When a company is suspected of anti-competitive practices, the prospect of a lengthy and costly investigation is a real threat. proceedings before the Competition AuthorityThis can be a cause for concern. However, direct confrontation is not the only way out. Visit French competition lawFollowing the example of European law, the European Union has developed alternative procedural tools which, under certain conditions, enable cases to be resolved by negotiation. These mechanisms - leniency, settlements and undertakings - offer companies strategic opportunities to limit risks, reduce sanctions or even terminate proceedings without a formal finding of infringement. Understanding how they work, the conditions for accessing them and their respective advantages is essential for any company facing an investigation or inquiry by the Autorité.
Leniency (Art. L. 464-2 IV C. com.): denouncing a cartel to avoid sanctions
The leniency procedure is a powerful instrument specifically designed to combat the most serious secret agreements, commonly known as "cartels" (horizontal agreements on prices, market sharing, production quotas, etc.). Its aim is simple: to encourage companies taking part in a cartel to report it to the Competition Authority in exchange for total or partial immunity from financial penalties.
- The "race for authority" principle: Clemency operates on a "first come, first served" basis.
- Total immunity (Clémence type 1) : The first company to provide the Authority with evidence key of a cartel of which it was previously unaware, or which enable it to carry out dawn raids, may benefit from a total exemption of the fine it would otherwise have incurred. To qualify, the company must meet strict conditions: it must immediately cease its participation in the cartel (unless otherwise instructed by the AMF not to disclose the investigation); it must cooperate fully, actively and continuously with the AMF throughout the proceedings; and it must not have instigated the cartel or forced other companies to participate in it.
- Fine reduction (type 2 Clemency) : Companies that are not the first to denounce the cartel can nevertheless obtain a significant reduction of their fine if they provide evidence that brings "significant added value" to the Authority's investigation, compared with the evidence already in its possession. The rate of reduction will depend on the company's rank (second place gets a bigger reduction than third place, etc.) and the importance of its contribution.
- The procedure: A company wishing to benefit from leniency must contact the AMF (often via its lawyers) on a confidential basis. It may first request a "marker" to reserve its place in the order of arrival, while it gathers the necessary evidence. It then submits a formal leniency application. The procedure, although recently simplified by the abolition of the intermediate formal "leniency notice", requires unfailing cooperation until the Authority's final decision.
- Advantages and limitations : The main advantage is financial: total or partial immunity from fines, which can reach considerable amounts (up to 10% of worldwide turnover). It is crucial to note that leniency does not protect the company against claims for damages that may be brought by the victims of the cartel (customers, injured competitors). Furthermore, leniency only applies to secret horizontal cartels (Art. L. 420-1 C. com.) and not to abuses of a dominant position (Art. L. 420-2 C. com.) or vertical restraints.
- Protection of individuals : An important advance concerns individuals. Article L. 420-6-1 of the French Commercial Code provides conditional immunity from criminal prosecution for managers or employees who have personally participated in the organisation of the cartel, if they actively contribute to their company's leniency application and cooperate with the Autorité. This is an important additional lever for encouraging the reporting of cartels.
Settlement (Art. L. 464-2 III C. com.): acknowledging the facts for a reduced penalty
The settlement procedure, which has replaced the old "no statement of objections" procedure, offers another way of speeding up the resolution of a case, but in a different context from that of leniency.
- Background: This procedure may be proposed by the Competition Authority after it has notified a company of its objections. It therefore does not apply to secret cartels that have not yet been discovered, but rather to cases where the Authority has already conducted its investigation and formalised its objections.
- The mechanism : If the Authority considers that the case is appropriate, it may propose a settlement to the company. To qualify, the company must agree to not contesting the grievances of which it is accused. In return for this non-challenge, the AMF will give the company a range for the financial penalty This range includes a certain reduction compared to what the penalty would have been under the ordinary procedure.
- The procedure: The initiative comes from the AMF. The company has a period in which to accept or reject the settlement proposal. If it accepts, it signs a settlement agreement. The AMF then issues a final decision confirming the agreement and setting the final amount of the penalty, which must be within the range announced.
- The benefits: For the company, the main benefit is the reduction in fine and greater predictability on the final amount of the claim. The procedure is also quicker than the traditional litigation procedure, which requires a detailed report, observations in response and a longer hearing on the merits.
- The rewards : The company waives its right to contest the facts and legal classification used by the AMF in the statement of objections. This is not an admission of guilt in the criminal sense, but an acceptance of the Authority's conclusions for the purpose of closing the administrative procedure.
Commitments (Art. L. 464-2 I C. com.): proposing solutions to avoid a penalty
The commitments procedure offers a radically different approach: it aims to resolve the competition concerns identified by the Authority by proposing corrective measures. by the company itself, bringing the matter to a close without any finding of an offence or financial penalty.
- The right time : Undertakings are generally proposed by the company at an early stage in the procedure, often after the Authority's investigation departments have made their "preliminary assessment" of potential competition problems, but they may also be proposed at a later stage. before the formal notification of grievances.
- The principle: In response to the doubts expressed by the Authority, the company proposes to make specific commitments to remedy the problems identified. These commitments may be :
- Behavioural : Modifying contractual clauses deemed problematic, changing commercial practices, guaranteeing access to certain information or infrastructures to competitors, reviewing pricing policies... This is the most common type of commitment.
- Structural (or quasi-structural) : Disposing of part of its business, granting licences for intellectual property rights, etc. Although these are rarer in anti-competitive practice (and more common in merger control), they can be considered.
- The procedure: The company submits a proposal for commitments. The AMF assesses whether these proposals are credible, sufficient and likely to effectively address the competition concerns. It may conduct a "market test": publish the proposed commitments and invite interested third parties (competitors, customers, associations, etc.) to comment on them. If, after any adjustments, the Authority considers the commitments to be satisfactory, it adopts a decision making them mandatory for the company and closes the procedure.
- The benefits: The major advantage is that no offence is found and there is therefore no financial penalty. This can also protect the company's reputation. The procedure can be faster and gives the company some influence over the nature of the remedies implemented.
- Points to watch : The commitments accepted become legally binding. Failure to comply with the commitments exposes the company to penalties for non-performance. The AMF is never obliged to accept commitments; it retains discretionary powers and will refuse to do so if it considers that a serious and proven infringement merits a penalty (for example, in the case of the most damaging cartels). Commitments may be revised if market circumstances change significantly.
Which procedure to choose: a strategic decision
Clemency, transaction or commitments? Each mechanism responds to different situations and objectives.
- Clemency is the tool of choice (and often the only salvation) for a company caught up in a secret cartel that it wishes to expose in order to escape an otherwise almost certain and potentially very high fine.
- The transaction is an option to be considered when the objections notified by the Autorité appear difficult to contest and the aim is to bring the proceedings to a rapid close by obtaining a guaranteed reduction in the fine.
- Commitments are relevant when the company is prepared to modify its practices to meet the Authority's concerns and wishes to avoid a formal condemnation and a fine, often in cases where the classification of an infringement has not yet been fully established or for practices that are less serious than a cartel.
The choice between these procedures, or the decision to follow the traditional litigationThis is a major strategic decision that must be taken after a thorough analysis of the facts, the available evidence, the risks involved and the company's objectives, ideally with the help of experienced legal advisers.
Navigating the intricacies of the alternative procedures offered by the Competition Authority requires specific expertise. If your company is involved in potentially anti-competitive practices, a rapid assessment of whether to apply for leniency, a settlement or undertakings may prove decisive. Our firm is at your disposal to support you in this strategic analysis and assist you in your dealings with the Authority.
Sources
- French Commercial Code: articles L420-1, L420-2, L420-6-1, L464-2 (paragraphs I, III and IV).
- Procedural notice issued by the Autorité de la concurrence on the French leniency programme.
- Communiqué de procédure de l'Autorité de la concurrence relatif à la procédure de transaction.
- Communiqué de procédure de l'Autorité de la concurrence relatif aux engagements en matière de concurrence.
- Relevant case law from the Autorité de la concurrence, the Cour d'appel de Paris and the Cour de cassation.
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