Competition Law Reforms Finalized - International Law Office

Authority's Powers and Resources
Procedural Rights of Undertakings
Transitional Measures

The Law on the Modernization of the Economy gave the government six months in which to issue an order giving the future Competition Authority new powers and setting out its prerogatives and how these fit with those of the minister of the economy. Order 2008-1161(1) grants the new authority sweeping powers and resources, grants new procedural rights to undertakings and includes a set of particularly complex transitional measures.

Authority's Powers and Resources

The chief case-handler will be informed of investigations that the minister of the economy wishes to pursue into anti-competitive practices before they begin and may assume jurisdiction over those investigations.(2) The minister's powers in cases involving 'micro-anti-competitive' practices(3) are limited. The authority retains its jurisdiction in cases of applications on the same facts or where undertakings refuse to compromise.(4) Undertakings that fail to cooperate risk the issuing of an injunction with penalties and, in the case of obstruction, the imposition of pecuniary penalties, which may not exceed 1% of worldwide turnover.(5) The authority is now empowered to appeal to the Court of Cassation against judgments of the Paris Court of Appeal.(6) It may make public its opinion on any issue relating to competition and recommend measures to government ministers for the improvement of the competitive functioning of markets.(7)

The authority has at its disposal an investigation department which can carry out the necessary inquiries for tackling anti-competitive practices and for merger control.(8)

Procedural Rights of Undertakings

The presence of lawyers during visits and seizures is now allowed,(9) but interrogations are also expressly permitted during the visit and seizure procedure. The maximum length of the prescription period is now 10 years, which starts to run from the termination of the anti-competitive practice.(10) The order ratifies those decisions that have previously held that acts interrupting proceedings also interrupt the prescription period before the Competition Authority. As with the current practice of the Competition Council, companies must report any change of situation or face a declaration of inadmissibility.(11) Taking note of the Ravon judgment,(12) the order grants a right of referral against visit and seizure orders to the chief justice of the appeal court in the jurisdiction where they were issued within 15 days of notification of the visits and seizures. Contesting visits and seizures falls within the jurisdiction of the same court. Finally, the president of the Competition Authority may be heard or consulted by parliamentary committees and must report, if requested, on the activities of the authority.

Transitional Measures

The order establishes complex transitional arrangements which require careful analysis by undertakings and their legal advisers.

It has already created issues of interpretation: it is unclear whether merger control has already been transferred to the Competition Council or whether this transfer will occur only after the first meeting of the authority once its members have been appointed. The latter construction, in line with the statement of reasons issued with the order, would appear to be the more realistic interpretation.

The transitional measures that apply to appeals against orders of the juge des libertés (judge of freedoms and detention) are complicated. Where an application against an authorization order is pending before the Court of Cassation, an appeal (non-suspensive) may be lodged within one month of publication of Order 2008-1161. If the authorization order is not appealed or if the appeal has been dismissed, a challenge against it may then be initiated before the Paris Court of Appeal in the context of an appeal against the Competition Council decision; with the exception of cases that, on the date of publication of Order 2008-1161, were the subject of a definitive decision. If an appeal against a Paris Court of Appeal judgment overturning a Competition Council decision is pending before the Court of Cassation, the parties have the option of requesting a referral to the Paris Court of Appeal for an application to contest the visit and seizure order issued by the juge des libertés.

For further information on this topic please contact Joseph Vogel at Vogel & Vogel by telephone (+33 1 53 67 76 20) or by fax (+33 1 53 67 76 25) or by email (joseph.vogel@vogel-vogel.com).

Endnotes

(1) JORF 0265 of November 14 2008, p 17391.

(2) Article L450-5 of the Commercial Code.

(3) Practices affecting a local market but not trade between EU member states, where the individual firms' cumulative turnover does not exceed €50 million.

(4) Article L464-9 of the Commercial Code.

(5) Article L464-2V.

(6) Article L464-8.

(7) Article L462-4.

(8) Article L450-1.

(9) Article L450-4.

(10) Article L462-1.

(11) Article L463-2.

(12) ECHR, February 21 2008.