COMPETITION • FRENCH LAW • PROCEDURE
The Competition Authority may impose a financial penalty applicable either immediately or in the event of failure to comply with injunctions or commitments it has accepted (Commercial Code, Article L. 464-2). The setting of the financial penalty depends on assessment criteria that the Authority must set out precisely in its decision. Penalties are determined individually for each undertaking, organization or group of undertakings and must be substantiated. These penalties are administrative not criminal, and the principle of the individual nature of penalties is applicable only to a certain extent.
In a notice dated 16 May 2011, the Competition Authority explains the method it follows for the setting of financial penalties and summarizes the main aspects of its decision-making practice. The notice is binding on the Authority and can be relied on if, in its decisions, the Authority fails to explain the specific circumstances or the public interest reasons justifying departing from it in order to impose a lump sum fine.
The Competition Authority’s method consists in determining the penalty on the basis of four criteria: the seriousness of the facts, the extent of the damage caused to the economy, the individual situation of the sanctioned organization or undertaking or of the group to which the undertaking belongs, and the possible repetition of practices prohibited by the competition rules. Those criteria are applied in a specific order: the Authority first determines the basic amount of the fine according to the seriousness of the facts and the extent of the damage caused to the economy. Like the Commission, the Competition Authority uses as the basic amount a proportion of the value of the sales (turnover) of the products or services to which the infringement relates, in France by each undertaking or body concerned. The proportion of the value of sales made during the reference accounting period used by the Authority is between 0% and 30%. This basic amount is then adjusted to take into account the specific conduct and individual circumstances of each undertaking or organization (aggravating or mitigating circumstances), with the exception of repeat offenses, which the law makes an independent criterion. Finally, this amount is compared to the legal maximum (10% of the undertaking’s turnover), before reduction to take into account leniency or a settlement, and then adjusted to cover the contributory capacity of the undertaking or organization requesting it.
