On June 11, 2021, the French Competition Authority (“FCA”) published a draft to update its Notice on fines.[1] The draft is subject to a public consultation which was held between June 11 and 25, 2021. According to the FCA, the update was prompted by the entry into force of ordinance No.2021-649 of May 26, 2021, which implements Directive (EU) 2019/1 of the European Parliament and of the Council of December 11, 2018 (“ECN+ Directive”), whose aim is to strengthen and harmonize competition enforcement by national authorities.[2] The FCA also said that the revision also aimed to reflect the FCA’s decision-making practice and to bring it closer to the European Commission’s. In practice, the Draft Notice would likely increase to a significant extent the level of fines imposed by the FCA.

Like under the current system, fines imposed by the FCA would be based on the value of affected sales during the last full year of infringement, to which a multiplier would be applied to reflect the gravity and the duration of the infringement. The basic amount would then be adapted based on relevant aggravating or mitigating circumstances, or “individual factors”. However, the following changes would be implemented.

First, the Draft Notice clarifies that the FCA may use, as a basis for its calculation of the fine, the sales value of the goods or services to which the competition infringement “directly or indirectly” relates, thus allowing indirectly related turnover to be taken into account.[3]

Second, the Draft Notice proposes to revise the criteria that the FCA may rely on to assess the conduct’s gravity to notably include its impact on the environment, innovation, or captive buyers.[4]

Third, the Draft Notice proposes to change the method to reflect the duration of the infringement. Under the 2011 Notice, a duration multiplier is applied where the first full year of infringement accounts for 1 and the following years account for 0.5 each. The Draft Notice provides that the value of sales shall be multiplied by the number of years of participation to the infringement.

Fourth, the Draft Notice[5] no longer contains any reference to the notion of ‘damage to the economy’ as a criteria for the calculation of the fines. The notion of ‘damage to the economy’ had already been removed from Article L. 464-2 of the Commercial Code by ordinance No.2021-649.

Fifth, the Draft Notice proposes to enable the FCA to increase the fine of an amount between 15% and 25% of the relevant turnover, for deterrence purposes in certain situations (including, but not only, horizontal price-fixing, market-sharing, and output-limitation practices).[6]

Sixth, the Draft Notice brings about several changes concerning fines imposed to trade associations. In line with the provisions of the ECN+ Directive, trade associations, which previously benefited from a €3 million sanction ceiling, may be subject to fines of up to 10% of the association’s turnover or of its members’ total turnover, where the anticompetitive practice “relates to the activity of its members.[7] The Draft Notice also institutes a new regime in case of a trade association’ insolvency: (i) either the infringement relates to the association’s activities and the association may demonstrate its financial difficulties in the same way as any other company,[8] or (ii) the infringement relates to its members’ activities, in which case the FCA may require the association to ask its members to contribute to the payment of the fine.[9]

Finally, the Draft Notice would allow the FCA to depart from its methodology on fines “after a thorough review of the overall circumstances of the case,”[10] as it deems “neither possible nor desirable […] to devise a mechanical scale making it possible to predict their precise amount in advance”.[11]

The FCA has not yet set a date for the final adoption of its Notice on fines, but it is expected to “take place as soon as possible”.[12]

[1]              The Notice on fines lays out the methodology used by the FCA to set fines imposed on companies for competition law infringements prohibited under Articles L. 420-1, L. 420-2 and L. 420-5 of the French Commercial Code, and Articles 101 and 102 of the Treaty on the functioning of the European Union. The current version of the Notice entered into force on 2011.

[2]              Directive (EU) 2019/1 of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, December 11, 2018, OJ L 11.

[3]              Draft Notice, para. 22. European Commission, Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No. 1/2003, OJ C 210, article 13.

[4]              Draft Notice, para. 29.

[5]              FCA, Draft Notice relating to the methodology for setting financial sanctions, June 2021, available at: https://www.autoritedelaconcurrence.fr/sites/default/ files/Projet%20de%20communique%CC%81%20sanction%20-%20juin%202021.pdf.

[6]              Draft Notice, para. 32.

[7]              Draft Notice, para. 4.

[8]              Draft Notice, para. 61.

[9]              Draft Notice, para. 62.

[10]             Draft Notice, para. 6.

[11]             Draft Notice, para. 13.

[12]             See FCA’s press release of June 11, 2021, available here: https://www.autoritedelaconcurrence.fr/en/press-release/autorite-de-la-concurrence-opens-public- consultation-revision-its-notice-fines.