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FCA’s New Policy Provides Strong Incentives For Compliance Program Adoption

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).




European Developments: French Competition Authority Launches Public Consultation on Settlement and Compliance Programs and Italy’s Prime Minister Announces New Cabinet

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 [...]

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