Anti-competitive agreements - agreements or concerted practices between companies aimed at distorting competition - often take place in the shadows. By their very nature, the participants seek discretion in order to escape the vigilance of the authorities and the potentially heavy penalties. However, the Autorité de la Concurrence has the investigative resources and analytical methods to detect these illegal activities. Understanding how evidence of a cartel is produced is essential for any company concerned about the compliance of its commercial practices. This article explores the intricacies of cartel evidence, from general principles to the specific clues used by the authorities.
General principles of evidence in cartel cases
When it comes to proving cartels, French competition law is based on a fundamental principle: freedom of evidence. Unlike certain areas where specific types of evidence are required, the Autorité de la concurrence can rely on any type of evidence to establish the existence of an anti-competitive practice. This means that written documents, e-mails, testimonies, statements, or even a body of corroborating evidence may be used as the basis for a conviction.
The burden of proof lies with the Autorité de la concurrence. It is up to it to demonstrate that the constituent elements of a cartel, as defined in particular by Article L. 420-1 of the French Commercial Code, have been met. It must establish the existence of an agreement or concerted practice between companies with an anti-competitive object or effect. For the accused companies, this means that they have the right to contest the evidence presented and to provide evidence to the contrary in their defence.
Direct evidence: when the cartel leaves explicit traces
The simplest case, although not the most frequent because of the often concealed nature of cartels, is where the Autorité has direct evidence. This evidence unambiguously establishes the existence of the unlawful concerted action.
This may include formal written documents, such as a contract or minutes of a meeting explicitly detailing an agreement on prices, market allocation or production quotas. Exchanges of e-mails or instant messages between competitors containing sensitive information about commercial strategies, future prices or the sharing of customers also constitute first-rate direct evidence.
Admissions by participating companies, obtained for example as part of a leniency procedure (where a company denounces the cartel in order to obtain immunity or a reduction in penalties), are also particularly strong direct evidence. Similarly, precise and detailed testimony from former employees or managers can shed direct light on the nature and scope of the cartel.
This direct evidence, when it exists and is deemed reliable, is generally sufficient to establish that an offence has been committed.
Cluster evidence: piecing together the jigsaw puzzle of concerted action
Given the often secretive nature of cartels, the Autorité de la concurrence frequently has to resort to an indirect method: proof by a body of serious, precise and concordant evidence. This approach consists of bringing together a set of elements which, taken in isolation, might not be sufficient, but whose combination and coherence make it possible to deduce the existence of the cartel with sufficient certainty.
This method requires a meticulous analysis of the economic context, the functioning of the market and the behaviour of the companies concerned. The aim is to demonstrate that the behaviour observed cannot reasonably be explained other than by prior concertation between the players. This is not a simple assumption, but a logical deduction based on objective and verifiable facts. The Authority must rule out other plausible explanations for the companies' behaviour. For more information on the various forms that such agreements can take, see our article on the types of prohibited agreements.
Indications specific to horizontal practices (between competitors)
Horizontal agreements, concluded between competing companies operating at the same level of the economic chain, are considered to be particularly damaging. Several types of evidence may point to the existence of such agreements:
- Parallel behaviour The observation of similar and simultaneous commercial or pricing strategies between competitors can be a clue. However, a simple parallelism of prices in an oligopolistic market is not sufficient in itself. It must be corroborated by other evidence suggesting prior coordination rather than simple rational adaptation to market conditions. The analysis of difference between an agreement by object and an agreement by effect is relevant here.
- Direct contact between competitors Evidence of secret meetings, frequent telephone calls or suspicious e-mail exchanges between executives of competing companies, especially if they coincide with similar price alignments or strategies, is a strong indicator.
- Exchanges of strategic information The reciprocal communication between competitors of commercially sensitive information that is not public (proposed tariffs, future sales volumes, intentions to respond to a call for tenders, detailed and recent market shares) reduces market uncertainty and facilitates tacit or explicit coordination.
- Compensation or monitoring mechanisms The setting up of systems to check compliance with sales quotas or allocated geographical areas, or providing for financial or in-kind compensation if a member deviates from the agreement, betrays the existence of a structured cartel.
- Internal declarations Internal company documents (minutes, notes, emails) referring to an "agreement", a "non-aggression pact" or "collective discipline" with competitors can be valuable clues.
Indices specific to vertical agreements (suppliers/distributors)
Vertical agreements concern agreements between companies located at different levels of the production or distribution chain (for example, a manufacturer and its distributors). Although they can sometimes be justified, certain vertical practices are prohibited. Proof is often based on :
- Explicit contractual clauses Clauses in general terms and conditions of sale or distribution contracts formally prohibiting exports, setting a minimum resale price or prohibiting online sales may constitute direct evidence of an unlawful vertical restraint (case law Philips). Defining what is an agreement under french law provides a better understanding of these contractual aspects.
- The distributor's acquiescence : Since the case law Bayer The Court of Justice of the European Union has ruled that the mere continuation of commercial relations is no longer sufficient to prove a distributor's acceptance of a new unilateral policy on the part of the supplier (for example, a restriction on sales). Genuine acquiescence and agreement must be demonstrated.
- The specific case of taxed resale prices In the absence of an explicit clause, evidence of a price fixing policy may be based on a combination of factors:
- Reference to prices by the supplier (recommended price catalogues, etc.).
- The character imposed of these prices (existence of a "price police": surveillance, pressure, threats, financial or contractual reprisals in the event of non-compliance).
- The effective and significant application of these prices by distributors, demonstrating their consent.
Limits to the admissibility of evidence: the case of clandestine recordings
While the principle is freedom of evidence, there are certain limits. In particular, case law has established safeguards concerning the fairness of evidence.
In an important ruling handed down by the full Court of Cassation on 7 January 2011, the Court held that recordings of telephone conversations made by a party without the knowledge of the author of the comments made constituted an unfair process that rendered the evidence inadmissible before the civil courts. Although proceedings before the Autorité de la concurrence are administrative, this case law influences the assessment of the admissibility of certain types of evidence obtained by means deemed unfair by the parties themselves (excluding the Autorité's specific investigative powers).
The complexity of the mechanisms of proof in cartel cases underlines the importance for companies to be vigilant about their commercial practices and their dealings with their partners or competitors. Understanding the rules and risks associated with agreements is an essential first step.
Proof of a cartel is often based on a detailed analysis and a combination of various elements. The consequences of a conviction can be significant, including substantial financial penalties and damage to the company's reputation.
For a personalised analysis of your practices or if you are facing an investigation by the Autorité de la concurrence, our team is at your disposal.
Sources
- French Commercial Code: articles L. 420-1 (prohibition of cartels), L. 464-2 (investigative powers and sanctions of the Autorité de la concurrence).
- Key European Union case law: ECJ ruling, 6 January 2004, Bayer AGC-2/01 P and C-3/01 P; ECJ judgment, 2 April 1998, Commission v SytravalC-367/95 P.
- Key French case law: Cass. ass. plén., 7 January 2011, no. 09-14.667 and 09-14.316 (inadmissibility of clandestine recordings).
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