Competition authorities are subject to an effective control of their impartiality: on July 29, 2020, the First President of the Paris Court of Appeal granted a petition for legitimate suspicion against the Polynesian Competition Authority

1. General lessons to be drawn from the decision

The decision of July 29, 2020 of the First President of the Paris Court of Appeal is the continuation and practical application of the landmark decision issued by the Cour de cassation on June 4, 2020, which subjected independent administrative authorities with powers to impose sanctions to an effective control of their requirement of impartiality through application of a procedure of legitimate suspicion even in the absence of a specific provision.

Undertakings of the Wane group subject to competition proceedings in French Polynesia had discovered that, in the context of employment tribunal proceedings between one of them and an employee, that the President of the APC had issued a statement to the employee’s benefit and an opinion on the investigation of the case being investigated before he had to hear it. This raised doubts as to the impartiality of the Authority, which the companies reported to the President of the Authority, but to no avail. They had therefore submitted a petition to the First President of the Paris Court of Appeal for referral of the case to the Paris Court of Appeal on the grounds of legitimate suspicion. However, the order of the First President dismissed the request on the ground that the organizational documents applicable to the APC did not provide for a specific procedure for disqualification or request for referral on grounds of legitimate suspicion. Moreover, the Authority would not be a court so that the general provisions on disqualification would not apply to it either (Paris, March 1, 2019, LawLex19866). This decision was criticized by several professors of law and commentators.

The companies appealed to the Cour de cassation, which granted their request under Articles 6 § 1 ECHR and L. 111-8 of the French Code of Judicial Organization. According to the Cour de cassation: “According to these provisions, every person is entitled to have their case heard by an impartial court which will decide on the merits of any charge brought against them in criminal matters, a matter to which proceedings for sanctions having the nature of a punishment are assimilated”. As it can have to impose sanctions, the APC must be regarded as a court, and even in the absence of a specific provision, it is subject to the general principle of impartiality requiring that any person prosecuted before it may, where appropriate, request referral on grounds of legitimate suspicion to the court of appeal.

The scope of this judgment was well beyond the scope of the case at hand. The Court made it clear that the power to punish belonging to Independent Administrative Authorities led to their being assimilated to courts and therefore made them accountable for compliance with the general principles of law, even when these were not included in the specific procedural rules applicable to them. The decision of the Cour de cassation now offers companies an ex ante control of the authority’s impartiality, making it possible to avoid any irreversible violation of the rights of defense much more effectively.

The First President, who received a new petition for legitimate suspicion following the Cour de cassation’s decision in this case, applied these principles. He held that the petition was admissible and well-founded on the grounds of the lack of impartiality of the President of APC and considered that this lack was likely to undermine the impartiality, or at least the appearance of impartiality, of the APC as a whole, contrary to the defense submitted by the respondent President, who attempted to argue that the legitimate suspicion implied a general lack of impartiality of all members of the Authority.

As the First President considered that the case should be referred to a court of the same nature and degree so that the parties would not be deprived of a two-stage judicial procedure, he referred the case to the Metropolitan Competition Authority, the Autorité de la concurrence based in Paris.

The decision is important in general as it shows that agencies (such as Competition authorities) having the power to sanction undertakings are subject to an effective control of their impartiality.

It is also significant on the merits for the present case because it tacitly but necessarily recognized that the quashing by way of consequence resulting from the decision of the Cour de Cassation of June 4, 2020 led to the annulment of the ruling on the merits that had been issued on August 22, 2019 by the APC, because it entrusted the Metropolitan Competition Authority with the task of ruling on the proceedings “pending” before the APC, and this necessarily means that the sentence on the merits no longer has any legal existence following the decision of the Cour de cassation.

2. Specific lessons of the decision regarding the Polynesian Competition Authority

This decision is yet another setback for the President of the APC, who has already been involved in several cases.

On October 16, 2019, the Paris Court of Appeal already suspended the decision by the APC to sentence the companies concerned on the merits because of the President’s potential lack of impartiality. The Court of Appeal considered that the grievances made to the President of the APC meant that the ruling entailed a serious risk of being annulled on the basis of the lack of impartiality of the board due to the behavior of its President (Paris, Pôle 5, ch. 15, Oct. 16, 2019, No. 19/15773; L’actu concurrence no. 114/2019 of Oct. 16, 2019; Rev. Lamy Concurrence, Dec. 2019, 6; Contr. Conc. Consom. Dec. 2019, 206, obs. G. Decocq; E. Dieny, Procédure: quand l’Autorité polynésienne de la concurrence se fait taper sur les doigts par la cour d’appel de Paris, L’Essentiel du droit de la distribution et de la concurrence, Jan. 2010; F. Venayre, Première decision de sanction de l’Autorité polynésienne de la concurrence: du Titan au Titanic, Dalloz Actualité, Nov. 6, 2019). The decision issued on the merits had already been severely criticized by the legal scholars (L. Donnedieu de Vabres et F. Vever, Première décision contentieuse de l’Autorité polynésienne de la concurrence: une analyse réfrigérante, Dalloz Actualité; E. Eréséo, La lettre de la distribution, oct. 2019, pp. 1-2).

On November 26, 2019, the President of the APC was disavowed by his own board, which issued a non-suit decision concerning an alleged cartel in the context of a public contract in the surveillance and guarding sector, in particular because of the lack of impartiality due to the interference of its president in the investigation, whereas the investigation and judgment functions must be separated (APC, Dec. No. 2019-PAC-02, Nov. 26, 2019; F. Venayre, L’Autorité polynésienne de la concurrence prononce un non-lieu pour défaut d’impartialité dans l’affaire du gardiennage, Dalloz Actualité 2019; L’actu-concurrence, n° 131/2019, Mettant au jour de graves dysfonctionnements au sein de l’institution affectant son impartialité, au point de vicier irrémédiablement la procédure, le nouveau collège de l’Autorité polynésienne de la concurrence rend une décision de non-lieu dans l’affaire du gardiennage; D. Schmitt, Non-lieu dans l’affaire du gardiennage : le Collège de l’APC désavoue son Président !, Tahiti Pacifique, n° 422): the new board of the APC had indeed noted that the investigation services had asked the Board and the President for instructions during the investigation on the direction to be given to the prosecution procedure, and the President had then actively and insistently interfered in the investigation, which is strictly forbidden.

Lastly, according to the local press, a compulsory resignation procedure was initiated against the President of the APC by the Board and gave rise to a hearing on June 8, 2020 (La Dépêche de Tahiti, June 2,2020; Tahiti Infos, July 4, 2020).

An order of the First President of the Paris Court of Appeal now recognizes that the behavior of the President of the Polynesian Competition Authority is such as to impair the impartiality, or at least the appearance of impartiality, of the APC as a whole and refers the case to the Autorité de la concurrence in Paris.

This series of decisions undoubtedly reflects a deficiency of the APC under its current President.