In connection with the upcoming transposition of Directive n°2019/1 (also known as the “ECN+Directive”), which exposes professional associations to increased fines in relation to anti-competitivepractices, the French Competition Authority (the “FCA”) published a study on the application ofcompetition law to professional associations (the “Study”) as well as related practical recommendations.
A financial risk increased by the ECN+ Directive in case of competition law breach
With the ECN+ Directive, the 3 million euros maximum fine applicable to professional associations is replaced by sanctions that can reach up to 10% of the cumulative worldwide turnover of each of its members, therefore exposing professional associations to a much greater financial risk.
The ECN+ Directive also provides for new provisions specifically targeting the members of a professional association in the event of the association’s insolvency:
- Obligation for insolvent professional associations to call on to their members for financial contributions covering the amount of the fine;
- Possibility for the FCA to directly require the payment of the fine to any undertaking whose representatives were members of the decision-making bodies of the professional association;
- When necessary, possibility for the FCA to demand payment of the remaining amount of the fine to any undertaking member of the professional association who was active in the market in which the infringement was committed (unless such an undertaking can demonstrate that it did not implement the professional association’s illegal decision and/or was unaware of its existence and/or actively disassociated itself from it before the opening of the investigation).
The Study is thus an opportunity to recall that competition law applies to professional associations, pursuant to Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) which prohibits all decisions by associations of undertakings that may restrict competition. A professional association can therefore be sanctioned, either independently or jointly with its members, depending on the implication of each entity in the incriminated practice.
While the ECN+ Directive has not yet been transposed, the introduction in French law of measures targeting professional associations is imminent. Since the publication on 4 December 2020 of the Loi portant diverses dispositions d’adaptation au droit de l’Union européenne en matière économique et financière (“DDADUE“), the French government has 6 months to transpose the ECN+ Directive by mean of an “ordonnance” which will then have to be ratified by Parliament in the following months.
The Direction générale de la Concurrence, de la Consommation et de la Répression des Fraudes (“DGCCRF“) is currently conducting a public consultation, open to all professionals concerned by the transposition (available here).
Summary of the most common practices involving potential competition law infringements
The Study recalls the most common practices of professional associations which can raise legal risks pursuant to competition law:
- The participation by a professional association to a cartel alongside its members (such as but not limited to price fixing agreements, reciprocal limitations on outputs, market sharing agreements and customer allocation). Such practice can occur when the association has contributed to the implementation of the cartel, even passively, for example by tacit approval or by failing to denounce the cartel to the authorities;
- Diffusion of price instructions, even if they are only indicative;
- Diffusion of commercially sensitive strategic information such as price, volume or market share data. In this respect, the FCA recommends that statistical data exchanged within professional associations be sufficiently aggregated and that all exchanges occurring at meetings be recorded;
- Calls for boycott;
- Enactment of unduly restrictive conditions for membership in a professional association. Such conditions must be sufficiently transparent, objectively verifiable, non-discriminatory and economically justified;
- Enactment of unduly restrictive standards or technical agreements. Such standards should not be unnecessary or biased in favour of certain market players, at the risk of constituting a barrier to entry;
- Diffusion of legal analysis resulting from a misreading of applicable regulations and thus likely to lead its members to engage in anti-competitive behaviour;
- Denigration of competitors resulting from lobbying activities or press campaigns as well as any action resulting in the presentation of deliberately misleading information to public authorities.
The FCA’s practical recommendations
The FCA provides professional associations with 6 practical sheets designed to limit the risks associated with anti-competitive practices. Those practical sheets, which take the form of a very useful “DO’s & DON’Ts“, are presented in annex to the Study in an interactive vade mecum available here (in French).
Those practical sheets address the following topics: professional requirements, pricing, exchange of information, membership conditions, standardisation/certification as well as legal advice/relationship with public authorities.
For more information, please refer to the report available here (in French).
We are at your entire disposal to answer any question your company may have in the area of French Competition Law.