The Paris Court of Appeal recently overturned a Competition Authority decision which considered marketing agreements between competitors to have no anti-competitive purpose due to the legal and economic context specific to the agreements in question.
The authority found that the France Farine and Bach Mühle joint venture – created between various millers in order to jointly market packaged flour – sought to restrict competition. The authority noted that the purpose of the marketing agreements was not a result of the companies' by-laws; but that the companies' management and function had led to joint price fixing of the flour sold to supermarkets and to the sharing of clients, which were supplied by a nearby factory.
The millers argued that, given the legal and economic context in which France Farine and Bach Mühle found themselves, the marketing structures could not constitute anti-competitive cartels. Their respective incorporation, which took place within a specific legislative and regulatory context, was necessary in order to operate on a national basis.
To respond favourably to these arguments the court recalled consistently held case law according to which, in order to assess the anti-competitive nature of an agreement, the content of the provisions, objectives and economic and legal context must be considered. With respect to the economic context of the marketing agreements, the court noted that the agreements were entered into at a time when economic regulations were still influenced by the applicable economic system, in terms of both price and manufacture. This must be taken into account in order to assess whether the purpose was anti-competitive.
As for the marketing agreement objectives, the court held that the incorporation of France Farine and Bach Mühle took place in an economic context characterised by the increased importance of mass-market retailers, which enjoyed substantial bargaining power. The court highlighted that the increase in prominence of mass-market retailers – which resulted from the takeover of brands or affiliated distributors – was accompanied by the disappearance of numerous economic players which until then had allowed millers to sell their produce in a geographical area corresponding to their traditional local or regional installation. The millers' numerous buyers had gradually been replaced by seven purchasing bodies for the whole of France, which now own almost all of the outlets for the sale of packaged flour.
Thus, the claimants were entitled to argue that they had been encouraged to group together in joint marketing structures in order to meet demand which had become national as a result of calls for tenders launched by mass-market retailers. The court concluded that these joint marketing organisations had no anti-competitive purpose and therefore overturned the order (which fined the seven companies €146.9 million).
This is another setback for the authority following the chicory case, in which the Paris Court of Appeal overturned the authority's decision as it had failed to take into account the specific context of the farming sector. As an appeal has already been filed, the Supreme Court's position is eagerly awaited.
Emmanuelle van den Broucke
Sara Pomar
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