Antitrust Alert : International Antitrust Attorneys: McDermott Will & Emery Law Firm

by Louise-Astrid Aberg, Lionel Lesur and Philipp Werner

The Cour de cassation, France’s highest court for judicial matters, rendered a judgment on 15 January 2013 in a case involving Jaguar’s distribution agreements in France.  The judgment follows an earlier ruling on the matter by the Court of Justice of the European Union (CJEU), from which the Cour de cassation had requested a preliminary ruling.  The Cour de cassation ruled essentially that quantitative selective distribution systems must be based on specified criteria, but those criteria do not need to be objectively justified and applied in a uniform and non-differentiated manner.  It therefore  exactly applied to the facts at issue the definition provided by the CJEU as regards the nature of “specified criteria” in Article 1(1)(f) of Regulation No. 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector (i.e., the Vertical Block Exemption Regulation for the Automotive Industry (VBER 1400/2002)).

To read the full article, click here.

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by Philipp Werner and Wilko van Weert

On 13 December 2012, the Court of Justice of the European Union (CJEU) held that national competition authorities (NCAs) can apply European competition rules, and fine companies for an infringement of EU rules, even in cases where the European Commission considers that Article 101(1) Treaty on the functioning of the European Union (TFEU) is not applicable.

To read the full article, click here.

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by Jacques Buhart and Lionel Lesur

The French competition authority (FCA) released on 8 October 2012 an opinion in relation to the car repair and maintenance sector.  The opinion is the result of a public consultation that was launched in Spring 2011.

The opinion, which is more than 200 pages long and available only in French, contains several statements and proposals aimed at increasing competition in the car repair and maintenance sector that may have substantial implications for market participants.

In response to the opinion, the French Minister of Industrial Renewal, Arnaud Montebourg, said that while the French Government will consider the FCA’s proposals, keeping prices low for consumers is not currently a top priority.  It can therefore be assumed that the French Government will not be making significant changes to legislation imminently.  The opinion may, however, have some immediate implications for the sector.

To read the full article, click here.

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by Joseph F. Winterscheid and Andrea L. Hamilton

Recent developments in the global legal landscape point to the inevitable conclusion that having an effective antitrust compliance program in place is now more important than ever.

To read the full article, click here. 

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by David Henry and Philipp Werner

On February 7, the European Commission (EC) and the European Free Trade Association (EFTA) Surveillance Authority conducted unannounced inspections in the energy exchange market.  Representatives of Nord Pool Spot (Lysaker, Norway) and EPEX Spot (Paris, France and Leipzig, Germany) announced that the companies were subject to inspections.  It is not known whether other companies were also raided.  The inspections show that the EC’s enforcement policy extends beyond the retail level of the energy sector.

To read the full article, click here.

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by Lionel Lesur and Louise-Astrid Aberg

Following up on our prior post, on February 10, 2012, the French Competition Authority (FCA) published the final version of its framework document on compliance programs and of its Notice relating to settlements.

First, the FCA decided that the Notice of Settlement would have the legal status of a "directive" under French administrative case law. Consequently, the Notice of Settlement is legally binding on the FCA and fully enforceable against it, except if the FCA explains in its decision the specific circumstances or any reason of general interest commanding it to adopt another solution.

Second, for the Notice of Settlement, the FCA decided to relax its initial rule preventing the cumulating of a settlement reduction and a leniency reduction. The FCA adopted this principle, first put forward in the laundry detergents cartel decision (December 8, 2011), that states companies may cumulate both reductions when significant procedural efficiencies are expected from such a cumulation of both procedures. In particular, this could occur when the objections notified to a party differ from the cartel described by the party in its leniency application. Settling parties may benefit from a 10 percent fine reduction.

In addition, parties settling with the FCA can decide to adopt behavioral or structural remedies that will enable them to benefit from an additional reduction between 5 percent and 15 percent. For cartels, parties can benefit from a reduction of up to 10 percent if they commit to changing their behavior in the future, in particular, by implementing a compliance program.

The framework document on compliance programs maintains that the mere existence of a compliance program will not, in principle, be considered as a mitigating circumstance by the FCA when imposing a fine. However, an important exception to this principle has been added to the draft document for cases other than cartels, e.g. an abuse of a dominant position or a vertical restraint. In these cases, companies with a compliance program that, through their own volition, immediately ends anti-competitive behavior upon discovery through their compliance program – that is, before any inspection or investigation is conducted by a competition authority – may claim the program as a mitigating circumstance if the FCA decides to take action against the company. Consequently, in cases other than cartels, the existence of a compliance program may now, under some conditions, be considered as a mitigating circumstance by the FCA when imposing a fine. It remains to be seen how widely the FCA will apply this new rule and what will be the rate of reduction.

The FCA's new policy may thus provide strong incentives for companies to implement compliance programs.

Click here to read The Notice of Settlement (in French), here to read the framework document on compliance programs (in French) and here to read the press release (in English).

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Public Consultation on Settlement and Compliance Programs Launched by the French Competition Authority
by Louise-Astrid Aberg and Lionel Lesur

On October 14, the French Competition Authority (FCA) launched a two-month public consultation for guidelines on settlement and compliance programs.  Both these guidelines have been highly anticipated since they were first announced last May.

The draft settlement guidelines contain details on the FCA's approach and decisional practices which were developed under the control of the French courts.  Among the guidelines, the FCA determined that settlement is possible in all cases where infringement on competition law has taken place, including cartels, vertical restraints and single firm conduct.  In the event of infringement, settlement becomes an option only after the parties have been formally charged.  Once parties fully acknowledge their participation in anticompetitive conduct, the casehandler in charge of the matter would decide whether to respond positively to their request for a settlement.  Parties retain the same procedural rights that they would in an ordinary procedure; in particular, they would be granted access to file.  The FCA would reward parties who wish to settle with a fine reduction of 10 percent.  In contrast to the settlement procedure of the European Commission (EC), it would not be possible to cumulate both a settlement reduction and a leniency reduction.  However, parties settling with the FCA may decide to adopt behavioral or structural remedies which would enable them to benefit from an additional reduction of 5-15 percent.  With regard to cartels, parties would benefit from a reduction up to 10 percent if they commit to changing their behavior in the future, in particular, by implementing a compliance program.

The draft guidelines elaborate further on the benefits of implementing a compliance program.  The FCA clarifies several instances in which a compliance program would enable a party to benefit from a reduction of its fine.  In the course of ordinary proceedings resulting in the imposition of a fine, the existence of a compliance program or the lack of it would not act as an attenuating or an aggravating circumstance.  However, in the case of a settlement procedure, the commitment to implement a compliance program would be considered a commitment by the company to change its behavior in the future and would, thus, enable the party to benefit from a reduction of its fine.  In this sense, the FCA and the EC agree that implementing compliance program would not have a significant effect on a fine that is set outside of a settlement procedure.  The FCA only differs with respect to the specific context of a settlement procedure.

A fine reduction of up to 10 percent may not be easy to obtain.  A compliance program would only be considered by the FCA if it includes the following characteristics: (i) the company's top executives are strongly committed to the program, (ii) the company has designated persons to oversee the program and take charge of its implementation, (iii) the company has taken effective measures to implement information, training and awareness programs, (iv) the company employs effective control, audit and alert mechanisms and (v) the company has an effective monitoring mechanism.  These requirements are prerequisites without which parties would not be able to claim a reduction of their fine on the basis of their foreseen compliance program.  Please note, however, that satisfying these prerequisites is not necessarily enough to obtain a reduction of their fine.

Some may argue that a 10 percent reduction would not be enough to encourage companies to spend time and resources implementing compliance programs. However, the FCA's vision is that such programs would enable companies to detect cartels more easily in the future and, thus, be the first in line to apply for leniency.

It remains to be seen whether these two sets of guidelines will be adopted at the end of the public consultation. If adopted, they could become useful tools for French competition lawyers and provide incentives for companies to implement compliance programs..

To read the full press release, click here

Italy's Prime Minister Announces New Cabinet
by Veronica Pinotti and Martino Sforza

Italy’s new Prime Minister, Mario Monti, has named the members of his new cabinet, which will start to work on economic reforms next week, once the Italian Parliament has passed its final vote of confidence on Monti. 

All the new cabinet members are high profile individuals from academia, industry and the public sector, none are politicians or affiliated with any political party.

Antonio Catricalà, current Chairman of the Italian Competition Authority, was named under-secretary to the Prime Minister's office and Secretary of the Council of Ministers.  There are a number of potential candidates to take Catricalà’s role at the Italian Competition Authority, including Lorenzo Bini Smaghi (former member of the ECB’s Executive Board) Luigi Fiorentino (current Secretary General of the Italian Competition Authority) and Pasquale de Lise (current President of the Council of State, the higher court for administrative cases in Italy).

In addition to Catricalà, with whom McDermott Italian lawyers have worked on many antitrust cases before the Italian Competition Authority, we have also crossed paths with other members of Monti's new cabinet including Corrado Passera, the current CEO of Intesa-San Paolo, who has been appointed as head of the newly-formed Ministry of Economic Development, Infrastructure and Transport; Elsa Fornero, also a board member of Intesa-San Paolo, who has been named head of the Ministry of Welfare and Francesco Profumo, the current President of the Politecnico University in Turin, who has been named head of the Ministry of Education.

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by Louise-Astrid Aberg and Lionel Lesur

The Commercial Court in Paris has once again ordered the French Competition Authority (the Autorité de la concurrence, the "FCA") to disclose documents in its file regarding an antitrust investigation on private damages.  However, the new decision, allows for the disclosure on a different procedural setting and on different grounds than the previous decision, which was rendered by a different Chamber of the court on August 24, 2011.

The latest decision was made in the aftermath of an infringement decision pursuant to a request for disclosure made by the defendant.  This contrasts with the previous decision that involved a settlement procedure and where the request was made by the plaintiff. 

Both decisions ordered disclosure of documents, but on different legal grounds.  Article L. 463-3 of the French commercial code prohibits the disclosure of information that is part of an FCA investigation and, therefore, confidential.  However, article 138 of the French code of civil procedure provides that a judge can order the production of documents if the party wishes to exhibit (i) an official document, (ii) an agreement to which it was not a party or (iii) any document held by a third party.

In the August 2011 decision, the court ordered the FCA to disclose documents in its file on the basis of article 138.  In the present case, however, the court held that the production of documents in the FCA's file could not be considered a confidential disclosure under article L. 463-3  because both parties were familiar with the documents at issue.

To add to the confusion, the court justified the disclosure as necessary for the requesting party to exercise its rights.  This additional justification muddies the standard that allows for production of these documents -- the court had already taken the position that disclosure is possible when the documents are known by both parties.

In the absence of more details on the reasoning of the court, it remains to be seen what the implications for leniency applications will be.  At this point, it would be useful to have a decision by the Cour de cassation (the French Supreme Court for judicial matters) which could more fully explain the courts' rationale and provide guidance on this issue, by specifying the scope of the disclosure of documents in the FCA's file.

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by Philipp Werner and Lionel Lesur

On 24 August 2011, the Commercial Court in Paris ordered the French competition authority, the Autorité de la concurrence (Autorité), to disclose documents relating to the settlement of an antitrust investigation in the context of a private damages action.  This order could significantly strengthen the position of claimants in damages actions in France and potentially in other EU Member States and adds another layer of complexity to cartel cases in the European Union.  When agreeing to settle with the Autorité, companies must therefore now consider the potential risk of having to disclose documents in future actions.

To read the full article, click here. 

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by Louise-Astrid Aberg and Lionel Lesur

The French Competition Authority has taken a hard stance by withdrawing its authorization of French broadcaster Canal Plus' purchase of rival commercial television company TPS, formerly the two most powerful players on the pay TV market.  This decision reasserts the importance of respecting imposed remedies.  In this case, Canal Plus was sanctioned with a fine of EUR 30 million for failing to fulfill the 59 remedies imposed by the Authority in 2006, and has been given one month to re-notify the transaction to the Authority.

While Canal Plus had "only" failed with respect to 10 of the 59 remedies, the Authority did not consider this to be an attenuating circumstance because several of these remedies were "essential" and that the entire "package" of commitments should have been implemented due to the likely impact of the concentration on competition in the market.  In particular, Canal Plus was blamed for being too slow in providing downstream distribution companies (principally represented by internet access providers) access to channels and content. The downstream distributors needed this content to be able to offer competitive packages of pay TV. The Authority considered this obligation essential and at the heart of the commitments necessary for the maintenance of competition.

In France, the Competition Authority can act on its own to take action against companies that fail to respect commitments entered into in the context of an antitrust investigation.  In the past, fines have been imposed on companies, but the amounts were quite symbolic (i.e., EUR 200,000 for two companies active in the postage sector).  This recent decision will force companies submitting to remedies to resolve a planned concentration to be certain it can accept/effectuate those constraints, as the ultimate failure to respect them could lead to disastrous outcomes.  Indeed, not only could companies risk a withdrawal of the Authority's authorization and the imposition of very high fines, such as in the present case, but also, the parties could be ordered to reverse the concentration if the commitments would prove impossible to honor.  Canal Plus, which has one month to renotify the concentration, will therefore be forced to undergo a new investigation by the Authority which could in theory end with an obligation to demerge.

It still remains unclear which type of remedies are considered essential by the Authority and, consequently, which breach could lead the Authority to impose the obligation to renotify and fines as significant as in the present case.  More specific details from the Authority about which remedies are considered essential are necessary so that companies can be informed during their considerations of whether or not to accept certain types of remedies. This case is, however, very specific as the conditional authorization granted by the French Competition Authority in 2006 led to the creation of a monopoly.  Moreover, many authors and practitioners highly criticized this decision, particularly several remedies which appeared to be impractical to implement immediately.

The decision (in French) and the press release (in English) can be read respectively at http://www.autoritedelaconcurrence.fr/pdf/avis/11d12.pdf and http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=389&id_article=1697.

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by Philipp Werner and Lionel Lesur

A French court has added another layer of complexity to cartel cases in the European Union.  The Commercial Court in Paris has ordered the French competition authority to disclose documents relating to an antitrust investigation.  The order concerns non-confidential versions of written and oral statements gathered during the investigation.

The ruling may strengthen plaintiffs' position in damages actions.  The French court's ruling only concerns settlements before the French competition authority but other European countries may follow France's lead.  According to the European Court of Justice's recent Pfleiderer judgement, national courts must decide whether plaintiffs may have access to documents submitted to national Member State authorities.

The number of private damages actions in the European Union is constantly increasing.  Most of these actions are "follow-on action," based on an infringement decision by the European Commission or the antitrust authority of an EU member State.  Plaintiffs can rely on the infringement decision as proof for the antitrust infringement but must further substantiate and prove the harm suffered as a result of the cartel.  They are therefore seeking access to information contained in the antitrust authorities' files, in particular to leniency applications, the confidential version of the infringement decision and also settlement documents.  It is still unclear whether plaintiffs will have access to leniency documents submitted to national antitrust authorities.

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