COMPETITION • FRENCH LAW • PROCEDURE
The imputability of the infringement gives rise to difficulties where the offending undertaking has undergone restructuring, i.e. a change in its structural organization or corporate form between the date on which the infringement was committed and the Competition Authority’s ruling. As the notion of undertaking is purely economic, it is, in principle, the entity that ensures the economic and functional continuity of the perpetrator of the anticompetitive conduct that must answer for it. The Authority will attribute the infringement to the undertaking to which the material and human resources that contributed to the commission of the infringement have been transferred, unless at the date of the decision the offender continues to exist legally. There are several possible scenarios:
– Merger or merger by absorption: according to Article L. 236-1 of the Commercial Code, this involves the universal transfer of the assets and liabilities. All the human and material resources having contributed to the commission of the infringement are transferred to the acquiring company, which must be held liable, even if, at the date of the operation, the acquired company had sold part of its assets to third parties. In the case of a merger by the creation of a new entity, liability for anticompetitive practices lies with the undertaking or professional organization resulting from the transaction.
– Transfer or injection of capital: the undertaking which, following a transfer or injection of capital, succeeds the undertaking having committed the infringement of the competition rules is liable for it where there is economic and functional continuity between them. The solution is different when, at the date of the Competition Authority’s decision, the legal entity supporting the undertaking still exists or when the undertaking transferred is operated in a personal capacity by a natural person.
– Lease-management: this type of contract, by which the owner of a business leases it to a manager who operates it “at his own risk and peril” (Commercial Code, Art. L. 144-1), has no other effect than the replacement of the operator of the business by a third party and does not cause the undertaking to cease to exist. Since the economic and functional continuity is not affected, the lease-manager assumes liability for the anticompetitive practices implemented by the undertaking.
– Divestment plan: to the extent that the transferee ensures the economic and functional continuity of the original undertaking, its liability is incurred despite the fact that it did not take any part in the anticompetitive practices and did not pursue them after the transfer. It may therefore be the addressee of the Statement of Objections and be required to comply with a cease and desist order, but, pursuant to Article L. 626-10 of the Commercial Code, is not subject to a pecuniary sanction.
– Transfer of control: the change in the composition of the capital of the undertaking that participated in an agreement does not affect the imputability of the sanction. In fact, the entities subject to competition law are the undertakings, not the individuals who run them. Nevertheless, on the basis of the existence of a single entity, the Court of Cassation has ruled that an undertaking that had taken control of a cartel participant after the infringement had ceased could be held liable for the infringement and calculated the fine on the basis of its consolidated worldwide turnover before tax.
– Change of type of undertaking or name: the transformation of an undertaking into a holding company or of an association into a professional union does not affect its economic and functional continuity. On the other hand, an association made up of former members of another association cannot be charged with the practices of which the latter is accused insofar as the offender continues to exist.
– Court-ordered receivership: once an undertaking has been taken off the market, it is no longer subject to competition law. However, if it continues to exist legally, even for the purposes of its winding-up, it must answer for the anticompetitive practices it has carried out. On the other hand, it will not incur any pecuniary sanction (Commercial Code, Arts. L. 622-21 and L. 622-23).
– Dissolution: a sanction can only be imposed insofar as the legal personality of the undertaking having committed the offense persists. Once the liquidation process has been completed, the undertaking can no longer be fined. On the other hand, where the process is not completed, the Competition Authority may validly impose a financial penalty on the dissolved company, which is not transferable to the undertaking that may have taken control of it. Dissolution may also be accompanied by the transfer of the activity of the dissolved undertaking to another. In this case, the principle of economic and functional continuity makes it possible to impose the sanction on the acquiring undertaking. It is necessary and sufficient that all the assets, rights and obligations, claims and debts of the offending undertaking have been assumed by the latter.
