COMPETITION • FRENCH LAW PROCEDURE

Pursuant to Article L. 464-2 of the Commercial Code, the Competition Authority may enjoin the parties concerned to put an end to the anticompetitive practice within a specified period of time or impose specific conditions. It may issue injunctions to do or refrain from doing specific actions (injonction de faire ou de ne pas faire). It can thus order an undertaking to cease intervening in the pricing of its distributors or applying discriminatory terms and conditions of sale, to end a boycott or to remove an absolute territorial protection clause in its distribution contracts. The Competition Authority may order the removal of a non-compete clause or the reduction of its duration, or the amendment of selective distribution contracts. It may also require the undertaking to provide information. In order to remedy price squeeze practices committed in exceptional circumstances, the Competition Authority may, alternatively and not cumulatively with a financial penalty, issue an injunction when this solution is the most appropriate for restoring effective competition in the market and maintaining it over the long term. On the other hand, the Competition Authority may combine a fine with an injunction to amend the disputed clauses of the internal rules of procedure of a grouping within a period of two months, when during the proceedings, the grouping has not made a commitment to do so in view of its wish to challenge the anticompetitive nature of the rules. This power of injunction is not unlimited. Thus, the Authority does not have the power to order the systematic monitoring of a sector in the future. While it may require the parties to terminate or amend unlawful agreements, the Authority is not authorized to annul an existing agreement or force them to conclude an agreement. Indeed, this power falls within the exclusive jurisdiction of the judicial courts pursuant to Article L. 420-3 of the Commercial Code.

An injunction by its very nature has a restrictive effect on those to whom it is addressed. Consequently, it is subject to a strict interpretation by the courts and must be clearly and precisely worded, contain no uncertainties about its enforcement and concern only the undertakings to which it is addressed.

Although Article L. 464-2 does not impose a time-limit on parties as regards the execution of orders coming from the Authority, the courts have held that they must be complied with within a reasonable period of time from the moment they are served. The Competition Authority has even stated that since injunctions are immediately enforceable, the parties must comply without delay. The reasonable period of time is assessed in concrete terms having regard to the circumstances of the case, and in particular the characteristics of the undertaking and the sector concerned.

The Competition Authority is competent to ensure that the injunction is complied with. The verification procedure follows more flexible rules than the procedure for prosecuting the infringement. It is not necessary for a Statement of Objections to precede the drafting of the report and its notification. However, the Authority may only rule on non-compliance with an injunctive measure if the matter has been referred to it under the conditions defined in Article L. 462-5 of the Commercial Code. In the event of non-compliance with the injunction, Article L. 464-3 of the Commercial Code allows the Authority to impose a financial penalty within the limits set out in Article L. 464-2.

The Competition Authority has a special power of injunction for cases of the abusive exploitation of a dominant position or a state of economic dependence by an undertaking or a group of undertakings operating one or several retail outlets. Where injunctions and pecuniary fines have not been sufficient to bring an end to the abuse of dominant position or the state of economic dependence, Article L. 752-26 of the Commercial Code empowers the Authority to order the undertaking or group of undertakings concerned to modify, supplement or terminate, within a specific period of time, all agreements and instruments creating the economic power having given rise to the abuse, or to transfer assets if such divestment is the only means possible to guarantee effective competition. This decision must provide reasons and is handed down after collection of the observations of the undertaking or group of undertakings concerned. In the regions subject to Article 73 of the Constitution and in the overseas collectivities of Saint-Barthélemy, Saint-Martin, the Wallis and Futuna and Saint-Pierre-and- Miquelon islands, when an undertaking or a group of undertakings operating one or more retail stores holds a dominant position which raises competition concerns relating to high prices or margins, Article L. 752-27 allows the Authority to make known its competition concerns to the undertaking or group of undertakings in question, which could, within a period of two months, propose commitments under the conditions laid down in Article L. 464-2. In the absence of a proposal of commitments or if the commitments proposed are insufficient to put an end to the competition concerns, the Authority may enjoin it to modify, supplement or terminate, within a specific period of time not exceeding two months, all agreements and instruments by which the economic power giving rise to the practices observed in terms of prices or margins was constituted. It also can order the sale of assets if this is the only way to ensure effective competition.

The Authority may order periodic penalty payments via injunctions of up to 5% of average daily turnover per day of delay as from a date set by it.