On January 22, 2025, the Paris Court of Appeal (the “Court of Appeals”)[1] upheld the Paris Commercial Court’s dismissal of Carrefour’s claim for damages against L’Oréal on the basis that such claim was time-barred.
Background
On December 14, 2014, the French Competition Authority (“FCA”) fined several suppliers of hygiene products, including L’Oréal, for having engaged in price fixing practices (the “Decision”)[2]. The Decision was upheld by the Court of Appeals on October 27, 2016.
L’Oréal appealed to the French Cour de cassation, which, on March 27, 2019, dismissed all of L’Oréal’s claims except for the level of the fine imposed on its subsidiary, Lascad. Upon remittal, the Court of Appeals upheld the sanction against L’Oréal on June 18, 2020, except for the part concerning Lascad. A subsequent appeal by L’Oréal was dismissed on October 18, 2023.
Meanwhile, on August 17, 2017, i.e., almost three years after the Decision, Carrefour filed a claim for damages against L’Oréal before the Paris Commercial Court. However, this appeal was dismissed on procedural grounds on July 13, 2020, and then later upheld on appeal on September 8, 2021.
Carrefour lodged a new claim on July 20, 2021, i.e., this time more than six years after the Decision. On January 23, 2023, the Paris Commercial Court ruled that the claims were time-barred, which Carrefour appealed before the Court of Appeals, claiming that the limitation period had been interrupted.
The starting point of the limitation period
The Court of Appeals observed that Carrefour became aware of the facts giving rise to the damage, thus enabling the plaintiff to take legal action, upon the FCA’s Decision of December 18, 2014. This marked the beginning of the five-year limitation period provided for in Article 2224 of the French Civil Code[3] in force at the time prior to the transposition of Article 10 of Directive 2014/104/EU (“the Damages Directive”).[4]
The interruption of the limitation period
In its appeal, Carrefour argued that the limitation period, which was set to expire on December 18, 2019, had been interrupted.
First, Carrefour argued that as a result of the transposition of Article 10 of the Damages Directive into Article L.462-7, paragraph 4 of the French Commercial Code,[5] the limitation period had been interrupted by the Competition Council opening competition proceedings against L’Oréal in 2006. Indeed, Article L.462-7, paragraph 4 of the French Commercial Code provides that any investigatory act taken by a competition authority interrupts the limitation period for civil action until a decision becomes final. Carrefour therefore argued that the limitation period had been interrupted between 2006 and 2023, such that its claim was not time barred.
Carrefour pointed out that the European Court of Justice (“ECJ”) had already ruled that, while Article 10 of the Damages Directive was substantive in nature, such that it should not be applied retroactively, national courts needed to evaluate whether the “situation in question” arose before the deadline for transposition of the Damages Directive, or whether it continued to have effects beyond that date, in which case Article 10 would, in fact, apply.[6]
The parties disagreed on the triggering event that constituted “the situation in question”.
Carrefour claimed that, based on the ECJ rulings, the critical event triggering the application of Article 10 of the Damages Directive was the expiration of the applicable limitation period.Therefore, since Carrefour’s limitation period had not expired by the deadline set to transpose the Damages Directive, i.e. December 27, 2016, it considered that Article 10(4) of the Damages Directive, and, consequently, Article L. 462-7, paragraph 4 of the French Commercial Code, were applicable.
Conversely, L’Oréal argued that the ECJ preliminary rulings did not specifically relate to the interruption of the limitation period, but rather (i) its starting point and (ii) duration. L’Oréal considered that the relevant triggering event for the purposes of Article 10(4) of the Damages Directive was the investigatory action taken by a competition authority, which, in this case, occurred in 2006, such that the “situation in question” arose well before the deadline set to transpose the Damages Directive in 2016, thereby concluding that Article 10(4) of the Damages Directive did not apply.
The Court of Appeals acknowledged the ambiguity surrounding the ECJ’s ruling on the temporal application of Article 10(4) of the Damages Directive, but observed that, in any event, since the 2006 investigatory action occurred prior to the commencement of the limitation period in 2014, Article 10 of the Damages Directive could not have interrupted a limitation period that had not yet begun.
Second, Carrefour observed that Article L. 462-7 of the French Commercial Code, introduced by the 2014 Hamon Law,[7] which was in force prior to the transposition of the Damages Directive, already provided that the limitation period was suspended by the initiation of proceedings by a competition authority until a final decision was reached. Since the Decision had only become final in 2023, Carrefour argued that the limitation period had been interrupted until such date.
However, the Court of Appeals reiterated established case law according to which laws introducing new causes for interruption or suspension of the limitation period are not retroactive and only apply to interruptive or suspensive events occurring after their entry into force. Therefore, the opening of proceedings by the Competition Council in 2006 could not have interrupted the limitation period.
The Court of Appeals also noted that the principle of effectiveness under Article 101 of the Treaty on the Functioning of the European Union was not undermined since the limitation period had begun well after the end of the practices in question, the Decision had provided Carrefour with sufficient elements to establish the existence and scope of any potential harm, and Carrefour had had a reasonable five-year period to lodge its claim.
Takeaway
The temporal application of Article 10(4) of the Damages Directive and Article L.462-7 of the French Commercial Code remains uncertain.
The limitation period begins when the claimant becomes aware of the facts constituting anticompetitive practices by the defendants, which doesn’t necessarily require a competition authority’s decision. However, in cartel cases involving concealed practices, such awareness typically arises from the authority’s decision, initiating the limitation period.
This ruling clarifies that any prior investigatory steps taken by competition authorities cannot interrupt this period unless the claimant had already obtained effective knowledge of the infringements before the authority’s proceedings commenced.
[1] Paris Court of Appeal, January 22, 2025, Carrefour v. L’Oréal (23/04477).
[2] FCA Decision n° 14-D-19 of December 18, 2014 relative to practices implemented in the home care products and insecticides sector and in the personal and body care products sector.
[3] Article 2224 of the French Civil Code: “Personal or property actions are time-barred after five years from the day on which the holder of a right knew or should have known the facts enabling him to exercise it” (Free translation).
[4] Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, set to be transposed by December 27, 2016.
[5] Article L 462-7 paragraph 4 of the Commercial Code: “Any act intended to investigate, detect or sanction anti-competitive practices by the Competition Authority, a national competition authority of another Member State of the European Union or the European Commission interrupts the limitation period for civil action and action for damages brought before an administrative court on the basis of Article L. 481-1. The interruption resulting from such an act shall have effect up to the date on which the decision of the competent competition authority or the court of appeal can no longer be appealed by ordinary means” (Free translation).
[6] ECJ, June 22, 22, Volvo AB/ DAF Trucks, aff. C-267/20 ; ECJ, April 18, 2024, Heureka groupe/Google LLC, aff. C-605/21.
[7] Law No. 2014-344 of March 17, 2014 – art. 2 (V).