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Strong and resilient European cooperation

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Strong and resilient European cooperation

Faced with the economic impact of an unprecedented public health crisis, the competition authorities of the European Union immediately mobilised to adapt their resources to the situation in order to protect citizens and consumers as effectively as possible. The French Authority was no exception in this regard. The past year was also marked by the entry into force of enhanced intervention tools, with the transposition of the ECN+ directive. Between responsiveness in the face of an emergency and proactiveness to meet the challenges that are looming, below is an update on the latest developments in European competition policy.

Resolutely committed in a time of crisis

Continued sustained activity

Despite a particularly complicated context on account of the Covid-19 epidemic, representatives of the European Commission and national competition authorities (NCAs) met 18 times in 2020 in the context of the European Competition Network (ECN). This illustrates the strong desire of its members to safeguard European cooperation in the area of competition, and to confront the exceptional circumstances. The work focused on convergence in merger control and antitrust, abuse of dominant position and illegal horizontal and vertical practices. The question of implementing competition law in the specific context of the public health crisis was also a central issue.

Immediate responsiveness to support economic activity

From March 2020 on, the European Commission and the European Competition Network set up a temporary framework to assess possible anticompetitive practices that might have been implemented in the context of cooperation between companies to respond to emergency situations arising from the pandemic. This framework also took into account the impact of the crisis on merger control, as well as the progress of investigations into anticompetitive practices.
The European network indicated that this extraordinary situation may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce products to all consumers. In the current circumstances, the ECN will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply.
Companies that had any doubts as to the compatibility of these cooperation initiatives with competition law could at any time contact the Commission or the relevant national competition authority for informal advice.

At the same time, it is of utmost importance to ensure that products considered essential to protect the health of consumers in the current situation (e.g. face masks and sanitising gel) remain available at competitive prices. The ECN will therefore not hesitate to take action against companies taking advantage of the current situation by cartelising or abusing their dominant position.

Strong and resilient European cooperation

In this context, the ECN wished to point out that the existing rules allow manufacturers to set maximum prices for its products. It should be noted that, under French law, article L. 410-2, paragraph 3, of the French Commercial Code (Code de commerce) provides that (translated) “The provisions of the first two paragraphs [relating to freedom of pricing] do not prevent the Government from adopting, by decree in the Council of State, temporary measures to prevent excessive price increases or decreases, in response to a crisis situation, exceptional circumstances, a public disaster or a manifestly abnormal market situation in a given sector”. To meet demand and tackle the sharp rise in the selling price of sanitising gels or solutions since the emergence of the coronavirus in France, the Government decided to make use of this provision. As such, it promulgated various decrees regulating the prices of these products and extending manufacturing authorisations in order to tackle shortages.

Message of the ECN to companies on what they can do in the face of the Covid-19 epidemic, Press Release of the Autorité de la concurrence, 23 March 2020

Covid-19 Section of the website of the Autorité de la concurrence

Strong and resilient European cooperation

A Covid-19 task force

The French Authority set up an internal Covid-19 Task Force, to respond rapidly to requests from companies for information on how to safeguard virtuous initiatives. The Task Force also made it possible to coordinate market surveillance during the crisis, to analyse the various conducts observed and, where necessary, to take rapid action to remedy the detected conduct. Any person (company or consumer) who considers that an action taken by one or more companies is likely to be anticompetitive may report it to the Autorité at the following dedicated address: signalement.externe@autoritedelaconcurrence.fr

The new powers conferred on the Autorité by the Directive

Adopted in 2019, European Directive n° 2019/1, known as “ECN+” (European Competition Network) has allowed major advances to strengthen competition policy. This directive enlarges the resources available to national competition authorities and provides for the creation of a “common set of powers” enabling them to enforce competition rules more effectively within the European Union. All competition authorities will now have the same powers at European level, ensuring a more effective enforcement of anticompetitive practices.

In France, the publication of Act 2020-1508 of 3 December 2020 on various provisions for adapting economic and financial legislation to European Union law (the DDADUE Law), which allows the ECN+ Directive to be transposed by ordinance, marks the next step in the modernisation of the Autorité and its powers.

The power at the Autorité’s disposal to implement interim measures on its own initiative will be particularly useful, to allow it to intervene even more rapidly in the practices that are the most harmful to the economy. The Autorité has already had the opportunity to test the effectiveness of this tool in the mass retail distribution sector, as the Egalim Law now gives it the possibility of starting proceedings on its own initiative in the case of mergers between large purchasing offices. This new possibility, which will now be extended to all sectors, may prove particularly valuable in the digital sector, given the difficult-to-overturn effects of certain practices on highly evolving markets.

The transposition will also mark an important step in the European harmonisation of penalties and will result in the concept of damage to the economy being taken out of the equation when the penalties imposed by the Autorité are calculated. The applicable regime will therefore be in line with the regime in force at European level.

As regards leniency, the Directive will facilitate a significant step forward, with full harmonisation of NCA leniency programmes for the most serious ‘secret cartel’ infringements. The leniency provisions of the Directive will be in line with the “Model Leniency Programme” adopted by the ECN in 2006.

The transposition also includes provisions on the Autorité’s investigatory powers in relation to access to digital data and the admissibility of evidence.

Strong and resilient European cooperation

A modernised framework for action

  • Introduction of the principle of discretionary prosecution, which will enable the Autorité to better deal with the cases that raise the most serious competition issues
  • Power to issue structural injunctions in the context of the fight against anticompetitive practices
  • A substantial increase in the cap on fines for professional bodies up to 10% of total worldwide turnover (ending the previous cap of €3 million)
  • Possibility for the Autorité to issue interim measures on its own initiative

Supplementary provisions to the Directive enhancing the Autorité’s means of action

The DDADUE Law, which entered into force on 6 December 2020, provides for complementary measures to the ECN+ Directive, aimed at enhancing the effectiveness of the Autorité’s action and enabling it to safeguard the smooth performance of its tasks.

First, the law clarifies the provisions relating to the Autorité’s investigatory powers in the context of dawn raids, in two respects: it mandates the presence of only one judicial police officer per site visited and provides for competence over all the sites visited of the liberty and custody judge who authorised the dawn raid in the first place.

Secondly, it gives the Autorité additional means to reduce the time taken to process cases involving litigation, while still respecting the adversarial principle. The legislative provisions streamline procedures before the Autorité by allowing more frequent use of the simplified procedure, by increasing cases that can be examined by a single member of the Board, and by adjusting the criteria for the allocation of powers between the DGCCRF (Directorate General for Competition Policy, Consumer Affairs and Fraud Control) and the Autorité in the area of micro anticompetitive practices.

Finally, certain provisions are intended to make the Autorité’s exercise of its powers in French overseas territories more flexible, by enabling it to act on market structure (through wider use of structural injunctions). The injunctions will no longer apply solely to retail stores, but now also to wholesale operators. Moreover, the implementation of the injunctions will no longer require the identification of an “impairment of effective competition” but only a “competition concern”. Also in the French overseas territories, the law provides for provisions to stimulate competition in the distribution of products where there is an exclusive import agreement situation. In addition to the existing ban on exclusive import agreements in French overseas territories, it will now be prohibited for a wholesale-importer or wholesaler-retailer or for a group of undertakings in which at least one of the entities performs one of these activities, to apply discriminatory conditions relating to products or services for which there is a de facto exclusive import agreement to an undertaking in which it does not hold any of the capital.

Press release, 20 November 2020

Strong and resilient European cooperation

Mathias Pigeat

Head of the Legal Department of the Autorité de la concurrence (previously Chief of Staff and Director of European and international affairs)

Competition law has recently been at the centre of debate on a range of sensitive issues. How do you view the role and position of competition law at the European and international level?

The last three years have been particularly active at European level. Since the negotiation and adoption of the ECN+ Directive, which bolstered the powers of national competition authorities and the provision of a common set of powers and safeguards, competition law has indeed been at the centre of debate. This has highlighted the importance of this economic policy tool in meeting the high expectations regarding a number of issues: the emergence of European champions, better regulation of the digital giants, and a commitment to sustainable development.

While there is no doubt that competition law is a powerful tool, if only in terms of the amount of sanctions that can be imposed or the possibility of imposing structural or behavioural injunctions, it seems to me that it is also via the capacity of the competition authorities to work in a network at European and international level and to provide a uniform and effective response on a pan-European and international scale that competition law has become an essential tool of economic policy.

The continual and repeated efforts of the competition authorities and this desire for convergence are indeed characteristic in this regard. This is a major strength in dealing with the actors and issues that transcend geographical borders in an increasingly globalised economic context. The various forums available to competition authorities: the OECD, the International Competition Network, UNCTAD and the European Competition Network (ECN) are a reference point and are particularly dynamic in creating consensus and advancing the reflections.

They can and should serve as models in the context of the reflections currently taking place at European level, in particular with a view to the adoption of the Digital Markets Act. Competition authorities will continue to play a leading role in the digital field and strengthen their cooperation for an ever more harmonised approach and implementation of competition law.

This is what the Autorité de la concurrence is working towards, whether through the adoption of the Common Understanding of the G7 competition authorities, in the context of the French presidency in 2019, or through its cooperation with other national competition authorities.