In a judgment dated October 19, 2021, the Cour de cassation quashed a Paris Court of Appeal’s judgment invalidating inspections carried out by the French Competition Authority (“FCA”) at Swarovski France’s (“Swarovski”) headquarters in July 2019.[1] The judgment is in line with recent Cour de cassation rulings favorable to the FCA.

Background

In July 2019, the FCA obtained an order from the liberty and custody judge (“LCJ”) of the Paris Court of First Instance allowing it to conduct a dawn raid at Swarovski’s French headquarters in relation to potential anticompetitive practices, including price fixing and abuse of dominance through exclusivity clauses imposed on its distributors.

Pursuant to Article L. 450-4 of the French Commercial Code (the “FCC”), Swarovski appealed.[2] The Paris Court of Appeals invalidated the LCJ’s order on the grounds, inter alia, that (i) the FCA transmitted an incomplete file to the LCJ because it did not provide certain documents that were in its possession and were referred to in the evidence it produced to the LCJ to justify the dawn raid, and (ii) the FCA did not establish Swarovski was dominant on the market nor did it establish a presumption of the suspected anticompetitive practices to the required standard.[3] The Paris Court of Appeals also found that the FCA relied on contracts submitted by Swarovski’s distributors which provided that their content could not be disclosed without Swarovski’s consent. The FCA appealed the Paris Court of Appeals’ judgment before the Cour de cassation.

The Cour de cassation’s judgment

On October 19, 2021, the Cour de cassation overturned the Paris Court of Appeals’ judgment.

First, it ruled that the FCA is not required to present to the LCJ all the documents it gathered during the investigation, nor even all the documents mentioned in the documents produced. Pursuant to Article L. 450-3-3, II, §5 of the FCC, the LCJ may authorize an inspection on the basis of a limited set of documents selected at the FCA’s sole discretion—as long as those documents evidence the existence of presumptions of anticompetitive practices. Second, the FCA does not need to establish a dominant position for the judge to grant a search warrant for an alleged abuse of a dominant position. A mere presumption that such a dominant position exists is sufficient. Finally, the Cour de cassation ruled that the FCA may submit as evidence a contract including a confidentiality clause as long as it obtained the contract validly during its investigation.

Conclusion

The Cour de cassation judgment is consistent with existing case-law on the standard of proof that the FCA must satisfy to obtain search warrants in antitrust cases. In essence, it is sufficient for the FCA to establish a mere presumption that the alleged anti-competitive practices took place, based on evidence that the FCA has sole discretion to select.[4] The judgment is also another recent example where courts have fully upheld the FCA’s dawn raid investigative powers.[5]

[1] Cour de cassation, Criminal division, October 19, 2021, Swarovski, No. 20-85.644.

[2] Paris Court of Appeals, October 7, 2020, Swarovski, RG 19/12686.

[3] In particular, the Paris Court of Appeals found that the economic studies submitted by the FCA did not evidence any dominant position of Swarovski and that the other documents submitted by the FCA, in particular vague emails and the complaint submitted by one of Swarovski’s distributors, did not corroborate the alleged presumptions of anticompetitive practices.

[4] Paris Court of Appeals, April 1, 2010, SNCF, RG 09/12488; Cour de cassation, Criminal division, March 21, 2018, Free Mobile, Free, Illiad, No. 16-87.193.

[5] Earlier this year, the Cour de cassation confirmed the validity of dawn raids authorized on the basis of another competition authority’s request for investigative measures. Cour de cassation, Criminal division February 17, 2021, Caudalie, No. 19-84.310. Also see Cour de cassation, Criminal division, November 4, 2021, Syndicat National du Notariat, n°20-80.149 on documents covered by attorney-client privilege.