On February 10, 2023, the French Constitutional Council (“Conseil constitutionnel”) considered that the second sentence of Article L. 464-2, I, paragraph 1 of the French Commercial Code, which provides that the French Competition Authority (“FCA”) may accept commitments in the context of antitrust litigation proceedings, but says nothing about its power to refuse them, complies with the French Constitution and, on this occasion, confirmed that companies can lodge appeals again FCA decisions rejecting suggested commitments.[1]
1. Background
In October 2016, the FCA launched an investigation into Sony interactive entertainment France and Sony interactive entertainment Europe limited (together “Sony” )’s practices following a complaint from an accessory manufacturer alleging that Sony had abused its dominant position in the market for next-gen gaming consoles.
As part of its preliminary assessment, the FCA’s investigation services found that Sony had implemented two anti-competitive practices. First, Sony had updated the PlayStation 4 operating system which allegedly resulted in the alteration of the functioning of certain third-party controllers.[2] Second, Sony had implemented an allegedly ambiguous and opaque licensing policy for companies seeking to sell controllers compatible with the PlayStation 4.
In response to these competition concerns and in order to put an end to the proceedings, Sony offered a number of commitments (in particular, to make its licensing policy for PlayStation 4 controllers more transparent and non-discriminatory). On October 23, 2020, the FCA rejected Sony’s latest set of commitments and sent the case back for further investigation on the merits.[3] Sony brought the case before the Paris Court of Appeals requesting the annulment of the FCA decision rejecting its commitments offer. The Court of Appeals considered the appeal was inadmissible as it found that there was no clear case law or legislation showing that Sony had the right to appeal. According to the Court, an FCA decision rejecting commitments could not be appealed separately from the final FCA decision on the merits.[4]
2. Referral of Sony’s claims before the Conseil Constitutionnel
Sony further challenged the Court of Appeals ruling before the French judicial Supreme Court (“Cour de cassation”).[5] Sony notably claimed before the Cour de cassation, which then referred the matter to the Conseil Constitutionnel on December 7, 2022, [6] that the provision (i.e. thesecond sentence of Article L. 464-2, I, paragraph 1 of the French Commercial Code mentioned above [7]) – which enables the FCA to use the same adjudicators for both its commitment and sanction procedures, in the same case, is unconstitutional. Sony claimed that said provision (i) violates constitutional principles of independence and impartiality by not precluding the members of the FCA case team having rejecting commitments in a given case to later rule on the sanctions to be imposed in the same case and (ii) breaches companies’ rights of defence and to an effective judicial remedy by preventing companies from appealing against a decision to reject commitments.
3. A constitutional right of appeal of decisions rejecting commitments
The Conseil Constitutionnel first held that the FCA’s power to review commitments and its power to fine a company for breach of antitrust rules have separate objectives. Their outcome does not impact one another and the principles of independence and impartiality are thus not violated by allowing the same adjudicators review commitments and impose fines in the same case.
The Conseil Constitutionnel then held that companies should however be granted the right to appeal against FCA commitments rejections even if this right is not explicitly mentioned under Article L. 464-2, paragraph 1, second sentence. In legal terms, the Conseil Constitutionnel held that a decision rejecting commitments should be treated as one of the decisions listed as subject to appeal under Article L. 464-8 of the French Commercial Code.
The case has now been referred back to the Cour de cassation who may decide to overturn the Court of Appeals’ ruling on inadmissibility, thereby giving Sony the chance to argue the merits of its appeal against the enforcer’s commitments rejection decision.
In sum, FCA decisions rejecting remedies can thus always be subject to judicial review, which means that, in future cases, the FCA has to provide robust reasons for rejecting remedy proposals. The Conseil Constitutionnel decision thereby increases the rights of the parties before the FCA and, subsequently, before the Paris Court of Appeals which would have to reassess the effect of commitments the FCA initially rejected in case of appeal.
[1] Conseil Constitutionnel decision No. 2022-1035, February 10, 2023, , Sony interactive entertainment France e.a.
[2] Three types of controllers are compatible with the PlayStation 4: (i) Sony controllers, (ii) third-party controllers manufactured under Sony licence and (iii) other third-party controllers which do not benefit from a Sony licence.
[3] FCA decision No. 20-S-01 of October 23, 2020.
[4] Paris Court of Appeals, April 21, 2022, Sony Interactive Entertainment France e.a., n° 20/16953.
[5] For sake of completeness, Sony had also brought the case before France’s highest administrative court (“Conseil d’Etat”) requesting the annulment of the FCA decision rejecting its commitments offer on the grounds of excess of power. On July 1, 2022, the Conseil d’Etat ruled that Sony’s appeal of the FCA decision rejecting its commitments could not be heard since the Conseil d’Etat had no jurisdiction to rule over such case. The Conseil d’Etat held that a decision of the FCA to reject commitments was not capable in itself of producing legal effects. Consequently, such decision could not be considered as unrelated and severable from the underlying FCA proceedings and could not be appealed.
[6] Cour de Cassation, December 7, 2022, Sony Interactive Entertainment France and Sony Interactive Entertainment Europe Limited, n° 22-16.616.
[7] Article L. 464-2, I, paragraph 1 of the French Commercial Code, second sentence (free translation) : “The Competition Authority may order the parties concerned to put an end to the anti-competitive practices within a specified period or impose specific conditions. It may also accept commitments proposed by the undertakings or bodies and likely to put an end to its competition concerns that may constitute prohibited practices pursuant to Articles L. 420-1 to L. 420-2-2 and L. 420-5 or contrary to the measures adopted pursuant to Article L. 410-3.”