On May 21, 2024, the French Competition Authority (the “FCA”) fined 11 companies active in the pre-cast concrete sector for having exchanged commercially sensitive information and implemented anticompetitive price fixing, customer allocation and bid rigging practices over seven to ten years (from 2008 or 2011 to 2017 or 2018 depending on the practices).[1]  These practices were uncovered in the context of a criminal investigation carried out under the supervision of a criminal investigating judge (juge d’instruction).  Fines ranged from €150,000 to €25.5 million, amounting to a total of approx. €76.6 million.

Background and criminal law component to the case

The FCA investigation was prompted by a report from the French Directorate General for Competition Policy, Consumer Affairs, and Fraud Control (the “DGCCRF”) of March 11, 2015.  Following this report, on November 17, 2016, the FCA sent a report to the French public prosecutor pursuant to article 40§2 of the French Criminal Procedure Code that states that if a public authority (such as the DGCCRF or the FCA) is aware of a criminal offence, it must immediately inform the French public prosecutor who may then decide to initiate a criminal investigation.

Under this provision, on October 25, 2018, a criminal investigating team intercepted phone calls and conducted simultaneous raids at several pre-cast concrete companies’ premises (A2C, KP1, Rector, Saint-Léonard Matériaux (“SLM”) and Soprel) while also disrupting a meeting at a hotel in Roissy attended by representatives from four market players (A2C, KP1, Rector and Soprel).  The criminal investigation team seized smartphones and laptops of all attendees, as well as hard-copy working documents, which notably contained commercially sensitive information on prices and customer allocation shared via secretive and sophisticated methods.

The FCA investigation and findings

Following these criminal raids, on October 30 and 31, 2018, KP1 and Rector respectively applied for leniency.  The content of the leniency applications, together with the elements gathered during the criminal investigation which had been transferred to the FCA,[2] led the FCA to initiate ex officio proceedings relating to suspected anticompetitive behaviour in the pre-cast concrete products sector.  KP1 and Rector’s leniency statements in particular helped identify participants and additional practices beyond those initially uncovered by the criminal investigation.

Throughout its six-year investigation, the FCA reviewed a large number of e-mails, phone taps and documents evidencing coordinated pricing policies, maps of France divided up between competitors or minutes of secret meetings or coded communications among the companies involved.  The evidence gathered revealed four infringements:  

  • The first infringement involved KP1, Rector, and Société d’Etudes et Applications de Composants (“SEAC”). The three companies fixed prices and shared worksite volumes at a national level to distort competition in calls for tenders issued by building companies operating at regional levels (Strudal, A2C, FB, L’Industrielle du Béton (“IB”), SLM and Soprel) from May 15, 2008 to October 25, 2018.  The case file contained detailed minutes of roundtables where the cartelists exchanged sensitive information on sales quotas to be met by region.  This information was compiled in tables then shared for implementation.  Spreadsheets were used to monitor compliance with the allocations.  Said tables included coded vocabulary to conceal the names of the companies involved and the content of the anticompetitive discussions.  There was also proof of discussions via disposable phones.
  • The second infringement related to an agreement between KP1 and Rector agreeing on net prices, price hikes, commercial conditions and volumes for wholesalers and home builders, which dated from April 2011 to October 25,2018.  Information was exchanged regularly (at least prior to every annual price hike), by text messages or during in-person meetings.  SEAC also participated in the conduct, but benefited from the 10-year statute of limitation as there was no proof of SEAC’s involvement after March 5, 2013.
  • The third infringement involved, KP1, Eurobéton France and Strudal. The FCA found that they colluded from December 14, 2011 to October 25, 2018 by exchanging sensitive pricing information before tender outcomes for pre-cast concrete projects were known.
  • The fourth infringement was a bilateral agreement between KP1 and Société de Préfabrication de Landaul (“SPL”) aimed at fixing prices and allocating customers between themselves from December 10, 2010 to December 15, 2017.

In total, eleven companies participated in one or several infringements (A2C, Eurobéton France, FB, IB, KP1, Rector, SEAC, SLM, Soprel, SPL, and Strudal) and were fined as follows:

  • Rector: €25,450,000 (including Rector Lesage: €21,440,000 and Planchers Fabre: €4,010,000) (which includes a 15-30 % fine reduction for leniency)
  • KP1: €19,040,000. Despite being the first company to report the infringements, KP1 was denied total immunity for the first and second infringements because the FCA already had evidence of these before its leniency application, as a result of the criminal dawn raids mentioned above. KP1 however benefited from full immunity for the third and fourth infringements, as these were revealed to the FCA based on KP1’s leniency application.  
  • SEAC: €10,990,000
  • A2C: €6,390,000
  • Strudal: €3,910,000
  • Eurobéton France: €3,445,000 (including €75,000 for obstructing the investigation by initially providing incorrect information)[3]
  • IB: €3,110,000
  • SLM: €2,840,000
  • SPL: €770,000
  • FB: €550,000
  • Soprel: €150,000

The FCA had also initially raised an objection against Fidal, a French law firm, for providing advice to the cartelists on how to hide their illegal activities.  The FCA specifically alleged that Fidal provided a competition law training course to the International Federation for Structure Concrete (“FIB”) trade association members, during which it allegedly offered guidance on concealing competitive behaviour.  The FCA however ultimately found that although Fidal’s presentation included advice on how to hide potentially anticompetitive actions, this alone did not prove that Fidal knew about a cartel among FIB member companies.  Additionally, since the training occurred in 2007, proceedings relating thereto would have been time-barred due to the 10-year statute of limitations.

Takeaways

This decision sheds light on how the DGCCRF, the FCA and the French criminal system can cooperate to uncover potential anticompetitive misconduct.  In this case, following the receipt of information from the DGCCRF, the FCA sent a report to the public prosecutor (article 40§2 of the French Criminal Procedure Code) triggering a criminal investigation.  The FCA then asked the criminal judge to provide it with the criminal case file in order to investigate the companies’ behaviour from a competition law standpoint (as permitted by article L.463-5 of the French Commercial Code) and the criminal judge accepted this request.

In previous decisions,[4] the FCA had merely relied on article L. 463-5 of the French Commercial Code to make use of the significant criminal investigation’s powers and evidence (including wiretaps and content of devices seized during criminal raids).  In particular, criminal investigations tend to be more coercive and therefore considered less protective of the rights of defence compared to administrative/FCA proceedings.  Lack of (i) mandatory and immediate assistance by a lawyer during a criminal inspection, (ii) minutes recounting the conduct of the search or (ii) possibility to appeal the judge’s authorisation to carry out the inspection are among the most significant procedural differences.  Also the protection of business secrets is not necessarily guaranteed in criminal proceedings as once a person liable for a company’s behaviour is formally under investigation (mis en examen) the judges are granted access to all documents seized, including any business secrets included therein.  In the present case, the FCA dismissed any arguments relating to the rights of defence by stating that it is the criminal judge’s sovereign decision and competence to decide on the scope of evidence shared with the FCA and that its investigation unit could lawfully review the documents shared without having to wait for the criminal investigation to be completed.[5]

In this decision, the FCA’s use of article 40§2 of the French Criminal Procedure Code – by inviting the criminal courts to launch a criminal investigation – further extends the risk of anticompetitive behaviour detection and subsequent fining.   

[1]              French Competition Authority, Decision No. 24-D-06 of May 21, 2024 regarding practices implemented in the pre-cast concrete products sector.  The FCA found that these practices were deeply entrenched, with some participants indicating that the collusion might have begun as early as the 1980s.

[2]              This transfer was based on article L. 463-5 of the French Commercial Code which allows the FCA to request evidence obtained during a criminal investigation that is directly related to facts under investigation by the FCA.  Criminal courts may accept this request.

[3]              Eurobéton had initially stated that its holding company had taken control of it in 2018 rather than in 2016. This mistake could have had an impact on the holding company’s liability duration and, in turn, on the amount of the fine.  Eurobéton spontaneously corrected this information when responding to the FCA’s statement of objections.  The FCA nevertheless sanctioned Eurobéton as it found that Eurobéton should have rectified the information relating to its holding immediately after realising its mistake rather than waiting to respond to the FCA’s statement of objections.

[4]           To our knowledge, the FCA has relied on evidence gathered in the course of a criminal investigation in six instances: FCA decision No. 99-D-50 of July 13, 1999 regarding practices in the relocation of military personnel sector in Vannes; FCA decision No. 05-D-69 of December 15, 2005 regarding practices in the roadwork sector in Seine-Maritime; FCA decision No. 06-D-07 of March 21, 2006 regarding practices implemented in the sector of public works in the Ile-de-France area; FCA decision No. 07-D-15 of May 9, 2007 regarding practices implemented in the public markets relative to Ile-de-France secondary schools; FCA decision No. 10-D-39 of December 22, 2010 regarding practices implemented in the vertical road signs sector, and FCA decision No. 11-D-02 of January 26, 2011 regarding practices implemented in the sector of the restoration of historic monuments.

[5]           The FCA made clear in its press release that its decision does not affect the outcome of any criminal proceedings.