — something it has already achieved in
the field of antitrust since the inception of the ECN in 2004, and something it is expected to
do more generally since the new law specifically calls for the Authority to contribute to
competition enforcement at EU and international levels.
The Authority also intends to be at the forefront of the merger dialogue that takes
place within the ICN and the OECD, as it has already started doing for antitrust since 2004.
The Authority can learn a lot from others, and those others may also have an interest in
gaining better knowledge of the Authority’s vision and practice. During the last year, the
process that led to the Authority’s institutional reform demonstrated once more that the ICN
11
and OECD are unique forums for benchmarking and for amassing understanding of how
competition enforcement is organized in other jurisdictions, how it works in practice, and
what results it manages to achieve. Their numerous reports and best practices along with their
workshops and roundtables have given the Authority a fairly good idea of what it does well
and what tools or practices it could fruitfully take over to optimize its system (something it
actually did with the new law). Accordingly, it is only fair that the Authority tries and gives
other agencies as much as they have given to it by reaching out and investing in their merger
projects.
But the Authority’s look beyond its borders should be done in parallel with working
together with French regulatory bodies, be it sector-specific agencies such as those in charge
of telecoms (the Electronic Communications and Posts Regulation Authority — ―ARCEP‖),
media (the Superior Council of Audiovisual — ―CSA‖) and energy (the Energy Regulation
Commission — ―CRE‖), or agencies with broader jurisdiction such as the Financial Markets
Authority (―AMF‖). Competition enforcement is meant to make certain that competition rules
are complied with on the marketplace, not to build any given industry. This is a fundamental
difference with a number of sector-specific agencies that were set up in the 1990s to
accompany former monopolies such as telecoms, or energy, in their transition towards
openness and competition. This difference is one of the reasons that explains why competition
law applies to all sectors, even those subject to such regulations. Indeed, the main sector
exempted from merger review (the banking industry) was brought back to the family a few
years ago. However, the Authority’s unlimited jurisdiction does not entail its refraining from
taking the relevant sector-specific regulation into consideration when it decides a case
concerning telecoms, banking, and so on. On the contrary, such laws are part of the market
context in which a given behavior occurs. The current crisis shows that the market not only
needs sufficient regulatory oversight, but also consistent oversight — not fragmented
approaches.
Thus, there are a number of issues on which a dialogue with regulatory bodies may be
useful if not necessary. The laws provide for a series of mechanisms intended to make certain
regulatory bodies can make their views known during Authority procedures when they are of
interest to the case. Reciprocally, these include provisions that allow these agencies to turn to
the Authority when they are confronted to a situation that should be checked under
competition rules. But all of that is really the tip of the iceberg. Why should the Authority
wait until it has a specific issue before talking to others ? Why should it refrain from
discussing common issues if it is in the public interest, and/or in the interest of market
players, that it broadens its coordination?
To start with, there are two elements on which progress could be beneficial to all.
First, it bears repeating that the Authority is not here simply to adjudicate cases, but to
oversee all aspects of competition on the market. Market studies may help the Authority in
gaining the comprehensive market knowledge it needs outside of — and ideally prior to —
handling individual merger cases or antitrust litigation. Sharing the results of its research by
granting others some access to its library and know-how in a way is something the Authority
may want to think about.
Second, all of the French authorities and agencies are the product of specific laws that
often build on one another, but not always. There are a number of issues (procedural, to start
with) in which greater coordination could be of value. For instance, the legal community has
already called for injecting greater consistency in the way these agencies handle business
secrets. They could target a few key points where greater consistency could be useful and
12
have their board members sit around the table and try to work on it. This is something the
Authority will look at in the coming year if there is reciprocal interest in moving forward.
V. LOOKING AHEAD AT THE OTHER BUILDING BLOCKS OF FRENCH
COMPETITION ENFORCEMENT
The Competition Authority should take over most of the Competition Council’s
heritage while looking ahead whenever further achievements are in sight.
A. Objectives
The Authority’s objectives for the coming five years are multiple, but at the end of the
day, they boil down to two core targets: making certain that firms and consumers understand
how much they can benefit from competition, and making certain that they effectively reap
the benefits of enforcement of competition rules.
1. Advocacy
Competition has always had its advocates and its detractors. However, in many cases,
the debate is biased by the fact that people are not talking about the same thing. So the
Authority’s first task must be to put things back in place. Competition law and policy are not
and should not become a doctrine. Making certain that markets are competitive is not and
should not be seen as an end in itself. The aim is to have an economy that works and that
brings prosperity. Competition is a tool to accomplish that, as it means that firms should do
their utmost in terms of innovation, investment, quality, etc., in a word, that they should strive
to be the best and the brightest in their field. That’s only half of the story, however, as the
words law and policy are as important as the word competition. Competition law states that
not only firms but consumers should benefit from free enterprise, and competition policy
ensures this is the case.
Why ? For a very simple reason: why would consumers accept the market economy if
they had nothing to gain from it ? Their benefits should include better products, wider
services, and lower prices, but they go well beyond that. If firms were able to shield
themselves behind cartels, to charge ballooning prices to consumers held captive by marketsharing or customer-sharing deals, would they have any incentive to remain innovative and
efficient ? Would they develop new industries and foster economic growth ? Would they offer
jobs and wages ? Obviously the answer is no, because as history shows very well, cartels kill
company incentives to do better. They may bring profits at first, but profits that are artificial,
undeserved, and above all counterproductive because they lead companies to look at the past
instead of the future, to hang onto their rents instead of searching for new opportunities, and
to shrink instead of expanding. So everyone has to understand that competition fuels
innovation, productivity, cost-effectiveness, and ultimately growth — and that growth
translates into jobs, wages, purchasing power, and ultimately consumer welfare.
13
Thanks to the great work achieved by the French government and parliament with the
Law of Economic Modernization passed during summer 2008 9, French businesspeople and
citizens have started realizing that competition enforcement contributes to economic
efficiency and prosperity. The French president and prime minister have entrusted the new
Authority with the mission of continuing this job by raising awareness and livening up the
public debate. Accordingly, the Authority members will roll up their sleeves.
The possibility for the Authority to give opinions on general competition issues will
be very important in that regard because of its manifold potential. The Authority will
continue, as its members have done since 1986, to offer opinions on the issues submitted by
the government, parliament, regional or local authorities, and other representative
organizations such as chambers of commerce, trade associations, consumer associations, etc.
But it is now also able to act on its own motion and to express itself on competition issues its
members think should be brought to the public attention. It will do this in two ways.
First, the Authority will focus on select sectors that provide a structure for the whole
economy. Traditionally, competition enforcers have been very active in a number of them,
including telecoms (with a string of cases being adjudicated since the mid-1990s, which were
marked by a liberalization process that culminated with the shift of the sector towards full
competition and the creation of an independent regulatory authority, the ART, which later
became the ARCEP), or more recently energy (with the KalibraXE and Direct Energie cases
in 2008, but also with a recent settlement in the Electric Cables case and with a number of
opinions). Yet, there are other key industries in which competition may not work as
effectively as it could. It is fundamental that the Authority be able to carry out a
comprehensive assessment of these situations without being bound by the limits of a given
practice, or without having to wait until deep problems give rise to entrenched litigation. This
will allow the Authority to give broader guidance to market players. Those players will gain
in predictability by better understanding the rules of the game. They will also be able to better
evaluate their strategies and frame them in a way that avoids antitrust risks. One possible
candidate is the press and media sector, which has made the competition headlines (with a
number of recent mergers, but also with antitrust cases focused on press distribution) and
which is currently being reviewed by the government. Another is e-commerce — a
fascinating phenomenon the Authority has already encountered in a number of cases dealing
with the online sale of goods such as jewelry in 2007, and cosmetics in 2007, and again in
2008. That being said, the Authority’s future sector enquiries should not automatically be
understood as a starting point for future litigation, although they may of course trigger
individual prosecutions if they reveal serious competition concerns. These are an integral part
of the Authority’s effort to strengthen the competition culture on the marketplace.
However, the market is two-sided. The Authority should not only make certain that the
industry understands competition, but that competition is informed by the changing realities
of the marketplace. Obviously, the current financial and banking crisis has led to lesser
confidence and credit crunch, and this uncertainty is now spreading to the real economy.
World leaders are working on solutions, including competition solutions. Although
competition authorities are not wonder-doers, competition enforcement is well placed to
contribute in its field of competence to forging viable solutions to the current international
market failure. After all, the Authority’s core business is to prevent or remedy a certain type
of market failure, namely structures or behaviors liable to harm consumer welfare by
substantially lessening competition or excluding efficient competitors from the marketplace.
9
See supra, note 1.
14
So although the Authority should beware of over-expectations, it should simultaneously resist
under-expectations.
There are a number of things the Authority can achieve, if it works hard at it. One is
making certain that its merger and antitrust processes are swift, targeted, and efficient.
Another is ensuring that its competitive assessment is consistent both with the short-term
situations created by the crisis and the long-term need to prevent consumer harm. Of course,
the Authority will only achieve all that if market players help it by talking frankly to the
Authority and providing it with the information it needs to reach prompt and suitable
outcomes. So the Authority will make it known that it is committed to handling the
competition aspects of the current crisis by not shying away from innovative solutions, while
never compromising on the mission the government has entrusted to it: making certain that
free enterprise means freedom to offer the best deal to consumers, not freedom to abuse
consumers.
Second, the Authority will assess the competition impact of select legislation and
regulations. As indicated by the OECD, this is common in a number of countries, but it has
traditionally remained limited in France, although the Authority has been eager to change this
state of play. The opinion the Authority gave in October 2007 on retail distribution and
commercial equipment10 has triggered a significant shift in legislation that had legitimate
objectives such as guaranteeing a balance between different distribution channels (shopping
malls, retail outlets, etc.), environmental protection, and geographic planning, but had also
resulted in increased barriers to entry, lesser competition, and ultimately higher prices for a
number of consumer goods as compared to neighboring countries. As a result of the Authority
spurring public debate, the regulations dealing with this sector were amended over the
summer of 2008 in a way that will ensure that public policy objectives can be achieved
without detrimentally affecting competition on local distribution markets. However, this is
only a first step, as the government is currently working on a second series of amendments
aimed at completing the job.
A number of other texts (for instance, governing regulated professions) has a potential
for better articulation between public policy considerations and normal competition. The
Authority will start to look at some of them in 2009, once it has completed its recruitment
program.
However, advocacy is not a task for the Authority alone, as it is part of a network of
actors. Its first partners are obviously companies and consumers themselves. If firms fully
understand that they have everything to gain — and nothing to lose — by putting competition
at the heart of their strategy, the Authority will have won its greatest prize. If most firms
themselves deter from breaching antitrust law and develop internal incentives to play by the
rule of merit-based competition to the point where the Authority can focus on a few relentless
recidivists, the Authority will have achieved a better world for consumers.
This is why compliance has been the ―new frontier‖ of the French Competition
Council during its last year of existence. It has commissioned an independent study dwelling
on all aspects of the topic, ranging from benefits and costs to legal and economic implications,
and from existing programs and practices in France and abroad to ways of successfully
moving on. The release of the study on September 15, 2008, gave rise to a lively discussion in
10
Opinion n° 07-A-12 of 11 October 2007 relating to the law on commercial equipment (available at
http://www.autoritedelaconcurrence.fr/pdf/avis/07a12.pdf).
15
the presence of the Minister of the Economy as well as of a number of enforcers and
representatives of the corporate community. The Authority announced that it would resolutely
move on hand and hand with general counsels, compliance officers, etc. It will now prepare a
draft framework document on compliance to be released for public consultation and input
before adoption. The aim will be to foster the voluntary spread of competition ethics within
corporate staff and management without introducing undue rigidity as to what the building
blocks of a trustworthy and efficient program should be: that compliance will only work if it
is adapted to its context, and that there are numerous ways of strengthening the competition
culture in the business world.
But relationships with judges are equally important. They include national review
courts such as the Paris Court of Appeal and the Cour de cassation (Supreme Court) for
antitrust and the Conseil d’Etat (Administrative Supreme Court) for mergers; it also includes
not only European courts such as the European Court of First Instance and Court of Justice,
but also any judge who may have to adjudicate competition cases.
The Authority’s procedure is pretty much settled, with only one annulment based on a
procedural ground since it enacted the separation between investigative and adjudicative
functions in 2001. Issues now mainly deal with the Authority’s newer legal tools such as the
commitments procedure, which implies that the Authority should get used to a wholly
different job (namely reaching a common agreement, in a non-accusatory framework, with
firms who voluntarily offer to modify a behavior that has given rise to competition concerns).
In parallel, as a result of the Authority’s shift towards a more economic approach in its
decisions and opinions, the economic debate is finding its way to the courtrooms. The Paris
Court of Appeal, which is empowered not only to check the legality of Authority decisions,
but to make a full assessment on the merits, is increasingly being called upon to adjudicate on
complex economic issues. This evolution is extremely stimulating.
Clearly, this new context suggested an adaptation of the agency’s procedural status,
that did not even allow it to explain its decisions in the courtroom until 2005 ! This is now
history. The Council has been allowed to submit written and oral observations to the Court of
Appeal in 2006. In addition, the Authority can now lodge appeals before the Supreme Court if
it is of the view that important points of law warrant it — just as any other administrative
authority may do.
2. Strategies and Outcomes
Being aware that competition is good is one thing, but being able to measure how
much is another. The Council had thought a lot about it, but there was a limit to what it could
do given the instruments available under the previous competition architecture. The Council
had little control of what happened upstream of case assessment and adjudication, i.e. during
the inquiry phase, as by and large, the Ministry of the Economy was in charge of it. Likewise,
the Council had no means of knowing what occurred downstream as again the Ministry was in
charge of monitoring the implementation of the Council’s decisions. Vertical integration
means that the Authority is now responsible for all that. It will thus take over where the
Council stopped and make a proactive use of the new tools afforded by the amended legal
framework.
The Authority will work on five fronts in the coming months. Its first priority will be
to remain frontrunners in the race, as time is of the essence for companies. The Authority
16
must continue to accelerate its procedures, of course without sacrificing quality. Before the
reform, Authority cases ran for 18 months on average between the time it received the file
from the Ministry of the Economy and the date it reached a final decision. As the entire
antitrust procedure has been brought under its roof, the Authority now builds all aspects of its
cases from the start instead of artificially disintegrating two activities and two phases
(collecting evidence on the field and intellectually building the file). This will result in
significant time efficiencies.
At the same time, the Authority must continue to resort to interim measures when
urgent cases call for immediate action because a behavior that is likely to amount to a breach
of antitrust rules may result in irreversible damage, such as a high-tech market irremediably
tipping towards a given standard. Every year, the Authority receives a high number of interim
requests (between 10 and 20), but not all of them are legitimate. The Authority is very strict in
admitting them because interim relief litigation should not become a way for competitors to
obstruct merit-based innovation. However, when the evidence reveals there to be a problem
calling for an urgent solution, there is no reason for the Authority not to use the tools provided
by French competition law such as granting either the interim injunction applied for or one the
Authority deems fit.
Second, the Authority will optimize the balance that it has struck over the last five
years between deterrence and alternative procedures that allow it to negotiate the closure of
antitrust cases. As previously mentioned, the Authority will continue to prosecute and fine
companies that breach antitrust rules. Fines have been rising: 751 million Euros in 2005, 128
million Euros in 2006, 221 million Euros in 2007, and 631 million Euros in 2008, as opposed
to a range of 60 to 65 million Euros in the previous years. Although the Authority may not be
happy when it imposes a high fine, if firms stopped participating in cartels or monopolizing
markets, there would be no fines. But whenever competition infringements damage consumer
welfare, they should be sanctioned at a level consistent with their market impact that promotes
deterrence.
Leniency has proved hugely successful in that regard. The Authority leniency
program11 has now been in place for three years and is regarded as one of its biggest
successes. Firms that have asked for leniency have helped the Authority to detect and punish a
number of cartels (e.g., the Doors cartel in 2006 and the International Removal cartel in 2007)
or to strengthen the Authority’s position in cases on which it already had begun work (e.g.,
the Steel Trade cartel). Leniency seekers have fed a strong pipeline of ongoing cases, and it
does not look like as though this is going to stop, as the Authority received around 20
leniency applications in 2008, not counting summary applications that may end up being
handled by a better-placed authority within the ECN according to the ECN model leniency
program.12 That is as much as the total number of leniency applications received in the
previous years! Part of this success is due to the marker system, which provides applicants
with a guarantee as to whether they are the first through the door, and to the Authority’s
practice of granting conditional leniency opinions very early in the process, which gives
applicants full predictability as to the outcome of the case if they cooperate all the way
through. Accordingly, no significant changes to the leniency policy are foreseen in the coming
days.
11
Notice of April 11, 2006, updated on April 17, 2007, and on March 2nd, 2009, on the French leniency program
(available at http://www.autoritedelaconcurrence.fr/doc/cpro_autorite_2mars2009_clemence.pdf).
12
ECN model leniency program of September 29, 2006 (available at
http://ec.europa.eu/competition/ecn/model_leniency_fr.pdf).
17
The new law provides further incentives for firms to settle cases that do not warrant a
fine, or at least a fully fledged fine. As everyone knows, commitments and settlements have
both been part of the Authority’s toolbox for a number of years. Commitments allow the
Authority to end cases prior to any finding of infringement when companies come forward
with constructive business solutions aimed at guaranteeing or restoring competition well
before their behavior has caused significant consumer harm. The Code of Commerce now
clarifies that the procedure is totally devoid of any incriminatory nature insofar as
commitments are meant to put an end to the competition concerns expressed by the Authority
after a preliminary assessment of the case, well before notification of any objection to the firm
concerned. That means the Authority’s decision cannot be used by private plaintiffs to ground
a claim for damages. It simply states that the Authority had a number of concerns, which were
met by relevant, trustworthy, and workable commitments offered by the firm concerned, thus
enabling it to close the case.
The Authority has experienced this in a number of cases (totaling 22 since 2006) while
refining its practice to the point where it became possible to issue public guidance 13. Of
course, a number of issues are still open, and the Authority will continue to develop its policy
in the coming years. But it is a great encouragement to see that firms are increasingly keen to
work with the Authority by providing constructive market solutions that enable them to build
their competition future instead of taking the risk of unpredictable (and in certain cases,
lengthy) litigation. Actually, the fact that the Authority now manages its own on-the-ground
investigations should boost demand for commitments because it will be able to share its initial
competition diagnostic with companies almost as soon as the case starts instead of being
forced to wait until the Minister of the Economy hands over files that have already been
ongoing for a while, as occurred under the previous legislation.
The Authority settlement package, which has been around since 2001, allows it to
terminate cases at a later stage than commitments, whereby firms decide to put their past
behind them. They do so by waiving the charges to speed up the administrative process and
by committing to change their behavior in exchange for a reduced fine. Additional flexibility
is kicked into the system with the new law, which makes commitments optional: from now
on, either firms will simply decide not to challenge the charges notified by the Investigation
Services in exchange for a fine reduction, or they will also decide to put commitments on the
table in exchange for an additional reduction. This move makes sense because it is more
difficult to come up with commitments in some cases. Cartels and bid-rigging cases are prime
candidates for compliance commitments, which can include a number of elements ranging
from e-learning to whistle-blowing. But no infringement is excluded per se from a settlement.
True, most of the Authority’s recent settlements were reached in agreement cases, but a few
unilateral conduct cases were settled as well. For instance, in October 2007, the Competition
Council reached a very satisfactory deal with France Telecom, who agreed on a set of
measures aimed at bringing about a ―cultural revolution‖ in the firm (and hopefully at making
sure that this would be the last of a string of antitrust condemnations amounting to more than
150 million Euros in fines in 10 years) in exchange for a substantial fine reduction. These
measures included not only compliance programs, but also valuable behavioral commitments.
With approximately one out of four infringement cases being closed by way of a
settlement, the Authority has now built a sufficient practice to give companies and consumers
a clearer view of its settlement policy. Therefore, publishing settlement guidance features
13
Notice of April 3, 2008, updated on March 2, 2009, on antitrust commitments (available at
http://www.autoritedelaconcurrence.fr/doc/cpro_autorite_2mars2009_engagements_antitrust.pdf).
18
very high on this year’s agenda. A number of items other than the one modified by the law
itself call for attention 14. The Authority will address these in a draft paper, which it will
release for public consultation as it always does before posting a final notice on its new
Internet site.
Third, the Authority will start to invest in a field that is not totally new for it, but really
remains the Far West for the time being as it was the administration, not the Authority that
was previously in charge of it: checking actual outcomes on the marketplace. One year ago,
the Authority’s Legal Service started monitoring compliance with antitrust undertakings
voluntarily subscribed by companies in commitment and settlement decisions, and it has done
a great job of building a matrix for that purpose. That’s a must-do if the Authority wants these
procedures to be both credible and successful. Under French law and jurisprudence, breach of
a commitment or remedy is a very serious violation of the law that should attract a very high
fine in and of itself. The Authority will be extremely vigilant about that, but success goes well
beyond compliance. As the Authority can opt for a variety of antitrust and merger
commitments and remedies, it should ask itself a number of questions: Were they easy to
administer ? Were they easy to control ? Did they actually work ? Could the Authority have
done better by opting for another instrument ? When and why should the Authority favor
behavioral solutions over structural ones, or conversely ? How should the Authority best
frame them ? In which circumstances should they be amended ? Monitoring them,
guaranteeing their predictability, and measuring their efficiency, give rise to a number of
issues the Authority will address.
However, the Authority should not be bogged down by systematic monitoring or let
itself be dragged into automatic litigation. Potential cases do not necessarily have the same
weight in terms of qualitative and quantitative impact on the marketplace. The Authority must
evaluate that upfront because it has a duty not to waste its limited resources. Prioritization
must therefore inform its policy of opening ex officio infringement and noncompliance cases.
But the system also allows the Authority to dismiss cases that are not supported by
satisfactory evidence. Indeed, the standard of evidence weighing on the plaintiffs cannot be at
variance with the high standards of proof imposed on the Authority (when it finds an
infringement), or on the companies concerned (when they allege efficiency gains). Failure to
filter cases that do not meet this standard would not represent procedural fairness.
Fourth, the Authority will continue to renovate its partnership with the antitrust bar —
meaning not only the specialized competition lawyers with whom the Authority members
often have very stimulating discussions in the hearing room (be it on questions of strategy
such as when and why the Authority opts for commitments or for a settlement instead of
traditional litigation or on substantive issues). Competition is increasingly acknowledged as
being everyone’s business and as something that should be welcomed because it is part of
everyday life for an ever-wider number of small- to medium-sized companies throughout the
territory.
The Authority has already done a lot in that regard. It has a set of procedural best
practices published in September 2007 to flesh out the Code of Commerce. French
competition law is extremely protective of the rights of defense. For instance, the Authority’s
standard procedure is comprised of two rounds of written pleadings with the parties, and it
systematically includes a hearing during which all the parties — including the plaintiff, who
14
See Bruno Lasserre, Settlements under French Competition Law: Taking Stock and Looking at Prospects,
General Assembly of the French Association of Competition Studies (AFEC), Paris, April 10, 2008 (available at
http://www.autoritedelaconcurrence.fr/doc/transaction_afec_10avril2008.pdf).
19
has the same rights as everyone else — have an opportunity to discuss their cases and
challenge the arguments of the Investigation Services in front of the College … which
actually disagrees with the Investigation Services in 45 percent of the cases ! Still, there was a
need to go beyond the Code of Commerce on a number of new developments, such as
electronic communications. That is what led to the opening of comprehensive discussions
between Authority teams and representatives of the bar that paved the way for procedural best
practices on the handling of antitrust cases. In due course, these may have to be reviewed,
given the significant procedural progress achieved by the new competition bill (which inter
alia allows the presence of lawyers during the preliminary investigation process, simplifies
the treatment of business secrets, and decriminalizes obstruction cases, which are now
handled under an administrative process closely modeled on the EU procedure with
injunctions and fines). But it is unwise to codify without having experimented first !
Of course, the Authority’s effort to reach out is not limited to case matters. It has done
a great job with a few lawyers and economists in the ICN (to whom the author wants to pay
tribute and say that the Authority members look forward to future work in common). But the
Authority also intends to set up a dedicated forum, which should be more like a series of
workshops than a conference, in order to discuss freely antitrust and merger issues with the
competition community at large.
Finally, the Authority will continue to advocate for a finer balance among the different
pillars of competition enforcement. Administrative enforcement is now entrusted to a single
agency, but greater attention needs to be paid to criminal and civil enforcement.
French criminal antitrust enforcement, which is under the responsibility of criminal
judges, is limited. The law provides that individuals who personally play a decisive part in the
conception, or operation, of a corporate antitrust breach can be fined, or jailed, for a
maximum of four years. But implementation is scarce, and when it takes place, nobody really
knows exactly how criminal policy operates. One of the reasons is that antitrust infringements
are often bundled with other infringements.
However, that could change soon. The president of the Republic commissioned a
report on the future of criminal business law issued in January 2008 that contained a number
of interesting proposals on the antitrust front.15 Many of them are consistent with suggestions
the Authority made when it was auditioned by the members of the commission. In summary,
they suggest a move towards more targeted and more efficient criminalization. For the time
being, maximum fines are too low to ensure deterrence (75,000 Euros). In addition, any type
of antitrust infringement can currently give rise to criminal proceedings, including not only
cartels and bid-rigging, as in many other jurisdictions, but also any type of vertical restraint or
unilateral conduct, despite the complex issues to which they may give rise.
Finally, there is no leniency program for individuals. This last point is absolutely
crucial, as something should be done to avoid firms wrestling with their staff because they
want to obtain fine immunity via corporate leniency, while their employees do their utmost
not to cooperate to avoid the finding of a corporate infringement that would trigger individual
criminal proceedings. Thought should be given to aligning individual incentives with
corporate incentives. But changing the law will not suffice without clear signals as to exactly
15
Report of the working group presided by Mr J.-M. Coulon, Honorary First President of the Paris Court of
Appeal, presented to the Minister of Justice in January 2008 (available at
http://lesrapports.ladocumentationfrancaise.fr/BRP/084000090/0000.pdf).
20
what public policy the prosecutors are pursuing, although the Authority president is confident
that changes will eventually happen.
As for private enforcement, which is being considered at the EU level, everyone
understands that it is the second leg of competition law. Human beings must use both their
legs, but these two legs must be coordinated, as otherwise standing up and walking will be
risky. Allowing victims to claim damages when they have suffered from a cartel, as is the
case for any other type of tort, is an important element of trust in a legal and economic system
based on the rule of liability for injuries caused to others. However, such claims should be
well coordinated with public enforcement so that private interests do not conflict with the
public interest.
B. Organization and Management
Transforming the Council into a fully fledged Authority would have been meaningless
if the additional means needed to implement the additional powers had not also been
transferred to the agency. This is something that was emphasized as soon as the idea of the
reform made its way to the National Assembly and Senate — especially by the members of
the parliament in charge of reporting the draft competition law. Admittedly from this point of
view, the standard the French competition authorities lived under since the creation of the
Council in 1986 was not comparable to that of most NCAs of Europe, including NCAs in
charge of much smaller jurisdictions in terms of markets and population. But it had also fallen
significantly behind that of French regulatory authorities, something that came as a surprise
given the competition authorities’ very broad competence as opposed to that of sector-specific
agencies.
This has changed with the 2009 budget. The Authority is now in the process of
integrating 60 new people, a move that will bring its total staff to almost 200, as compared to
130 for the past years. The credit that goes with it should be transferred too. In a tight
budgetary context in which almost all administrative budgets and staffs are being frozen (if
not cut down), this means the government has really made more efficient competition
enforcement a priority.
But in turn, means bring little result if those in charge do not have a clear view on how
to run their organization. The challenge of modernizing the French antitrust authority’s way
of performing its job matched the challenge of revamping the competition bill. The Authority
has already done a lot in 2006 via the setting up of dedicated economic and legal departments,
to which an office has been added to provide the president of the Authority support on
strategy and policy as well as on institutional, European and international affairs. Integrating
these new taskforces and fitting everything together was not given for granted, but by and
large, it has been very successful. This has provided obvious added value in both case and
non-case matters, exactly as the Authority’s first-class communications service has done since
its creation.
The new law meant moving to the second phase of this reshuffling. The Investigation
Services, which are the heart of the Authority’s house, will be the main target of the
amendments this time. In addition to the Merger Service and the dedicated Chief Economist
and Legal Service, they will host a unit specifically devoted to on-the-ground investigations.
This unit will of course not take care of all the Authority’s investigations, which should be
carried out with the case managers and case handlers, but it will definitely be the Authority’s
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expert team for a number of technical dawn raid issues. The Authority’s growing population
will also allow it to set up distinct Antitrust Services in which a small, governable group of
case handlers will be directly accountable to their manager, who themselves will be placed
under the direction of the General Rapporteur. This should translate into enhanced reactivity
and consistency.
Moving beyond structures, the Authority will optimize the way people work, both
individually and together. Over the last years, the Authority’s recruitment policy has been
aimed at diversifying and balancing profiles (competition lawyers, economists and
econometricians, financial auditors, sector-specific experts, etc.) in line with strategic
priorities, as well as mixing promising juniors with established talents. The Authority now
have a good portfolio of people, composed roughly of 50 percent civil servants and 50 percent
private practitioners coming from various horizons — including a number of representatives
of other European nationalities. This policy should be carried on.
Given its enhanced visibility and prerogatives, the Authority should prove at least as
attractive as the Council. This is important because it recruits from a very narrow and
competitive market segment. But the Authority must also continue to help the people it has
invested in when, after a while, they decide to move on, especially the younger ones. They
should be aware when they come to the Authority that it will do its utmost to help them climb
the ladder when they leave. They should also know that the door remains open if they want to
come back after having gained experience in the wider world. And, of course, they should
receive attractive, merit-based packages during their stay.
Finally, processes should also evolve. Since 2004, the Competition Council’s College
and Investigation Services have done an impressive job of taming its caseload, which has
been reduced by 60 percent between 2000 and 2007 (from 417 cases to 155). The number of
older cases has been virtually zeroed (15 cases in 2007 against 162 in 2000), apart from a few
voluminous cartels and complex abuses in which the agency must take the time necessary to
assess evidence that runs on for thousands of pages. Finally, the average duration of the
procedure has been halved. Without this collective effort, which enabled the agency to do its
utmost, nobody would have ever noticed the inefficiencies that stemmed from the duplication
and dispersion of powers and means between the Council and the Ministry of Economy. That
reform would have been on nobody’s map.
The Authority’s teams will be directed to think about the ways of securing these
results on the long run. The caseload must remain firmly under control, and the Authority
must continue to act in line with business time. This is a renewed challenge, because antitrust
complaints have been on the rise lately (120 in 2008 as opposed to 100 per year between 2000
and 2007). Requests for interim relief have also increased. The recent iPhone decision shows
the Authority does not shy away from urgent intervention when it is warranted, as may be the
case in fast-moving markets.
But as these cases should not upset investigations on the merits, the Authority must
pay attention to the way it allocates its limited resources. Given these trends, the Authority
must further modernize and secure its processes from the handling of its procedures to the
drafting of its decisions and opinions. Its people work with great professionalism, but there
are always ways of achieving further progress. For instance, the Authority’s performance
scoreboard, which enables the General Rapporteur to oversee the work of his case handlers in
real time and to evaluate individual results on a monthly basis, could be incorporated in a
multiannual working program. Indicators, including statistics on ex officio cases, duration of
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procedures, appeal rates, quality of decisions, and consistency of decisions with precedentsetting cases, etc., should be periodically reviewed and adapted.
In a nutshell, making sure that accountability, predictability, and quality are built in
the very fabric of the Authority and put at the heart of every move it makes will top the
agenda.
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