On December 20, 2023, the French Cour de cassation ruled that the French Competition Authority’s (“FCA”) Rapporteur Général is required to duly justify its decision to disclose business secrets.[1] Two days later, the Conseil d’État (the French administrative supreme court) requested a preliminary ruling from the Tribunal des Conflits in the same case to clarify whether an action seeking to enforce the right to the protection of business secrets should be heard by a civil or administrative court.[2]
Background
During an investigation into alleged anticompetitive practices in the out-of-home advertising sector, JC Decaux submitted various documents to the FCA, which it claimed contained business secrets. The FCA initially acknowledged the claim and agreed to treat the information as confidential. However, later in the investigation the FCA’s Rapporteur Général revoked its decision to keep these business secrets confidential stating that the disclosure of such information in its confidential version was necessary for the exercise of the rights of defence and/or for the purposes of the adversarial debate before the FCA, on the basis of Article R. 463-15 of the French Commercial Code.[3] Shortly thereafter, the FCA sent a statement of objections disclosing some of the confidential information to all parties to the investigation, including the plaintiff, Clear Channel France, also JC Decaux’s main competitor.
JC Decaux appealed the Rapporteur Général’sdecision to disclose the confidential information and on May 25, 2022, the Paris Court of Appeals partially annulled the Rapporteur Général’s decision to disclose the confidential informationfor failure to provide adequate justification. JC Decaux subsequently lodged an application for interim relief (référé) with the Judicial Court of Paris to order Clear Channel France to destroy or hand over all documents containing sensitive information. JC Decaux also requested that the court order the FCA to refrain from further disseminating JC Decaux’s business secrets.
Referral to the Tribunal des Conflits
On December 27, 2022, the Judicial Court of Paris declined jurisdiction in favor of the Conseil d’État. On June 15, 2023, the Paris Court of Appeals confirmed the first instance ruling, considering that, pursuant to Article L. 464-8-1 of the French Commercial Code,[4] civil judicial review is limited to the Rapporteur Général’s decision to revoke the decision to protect business secrets, whereas JC Decaux’s application for interim relief related more broadly to the investigation and the statement of objections, the judicial review of which falls upon the administrative courts.[5]
JC Decaux therefore brought the case to the Conseil d’État, which departed from the reasoning of the civil courts, ruling that the injunction was inseverably linked to the Rapporteur Général’s decision to disclose the business secrets and hence should be judicially reviewed by the judicial courts, in the present case, the Paris Court of Appeals, in compliance with Article L. 464-8-1 of the French Commercial Code.
In view of this jurisdictional divergence, the Conseil d’État decided to stay the proceedings and refer the question to the Tribunal des Conflits, whichis in charge of adjudicating possible jurisdictional conflicts between administrative and civil courts.
Duty to justify the publication of business secrets
The referral to the Tribunal des Conflits came shortly after the French Cour de cassation confirmed on December 20, 2023 the Paris Court of Appeals’ ruling that partially annulled the Rapporteur Général’sdecision to disclose JC Decaux’s business secrets due to insufficient justification.
The French Cour de cassation dismissed both arguments put forward by the Rapporteur Général on appeal. First, the Rapporteur Général submitted that the duty to provide adequate justification as interpreted by the Paris Court of Appeals was excessive. In response, the French Cour de cassation ruled that the mere reiteration of the terms of Article R. 463-15 of the French Commercial Code was insufficient. Specifically, the Rapporteur Géneral must explicitly justify why the confidential version is necessary for the rights of the defence or for the purposes of the debate.[6] Second, the Rapporteur Général argued that, beyond assessing whether the reasons stated were sufficient, the Paris Court of Appeals failed to substantively assess whether it was necessary to revoke the decision to keep business secrets confidential. The French Cour de cassation responded that the insufficient reasoning provided by the Rapporteur Général precluded the Paris Court of Appeals from exercising effective judicial review.
Takeaways
This is not the first time that the Tribunal des Conflits has weighed in on the potential violation of a company’s right to the protection of its business secrets. On October 5, 2020, the Tribunal des Conflits confirmed that the Paris Court of Appeals had jurisdiction to rule on an appeal against an FCA decision ordering interim measures, in which the claimant alleged that the FCA’s decision, as published, had breached its right to the protection of its business secrets.[7] The Tribunal des Conflits found that the decision regarding the redaction of business secrets in FCA decisions was inseverable from the substantive decision itself. The same reasoning was adopted by the Conseil d’État in the present case.
This is also not the first time that the French Cour de cassation has scrutinized the Rapporteur Général for not providing sufficiently detailed reasons in deciding to disclose business secrets. On January 29, 2020, the French Cour de cassation issued two rulings dealing with the same issue.[8] In the first one, the French Cour de cassation held that the Rapporteur Général must provide concrete reasons justifying the disclosure of confidential business secrets to other parties in the proceedings. However, in the second ruling, which related to proceedings that did not involve any other parties, the French Cour de cassation considered that the Rapporteur Général’s decision would not risk exposing that party’s business secrets to any third parties and upheld the Rapporteur Général’s decision.
In any event, the duty to state adequate reasons serves the primary objective of effective judicial review, which requires a review of both matters of fact and law as required by the European Court of Human Rights.[9] Mere references to the applicable law and generic explanations are unlikely to allow the judge to conduct a full review.
[1] See French Cour de cassation, Commercial, Financial and Economic Chamber, judgement of December 20, 2023, n° 22-17.296.
[2] See Conseil d’État, ruling of December 22, 2023, n° 475815.
[3] Article R. 463-15 of the French Commercial Code states: “Where the Rapporteur considers that one or more documents in their confidential version are necessary for the exercise of the rights of defence of one or more parties or that they need to be acquainted with them for the purposes of the adversarial debate before the Authority, he or she shall inform […] the person who has made the request for protection of the business secrets contained in these documents and set a time limit for submitting his or her observations before the Rapporteur Général issues a decision. […].” (Free translation).
[4] Article L. 464-8-1 of the French Commercial Code provides that: “Decisions taken by the Rapporteur Général of the French Competition Authority pursuant to Article L. 463-4 to refuse the protection of business secrets or to revoke the protection granted may be subject to an action for reformation or annulment before the First President of the Paris Court of Appeal or his delegate.” (Free translation).
[5] See Paris Court of Appeals, ruling of June 15, 2023, n° 23/00733.
[6] French Cour de cassation, Commercial, Financial and Economic Chamber, judgement of December 20, 2023, n° 22-17.296, para. 10.
[7] See Tribunal des Conflits, ruling of October 5, 2020, no 19/12686.
[8] See French Cour de cassation, Commercial Chamber, judgment of January 29, 2020 no. 18-11.725 French Cour de cassation, Commercial Chamber, judgment of January 29, 2020 no. 18-11.726.
[9] See for instance European Court of Human Rights, Menarini Diagnostics v. Italy (Menarini), judgment of September 27, 2011, application no. 43509/08.