When a company operates in the French market, it enters a dense regulatory environment where several layers of rules coexist. This is particularly true of competition law. Companies are subject to both national law, mainly set out in the French Commercial Code, and European Union law, the provisions of which are designed to ensure healthy and undistorted competition throughout the single market. This dual application raises complex questions about the relationship and hierarchy of standards. Understanding how these two bodies of law interact is not just a theoretical exercise; it is an imperative if you are to secure your commercial practices and avoid potentially heavy penalties. Navigating this regulatory landscape requires in-depth knowledge that only an expert can provide. expert lawyer in competition law can fully contribute.
The fundamental principles of articulation
The interaction between European and French competition law is based on clear principles, long established by the Court of Justice of the European Union (CJEU). These foundations determine which standard should apply and in what circumstances, creating a framework in which the two systems, far from opposing each other, are designed to complement each other.
The primacy of European Union law
The cornerstone of the edifice is the principle of primacy of Union law. This principle means that European rules, in particular Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), take precedence over any conflicting national provisions. In practical terms, a commercial practice (a distribution agreement, a pricing policy) may be deemed perfectly legal under French law, but if it is likely to affect trade between Member States and contravenes European rules, the European prohibition will prevail. This supremacy is reinforced by the direct effect of Articles 101 and 102 of the TFEU, which allow any company or individual to invoke them directly before national courts to assert their rights. A proper understanding of the european regulatory framework for competition law is therefore an essential prerequisite.
The Walt Wilhelm case and its implications
As early as 1969, in the seminal Walt Wilhelm (ECJ, 13 Feb. 1969, Case 14/68), the Court of Justice laid the foundations for the coexistence of the systems. It accepted the possibility of a dual procedure: the same cartel may be the subject of parallel proceedings, one conducted by the European Commission under EU law, the other by a national authority under its national law. However, this possibility is not without limits. The Court immediately made it clear that the application of national law must never prejudice the uniform application of EU law throughout the internal market. In the event of conflict, the decision taken in application of European law takes precedence. This principle is intended to ensure that the effectiveness of European rules is not weakened by divergent national decisions. The judgment also addressed the rule non bis in idem (no one may be prosecuted or punished twice for the same acts). If a company is penalised by the Commission, any national authority that subsequently penalises it for the same acts under its national law must take account of the first penalty when determining the amount of its own fine.
The system of shared competences
The architecture of competition law enforcement was radically overhauled by Regulation (EC) No. 1/2003. This text introduced a system of decentralised parallel powers, whereby the European Commission and the national competition authorities (the "NCAs") are both responsible for the direct application of Articles 101 and 102 of the TFEU. This network of authorities forms the European Competition Network (ECN), designed to ensure close cooperation and consistent application of the rules.
Role of the European Commission
Within this network, the European Commission retains a central role. It acts as the orchestra conductor, ensuring the consistency of competition policy across the Union. It generally deals with the most important cases, those with a significant cross-border impact or which raise a new legal issue. It may at any time withdraw a case from a national authority if it considers that action at EU level is more appropriate. The Commission also retains a monopoly on the adoption of block exemption regulations, which are key texts defining "safe harbours" for certain commercial practices.
Role of national competition authorities (e.g. the French Competition Authority)
National authorities, such as the Autorité de la concurrence in France, have become the ordinary judges of the application of European rules. They now have not only the power but also the obligation to apply Articles 101 and 102 of the TFEU whenever a practice is likely to affect trade between Member States. They deal with the vast majority of cases, bringing decisions closer to the people on the ground and the economic players concerned. However, their powers are limited: a national authority may not take a decision that would run counter to a decision already adopted by the Commission on the same matter. If the Commission initiates proceedings, the NCAs lose their power to apply EU law.
Preliminary ruling and stay of proceedings (CJEU Delimitis, Masterfoods)
National courts also play a key role. When a commercial dispute brought before a French court (for example, an action for annulment of a contract for breach of antitrust rules) raises a question of interpretation of EU law, the national court has the possibility, and sometimes the obligation, to refer a question to the CJEU for a preliminary ruling. This mechanism guarantees a uniform interpretation of EU law. Case law has clarified the duties of national courts. In the Delimitis (ECJ, 28 Feb. 1991, C-234/89), the Court indicated that a national court, in assessing the validity of a contract under Article 101 TFEU, must verify whether it affects trade between Member States and whether it benefits from an exemption. In the event of doubt, or if a Commission decision is likely, the national court may stay the proceedings, i.e. suspend the proceedings pending clarification of the situation. The ruling Masterfoods (ECJ, 14 Dec. 2000, C-344/98) reinforced this obligation to cooperate by stating that a national court may not take a decision that would conflict with a decision envisaged by the Commission.
The impact of the modernisation of competition law (Regulation 1/2003)
The entry into force of Regulation 1/2003 marked a major turning point, replacing a centralised system of prior notification with a system of directly applicable legal exceptions. This "modernisation" has had far-reaching consequences for the way in which companies are required to assess the legality of their agreements, and for the way in which standards are linked together.
Recognition of the primacy of European exemptions
Prior to 2003, a company wishing to benefit from an individual exemption for a potentially restrictive agreement had to notify the European Commission, the only body empowered to grant such an exemption. Regulation 1/2003 abolished this system. Henceforth, an agreement that meets the four conditions of Article 101(3) of the TFEU (efficiency gains, benefit to consumers, etc.) is automatically and by operation of law valid, without any prior decision. It is up to the company claiming the exemption to prove that the conditions are met. This logic also applies to block exemption regulations, which create a presumption of legality for certain types of agreement. For example, Regulation (EU) 2022/720 on vertical restraints conditionally validates many distribution agreements. Where an agreement benefits from such a European exemption, it is protected not only from prohibition under Article 101 TFEU, but also from prohibition under national law. This ensures that the main types of prohibited agreements are treated in the same way throughout the Union.
Impact on the application of national law (L.464-6-1 C. com.)
Regulation 1/2003 formalised the principle of convergence between competition laws. Article 3 lays down a clear rule: when the competition authorities or courts of a Member State apply their national antitrust law to an agreement that affects trade between Member States, they must also apply Article 101 of the TFEU to it. More importantly, they cannot use their national law to prohibit an agreement that does not infringe Article 101 TFEU. In other words, if an agreement is deemed lawful under European law (because it does not appreciably restrict competition or because it benefits from an exemption), French law cannot declare it unlawful. French competition law, in particular Article L. 420-1 of the French Commercial Code, cannot therefore be stricter than EU law with regard to cartels. The legislator has drawn the consequences of this primacy, in particular through provisions such as the former Article L. 464-6-1 of the French Commercial Code, which organised the procedures for this coordinated application and ensured the full effectiveness of European law in the domestic legal order.
Practical consequences for companies and litigation
This two-tier legal architecture has very real repercussions for companies, which have to develop their commercial and legal strategies with this complexity in mind. Risk analysis cannot be limited to a single legal system.
Risk of differences in assessment between Member States
Despite efforts to harmonise and coordinate within the European Competition Network, there is still a risk that the 27 national authorities will differ in their assessments. The definition of the relevant market, the assessment of a dominant position or the analysis of the effects of a practice may vary from one Member State to another. One authority may be stricter than another on a particular type of clause. This situation creates legal uncertainty for companies operating in several EU countries. A practice that is validated or tolerated in one country could be challenged in a neighbouring country, forcing the company to adapt its strategy or face multiple disputes.
Judicial and administrative strategies
The coexistence of several competent forums (Commission, national authorities, national courts) opens the way to "forum shopping" strategies. A company that believes it has been the victim of an anti-competitive practice may choose to lodge its complaint with the authority it considers most receptive to its arguments or quickest to act. Conversely, a company that has been accused must develop a coherent defence strategy on all fronts. An argument or a document submitted in the context of proceedings in one Member State could be used against it in another. Consistency is therefore fundamental. It is imperative to anticipate how a decision handed down by one national authority might be perceived by another or by the Commission.
The interplay between European and national competition law is a subtle legal mechanism, the mastery of which is a prerequisite for the legal certainty of commercial transactions. For a company, ignoring this duality of rules means running the risk of seeing a commercial agreement destroyed or incurring financial penalties from several authorities. Navigating between the requirements of French law and those of European competition law calls for fine-tuned expertise and strategic vision. For an in-depth analysis of your situation and tailored advice, contact our team of lawyers.
Sources
- Treaty on the Functioning of the European Union (TFEU), in particular articles 101 and 102.
- French Commercial Code, in particular Articles L. 420-1 et seq.
- Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty.
- Case law of the Court of Justice of the European Union (CJEU).
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