1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
Articles L 462-6 and L 464-2 of the Code de commerce (the Commercial Code) provide the Conseil de la concurrence (Competition Council – the Conseil) with the power to impose fines on any undertaking which has infringed Articles L 420-1 (anticompetitive agreements) or L 420-2 (abuse of a dominant position or economic dependency) of the Commercial Code and/or Articles 81 and 82 of the EC Treaty prohibiting anticompetitive agreements and abuse of a dominant position.
Although there are no detailed rules or guidelines on the method of setting fines, Article L 464-2 I of the Commercial Code provides that fines must be proportionate to the gravity of the alleged facts, to the extent of the damage caused to the economy, to the situation of the undertaking being penalised or the group to which it belongs and to repeated infringements. The maximum fine undertakings may incur is 10 per cent of the highest worldwide pre-tax turnover reached during a financial year ended since the financial year before that in which the practices were carried out.
Unlike many other jurisdictions, where leniency programmes are the result of notices issued by competition authorities, the French leniency programme was introduced by law. This procedure, introduced into French competition law as part of the modernisation package contained in the Loi sur les Nouvelles Régulations Economiques (New Economic Regulation Act – the NRE Law) of 17 May 2001, has been codified in Articles L 464-2 IV and R 464-5 of the Commercial Code.
In response to the criticism that the French leniency rules left too much discretion to the competition authorities and did not clearly spell out the conditions for obtaining full or partial immunity, the Conseil adopted on 11 April 2006 a procedural notice relating to the French leniency programme (the Procedural Notice) to clarify the application of its leniency programme and encourage the use of the procedure.
On 17 April 2007, the Conseil revised the Procedural Notice in order to comply with the Model Leniency Programme adopted by the European Competition Network in September 2006 (the ECN Model Programme). Besides the introduction of a marker system and of the possibility to file a summary application in cases where the European Commission has authority to handle the case, the conditions for immunity and reduction in fines have been clarified and the guarantees relating to the statements made by the undertakings have been strengthened. The Procedural Notice follows for the large part the European Commission’s Notice on immunity from fines and reduction of fines in cartel cases (OJ C298/17, 8.12.2006) (the EC Leniency Notice).
The main enforcing bodies are the Conseil and DGCCRF (the Directorate General of Competition, Consumers Affairs and Fraud Control) (the competition authorities), a division of the Ministry of Economy. Both the Rapporteur Général of the Conseil (general case-handler – the Rapporteur Général) and the DGCCRF’s Directeur Général (general director
– the Directeur Général) are empowered to receive leniency applications. Quite separate from the leniency procedure is the availability of a reduction in fine by negotiating a settlement with the Rapporteur Général (Article L 464-2 III of the Commercial Code) once a formal proceeding has been initiated (the settlement procedure). In this situation, the Rapporteur Général has a pivotal role. He is in charge of proposing to the Conseil a fine reduction that takes into account the absence of dispute of the objections. It is for the Conseil and not the Rapporteur Général to decide whether an undertaking may benefit from a reduction in fine.
2. What are the basic tenets of a leniency/immunity programme?
According to Article L 464-2 IV of the Commercial Code, the leniency programme covers undertakings which have participated in an infringement of Article L 420-1 of the Commercial Code and decide to inform the French competition authorities of the existence of such an infringement.
In theory, this position would differ from that in many other jurisdictions in which leniency is granted only for cartels because Article L 420-1 of the Commercial Code has a wider scope and covers not only cartel practices such as horizontal price fixing, bid rigging and market sharing but also vertical practices. The Conseil clarified the scope of the leniency programme in the Procedural Notice by indicating that the infringements concerned were cartels between undertakings including price fixing, market sharing, production or sales quota, or any other similar anti-competitive behaviour between competitors.
Under Article L 464-2 IV of the Commercial Code and the Procedural Notice, the French leniency policy offers both full immunity and partial immunity.
As in many other jurisdictions, the qualification of a leniency application depends in particular on:
Full immunity is granted to the first undertaking that comes forward and provides the competition authorities with the requisite information (see response to questions 4 and 8 below). As under the EC Leniency Notice, an undertaking may be eligible for full immunity even after the launch of a targeted inspection (a dawn raid). In such a case, the standard of proof will be higher as the undertaking will have to provide the competition authorities with evidence enabling them to find a breach of Article L 420–1 of the Commercial Code and/or of Article 81 EC. Leniency applicants that come forward subsequent to the first immunity applicant may be eligible for a reduction of fine up to 50 per cent (partial immunity) if they provide evidence which represents ‘significant added value’ with respect to the evidence already in the competition authorities’ possession.
Applicants eligible for full or partial immunity will also need to meet other conditions such as providing the competition authorities with all the evidence relating to the cartel, making employees or legal representatives available for interview with the competition authorities and not coercing other undertakings to participate in the cartel (see response to question 4 below).
Applicants wishing to apply for leniency need to make a formal written or oral application to the Rapporteur Général or to the Directeur Général. Since April 2007, it has been possible for an applicant to make use of the marker system.
The settlement procedure applies after a proceeding has already started. Unlike leniency which only applies to cartels, negotiated settlements apply to all types of anti-competitive practices. They offer fine reductions to undertakings that do not dispute the facts and that undertake to change their behaviour in the future once they have received the statement of objections. Article L 464-2 III of the Commercial Code provides that the fine is calculated by taking into account the fact that the objections have not been disputed, and that the maximum fine should be reduced by half, ie to five per cent of the group’s turnover. However, to date, this maximum greatly exceeds the actual fines imposed. Further, the statute provided quicker operational alternatives by specifying that the Rapporteur Général could suggest to the Conseil fines allowing for the fact that the objections have not been challenged. As a result, in practice, the Rapporteur Général proposes reductions that should have been ordered by the Conseil.
The method was established with the first decision involving a settlement (Decision 03-D-10 of 20 February 2003, ‘Port autonome de Marseille’). The Conseil first assessed the usual amount of the fine, then applied a reduction rate taking the Rapporteur Général’s suggestions into account. In the circumstances in question, the Conseil applied a 50 per cent reduction whereas the Rapporteur Général had suggested a reduction of between 30 to 50 per cent.
It is obvious that the Conseil’s decision is intended to provide undertakings that are party to a settlement procedure with a real advantage as compared to those that pursue the usual course of action of challenging the objections. The Conseil has the power to determine the fine, and the Rapporteur Général’s reduction proposals are not binding. The Rapporteur Général may of course promise the undertakings that have agreed to make a settlement that he will suggest a fine reduction to the Conseil, but such a promise does not create any right to a reduction within the percentage range the Rapporteur Général suggests (CA Paris, 21 September 2004, ‘calculatrices a usage scolaire’).
Conversely, the Conseil may carry the Rapporteur Général’s suggestions even further. This occurred with the 04-D-65 decision of 30 November 2004, for which a 90 per cent reduction was determined, even though the Rapporteur Général had only suggested 50 per cent, albeit in the specific context of simplified proceedings (in such proceedings, the amount of the fine is limited to €750,000).
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
The leniency policy came into force on 17 May 2001. Since then, 67 cartels have been unveiled and punished. Only one decision was the result of a leniency application. In this case, the leniency applicant received full immunity.
However, 30 leniency applications have been filed with the Conseil and the Conseil has issued 23 conditional opinions (see response to question 10). Seventy-five per cent of these opinions received a positive response.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
To be a successful leniency applicant, an undertaking must:
The leniency application
In addition to its name and address, an undertaking must provide, orally or in writing, the competition authorities with:
This is simply a first set of information that must be provided and it does not have to be exhaustive. It allows the applicant to place a marker (ie to reserve its place in the queue). The applicant will then be granted a limited period of time to gather evidence meeting the requisite standard to be eligible for leniency.
It is also important to note that the applicant does not have to specify whether it is applying for full or partial immunity. The Rapporteur in charge of the case will inform the applicant promptly of the classification of the leniency application (Type 1 A, 1 B or 2 cases).
Eligibility conditions
An undertaking will be eligible for full immunity if it is the first cartel participant to provide the Conseil or DGCCRF with sufficient evidence enabling them either to:
In type 1 A cases, immunity will only be granted if (i) the competition authorities did not previously have sufficient evidence to be able to carry out a targeted inspection on their own initiative and (ii) the applicant provides evidence which is sufficient, in the Conseil’s view, to have the targeted inspection carried out.
In order to meet this evidential threshold, the applicant must provide all the information requested for filing a leniency application (see above) and any pieces of evidence (documentary, testimonial or any other nature) in its possession or that can be made available at the time of the application. These elements may consist of information helping to identify locations, dates and the object of contacts or meetings between participants in the alleged cartel.
In type 1 B cases, immunity will only be granted if (i) at the time of the application, the competition authorities did not have sufficient evidence to find an infringement of Article L 420-1 of the Commercial Code and/or Article 81 EC, (ii) the applicant provides evidence, which in the Conseil’s view, is sufficient to establish the existence of such an infringement, and (iii) no undertaking has obtained a conditional opinion granting type 1 A full immunity.
Applicants who do not meet the type 1 A or type 1 B conditions may be eligible for a reduction of fine of up to 50 per cent (partial immunity). In order to qualify for partial immunity, an undertaking must provide the Conseil with evidence of the alleged infringement which represents ‘significant added value’ with respect to the evidence already in the competition authorities’ possession.
The concept of ‘significant added value’ refers to the extent to which the evidence provided strengthens, by its very nature and/or its level of detail, the ability of the Conseil or DGCCRF to prove the existence of the alleged infringement. In this respect, the Conseil will generally consider written, contemporaneous evidence to have a greater value than evidence subsequently established, and incriminating evidence directly relevant to the facts at stake to have a greater value than evidence of indirect relevance. Similarly, compelling evidence will be attributed a greater value than evidence which requires corroboration if contested. Hence, even if testimonial evidence is accepted, compelling documentary evidence will give the undertaking a greater chance to secure a reduction in fine.
The level of reduction of fine will depend on the ranking of the application and the time when the evidence was submitted, as well as the extent to which the elements submitted bring significant added value.
Substantive conditions
In addition to the above conditions, the applicant must meet the following cumulative conditions to qualify for full or partial leniency:
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
Full immunity is only available to the first undertaking to come forward and provide the Conseil or DGCCRF with requisite information relating to the alleged cartel. Undertakings which are not the first to come forward are not eligible for full immunity.
Undertakings may now apply for a marker protecting their place in the queue for a given period of time, such period to be specified on a case-by-case basis. It allows the applicant to complete its internal investigation to gather the required information and items of evidence.
For the settlement procedure, there is no advantage to being the ‘first in’ to cooperate.
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
Undertakings which are not the first to come forward are ineligible for full immunity. However, an undertaking which is second to apply for leniency will be eligible for a reduction in fine if it provides the Conseil or DGCCRF with evidence of the alleged cartel which represents ‘significant added value’ and meets the four cumulative substantive conditions set out in response to question 4. The Procedural Notice does not follow the European Commission’s practice in adopting a sliding scale of fine reduction depending on the order of application by the cartel participants. Rather, the Conseil has kept a certain amount of discretion to determine the level of reduction of fine by indicating that, in principle, the reduction in fine should not exceed 50 per cent.
The Procedural Notice does not provide for an ‘amnesty plus’ option. However, if the applicant for a reduction of a fine is the first to submit compelling evidence which the Conseil uses to establish additional facts which have a direct bearing on the amount of the fine, this will be taken into account in the individual setting of the fine which may give rise to partial immunity.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
All undertakings which provide evidence of ‘significant added value’ with respect to the evidence that the Conseil or DGCCRF already have and meet the four cumulative substantive conditions set out in response to question 4 may benefit from a reduction of fine regardless of the time at which they decide to cooperate. In contrast to the EC Leniency Notice, an applicant cannot be eligible for partial immunity if it has taken steps to coerce other undertakings to participate in the cartel.
As explained in response to question 4 above, the concept of ‘significant added value’ refers to the extent to which the evidence provided strengthens, by its very nature and/or its level of detail, the ability of the competition authorities to prove the alleged infringement. In making this assessment, the Conseil will generally consider written, contemporaneous evidence to have a greater value than evidence subsequently established. Similarly, incriminating evidence directly relevant to the facts at stake will have a greater value than evidence of indirect relevance, and compelling evidence will be attributed a greater value than evidence such as witness statements which require corroboration if challenged.
As explained above, the Procedural Notice does not provide a sliding scale of fine reduction depending on the order of application by the cartel participants. The Procedural Notice merely indicates that the Conseil will take into account both the order and time of application and the extent to which the evidence submitted represents significant added value.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
Yes, full immunity will be granted to the first undertaking to provide the requisite information on the alleged cartel. The Procedural Notice contains two different evidential thresholds.
Type 1 A cases covers the scenario where the competition authorities have no information on the alleged cartel, ie in cases where an inspection has not yet been launched.
In such a case, the applicant may qualify for full immunity if:
Type 1 B cases cover the scenario where the competition authorities are already in possession of information on the cartel or have already carried out an inspection. In this case, the applicant may qualify for full immunity if all of the following conditions are met:
9. How many companies have received full immunity from fines to date?
As at 30 June 2007, the Conseil had issued 67 infringement decisions for cartel activity since the NRE Law came into effect and the leniency policy has been available. Of the 67 infringement decisions, there is only one published decision where an undertaking has been granted full immunity.
However, there are a number of cases where full immunity has been applied for and granted but where an infringement decision is still awaited.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
An undertaking applying for leniency will go through the three following practical steps:
Filing a leniency application
The applicant must contact either the Directeur Général of the DGCCRF or the Rapporteur
Général of the Conseil. Their contact details are:
Conseil
Thierry Dahan, Rapporteur Général
11 rue de l’Echelle – 75001 Paris
Telephone: +33 (0)155 040 078
Fax: +33 (0)155 040 086
E-mail: thierry.dahan@conseil-concurrence.fr
DGCCRF
André Marie, Head of Section B1
Sous-direction B – Bureau B1 – Teledoc 031
59 boulevard Vincent Auriol – 75703 Paris cedex 13
Telephone: +33 (0)144 972 329
Fax: +33 (0)144 972 500
E-mail: andre.marie@dgccrf.finances.gouv.fr
It should be noted that the competition authorities accept anonymous approaches by applicants wishing to obtain guidance on the implementation of leniency proceedings.
The leniency application can be made by registered mail with acknowledgement of receipt or even orally. In the latter case, the date and time of oral application is noted in writing.
The leniency applicant must provide:
The receipt of the application by the Rapporteur Général or the Directeur Général permits the undertaking to apply for a marker. A marker aims to protect the applicants’ place in the queue for a period of time to be specified on a case-by-case basis in order to enable the applicant to gather information and items of evidence relating to the infringement which are necessary for the examination of the leniency application. If the applicant perfects the marker within the period set by the Rapporteur Général or the Directeur Général, the information and evidence provided will be deemed to have been submitted on the date when the marker was granted.
The Directeur Général and the Rapporteur Général must keep each other informed of any application made to them.
Examination of the leniency application
Once the leniency application is registered, either by written receipt of the letter sent by recorded delivery or by the drafting of a minute, a written or oral corporate statement is taken from the undertaking’s representative by a Rapporteur of the Conseil or an investigator from the DGCCRF. At the applicant’s request, the oral statement can be electronically recorded by the Conseil (see response to question 13 for further details).
As this stage, the applicant must provide the competition authorities with all the evidence that it considers necessary to support its leniency application (eg a detailed description of the alleged infringement including information about its nature, duration, operating system and implementation as well as about its members). However, at this stage of the procedure, the applicant does not have to provide all the pieces of evidence it has in its possession, in particular if the provision of such elements would interfere with the confidentiality of its application. Only the leniency opinion will require the transmission of these elements and the compliance with such a request will only be assessed in the final decision of the Conseil.
Thereafter, the Rapporteur in charge of the investigation of the leniency application drafts a report in which he verifies that all of the eligibility and substantive conditions are fulfilled and prepares, if applicable, proposals for full or partial immunity. He must promptly inform the applicant of whether its application constitutes a Type 1 A case or not.
The report is then notified to the applicant and the Commissaire du gouvernement (a representative of the Minister of the Economy), at least three weeks before the hearing.
Leniency opinion of the Conseil
On the basis of the report, the applicant is called to attend a hearing (which is not public) before the Conseil.
The Conseil then adopts a leniency opinion in which it indicates whether it grants the applicant full or partial immunity from fines, and, in the latter case, the rate of reduction, and also specifies the conditions attached to it (see response to question 4). This leniency opinion is confidential.
The Conseil does not decide whether the conditions set up by the leniency opinion have been complied with until the end of the procedure. The statement of objections and the Rapporteur’s final report include an appraisal of the applicant’s compliance with these conditions.
The Conseil, when judging on the merits, considers whether it grants the total or partial immunity requested. If it considers that the applicant fulfils the conditions set out in the leniency opinion, it grants full or partial immunity from fines, as indicated in the leniency opinion. Otherwise, it determines the exact level of the partial immunity. If it considers that the conditions are not met, it issues a negative opinion and the information and items of evidence are returned to the applicant upon its request.
Parallel to the usual steps to obtain leniency is the ‘summary application’ procedure which allows an applicant to lodge a short form summary with the Conseil or DGCCRF in cases where the applicant has also sought full immunity from the European Commission. This procedure was introduced in April 2007 when the Procedural Notice was amended to comply with the ECN Model Programme and is designed to minimise the burden of multiple filings on leniency applicants.
The Conseil and the DGCCRF accept summary applications in type 1 A cases where:
Summary applications must be sent by recorded delivery with written receipt or by oral statement. The Rapporteur Général or the Directeur Général will acknowledge receipt (including the date and the time) of the application and will confirm whether the applicant is eligible for type 1 A immunity.
The date of receipt of the application or the drafting of the oral statement makes it possible to determine the order of the queue of the summary application. If it is confirmed that the applicant is the first to seek full immunity, the summary application will be considered by the Conseil as having been made in accordance with the conditions provided for type 1 A immunity. However, the applicant will remain bound to provide the Conseil with any additional information which it may request.
If the Conseil decides to take action in a case for which a summary application has been submitted, the undertaking will have to provide all information and pieces of evidence necessary for the examination of the application under the conditions provided for a classic leniency application.
11. Is there an optimal time to approach the regulatory authority?
In common with many other jurisdictions, the French leniency policy encourages undertakings to intervene as soon as possible: the sooner an undertaking provides information and items of evidence to the Conseil and/or DGCCRF, the greater the fine reduction may be. Indeed, the first cartel member to provide information may in principle be eligible for full immunity and subsequent applicants for a reduction in fine not exceeding 50 per cent.
The marker system introduced in April 2007 enables the undertakings to protect their rank in the leniency procedure. In order to ensure that it secures a marker as the first in the queue, the applicant should contact the Rapporteur Général or the Directeur Général as soon as possible. If the applicant is not sure whether the evidence it holds is sufficient to qualify for leniency, it can informally and on an anonymous basis seek guidance from the Rapporteur Général or the Directeur Général. However, it has to be noted that such an informal request does not secure a place in the leniency queue for the applicant.
Participation in a settlement procedure is based on the condition that the undertaking does not challenge the statement of objections issued by the Conseil or the DGCCRF. Therefore, an undertaking should apply for a settlement before the end of the two-month period allowed for replying to the statement of objections.
12. What guarantees of leniency exist if a party cooperates?
There is no guarantee of leniency until the final decision is adopted by the Conseil. However, an applicant fulfilling the conditions set in the opinion of the Conseil awarding partial or full immunity will secure leniency.
Among the conditions that a leniency applicant has to comply with are the cooperation obligations.
The Conseil has elaborated on the content of the cooperation condition in the Procedural Notice and has prescribed the following requirements that must be met in order for the cooperation condition to be fulfilled. Indeed, as part of its obligation to cooperate genuinely, fully, on a continuous basis and expeditiously with the Conseil or DGCCRF, the applicant must:
Provided all the other substantive conditions (ie, no coercion, ending its involvement in the cartel, not having destroyed or falsified evidence, nor disclosed its intention to apply for leniency) and eligibility conditions (see response to question 4 above) are met, leniency should be guaranteed. However, in practice the Conseil has significant discretion in deciding whether the conditions are met, particularly given the subjective nature of terms such as ‘significant added value’ or ‘full’ cooperation.
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
The French competition authorities are well aware of the importance of confidentiality as regards the applicant’s incentive to cooperate and therefore as regards the efficiency of the leniency programme.
Therefore, different measures have been taken to protect the confidentiality of leniency applications.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
As the Conseil has no powers to impose penalties on employees, there is no leniency programme for individuals.
The leniency treatment will have a certain impact on an applicant’s employees who have infringed Article L 420-6 of the Commercial Code. Under this provision, an individual who takes part personally and decisively in the design, organisation, or execution of anticompetitive practices with fraudulent intent can be punished with up to four years’ imprisonment and a fine of €75,000. The Conseil can refer such matters to the public prosecutor (Procureur de la République). However, as detailed in response to question 15 below, the Conseil has undertaken not to do so for individuals belonging to an undertaking which has been granted leniency.
15. Does leniency bar further criminal or private enforcement?
As regards civil enforcement, the Procedural Notice expressly states that full or partial immunity does not protect the undertaking from any civil law consequences that may result from its participation in a cartel. Leniency is only related to the proceedings before the Conseil and to possible fine reductions, and not to any award for damages, over which the Conseil does not have jurisdiction. In addition, a leniency application has no impact on the applicant’s liability nor on the lawfulness of its conduct. Consequently, the courts may award damages to a victim on the basis of a Conseil’s decision sanctioning an undertaking for cartel involvement, even though it was granted leniency and thus fully or partly exempted from fines.
As regards criminal enforcement, the Procedural Notice states that the Conseil will not refer individuals belonging to an undertaking which has been granted leniency to the public prosecutor for a prosecution of criminal offence pursuant to Article L 420-6 of the Commercial Code. The Conseil’s policy not to make criminal referrals is available only to successful leniency applicants. This procedure should alleviate the concerns which would otherwise discourage leniency applicants in cases where there are precedents of criminal sanctions, such as bid rigging cases.
RELATIONSHIP WITH THE EUROPEAN COMMISSION’S LENIENCY NOTICE AND LENIENCY POLICY IN OTHER EU MEMBER STATES
16. Does the policy address the interaction with applications under the Commission Leniency Notice? If so, how?
The Procedural Notice takes into account that a leniency applicant might also file an application to the European Commission. So as to be informed of such parallel proceedings, the Procedural Notice requires the applicant to provide the Conseil or DGCCRF in its leniency application with any other leniency application which has been or will be made to another competition authority.
More importantly, in order to alleviate the burden associated with multiple parallel applications, the Procedural Notice has introduced a ‘summary application’ procedure which allows an applicant to lodge a short form summary with the Conseil or DGCCRF in cases where the applicant has also sought full immunity from the European Commission (see response to question 10 above for more details on this procedure).
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
The Procedural Notice does not address the interaction with leniency applications made in other EU member states.
Steps have however been taken by the ECN to address the concern that has arisen as a result of the discrepancies between the leniency programmes of the EU member states, via the ECN Model Programme. This sets out the treatment which an applicant can anticipate in any ECN jurisdiction once alignment of all the programmes has taken place.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
No reform is currently underway.
One of the most important developments is the Conseil’s decision which implemented for the first time in April 2006 the leniency procedure.
In this case, the Conseil granted full immunity to France Portes, a company which had provided evidence of two cartels in the wooden doors manufacturing sector despite the fact that France Portes was the instigator and ring leader of these two cartels. This case illustrates the importance of being the first to cooperate.
The Conseil’s decision also confirmed the following procedural points:
