On March 26, 2021, the French Conseil constitutionnel ruled that Article L. 464-2(5), 2° of the French Commercial Code, under which the French Competition Authority (“FCA”) may impose a fine of up to 1% of an undertaking’s turnover for obstructing an investigation, was contrary to the French Constitution.[1]
Background
In November 2018, the FCA carried out dawn raids on the premises of various companies and organisations in the engineering and technology consulting sectors in relation to an alleged cartel in France. During the dawn raids at Akka Group, several employees took certain steps, namely altering the functioning of a mailbox, deleting emails, and breaking an affixed seal on an office door, which the FCA qualified as unlawful obstruction under Article L. 464-2(V), 2°. In May 2019, the FCA fined Akka Group €0.9 million.[2]
After the Paris Court of Appeal rejected its appeal, Akka Group challenged the FCA’s decision before the French Cour de Cassation. It raised a question prioritaire de constitutionalité (“QPC”) which the Court agreed to refer to the Conseil constitutionnel, on whether Article L. 464-2(V), 2° of the French Commercial Code sanctions the same act as the one sanctioned under Article L. 405-8 of the French Commercial Code and is therefore contrary to the constitutional principle of necessity of offences and penalties. According to this principle, the same behaviour by the same person cannot be sanctioned twice under different legal provisions.
The Conseil Constitutionnel ruling
The Conseil constitutionel considered that Articles L.464-2(V), 2° and L.405-8 of the French Commercial Code (i) target the same behaviour (i.e., obstruction during an investigation relating to an alleged anticompetitive practice) and (i) provide for sanctions (one administrative, the other criminal) which have an identical goal (i.e., to ensure the efficiency of FCA’s investigations in securing compliance with competition rules) and whose nature is identical (i.e., pecuniary sanctions of equivalent level). It therefore concluded that Article L. 464-2(V), 2° violated the principle of necessity of offences and penalties, and is therefore unconstitutional.
However, the decision did not benefit Akka. The Conseil constitutionel specified that the declaration of unconstitutionality could only be invoked in pending proceedings where the company had previously also been prosecuted on the basis of Article L. 450-8 of the French Commercial Code. This was not the case of Akka Group, which had only been prosecuted under Article L. 464-2(V), not Article L. 450-8.
Takeaway
The Conseil constitutionel’s ruling will have limited impact, since the FCA does not typically prosecute a company twice for the same obstruction behaviour on the basis of the two provisions. As an example, in its latest May 3 decision in the “ham” cartel, the FCA fined Fleury Michon for obstruction under Article L. 464-2(V), but did not prosecute it under Article L. 450-8 of the French Commercial Code.[3]
[1] Conseil Constitutionnel, no. 2021-892 QPC, March 26, 2021.
[2] See FCA Decision no. 19-D-09 of May 22, 2019 and press release of November 9, 2018. See French Competition Law Newsletter of June 2019.
[3] See FCA Decision no. 21-D-10 of May 3, 2021 and press release of May 3, 2021.