Publication of the order transposing the “ECN+” directive
The Law containing various provisions adapting to European Union law in economic and financial[1] matters (“DDADUE“) authorized the Government to transpose by ordinance the provisions, not yet included in French law, of Directive (EU) 2019/1 of December 11, 2018, known as “ECN +“, before June 4, 2021.
It is within this timeframe that Ordinance 2021-649 of May 26, 2021 on the transposition of the ECN+ Directive aimed at providing Member States’ competition authorities with the means to implement competition rules more effectively and to ensure the proper functioning of the internal market was adopted by the Council of Ministers (hereinafter the “Ordinance“).[2]
As a reminder, the ECN+ Directive aims at harmonizing the operating rules of national competition authorities within the European Union by providing them with “guarantees of independence, resources and enforcement and fining powers necessary for the effective application of Articles 101 and 102 TFEU“.
After the adoption of the provisions relating to the leniency procedure by Decree n°2021-568 of May 10[3], the Ordinance completes the modernization of French competition law.
In doing so, the Ordinance introduces substantial changes by granting new powers and means of action to the French Competition Authority (hereinafter “the Authority“) both in terms of procedure (1) and sanctions (2).
1 – In procedural matters, the Authority’s powers and means of action are considerably strengthened.
- The Ordinance gives the Authority the power to initiate proceedings at its own initiative and to issue interim measures in urgent cases, as well as structural injunctions proportionate to the infringement committed and necessary to put an end to it. It also provides that the Authority may make binding, modify or supplement the commitments made by the companies.
- In the context of “heavy” investigations (visits and seizures), the Order allows the Authority to access encryption keys of documents stored on digital media. It should also be noted that the means of appeal against the orders of the judge of freedom and detention concerning the authorization or the conduct of the search and seizure operations are extended to the Minister of the Economy or the Authority, and the appeal regime is specified.
- The Order specifies that the practices referred to the Authority “may be established by any means of proof“. Therefore, and in accordance with recital 73 of the ENC+ Directive, concealed recordings will be admitted as evidence, if they are not the sole source of evidence.
- The Ordinance clarifies the framework within which the parties have access to the file and sets limits on the use of the information that may be contained therein, including information relating to leniency and settlement proceedings.
- The leniency procedure is simplified and managers and employees cooperating in the fight against illegal cartels will benefit from enhanced legal protection under criminal law.
- Finally, measures are introduced to strengthen cooperation between national competition authorities at the investigation, prosecution and decision stages.
2 – With respect to penalties, the Ordinance first removes the notion of “damage to the economy” from the criteria for determining the penalty, and inserts the importance of the duration of the infringement (this notion was already included in the Competition Authority’s statement on the determination of the penalty).
In accordance with the transitional provisions set forth in Article 6 of the Ordinance, this amendment is only applicable to proceedings for which grievances are notified, pursuant to Article L. 463-2 of the French Commercial Code, after the Ordinance has come into force.
In addition, the Ordinance introduces significant changes with respect to trade associations, as the maximum fine is considerably increased from three million euros to 10% of the highest worldwide turnover excluding tax achieved during one of the fiscal years preceding the one in which the practices were implemented.
Where the infringement of an association of undertakings relates to the activities of its members, the maximum amount of the fine is equal to 10% of the sum of the total worldwide turnover of each member active on the market affected by the association’s infringement.
Finally, the Ordinance establishes the principle of financial liability of the members of the association of undertakings, which is nevertheless limited as regards the payment of the penalty.
Similarly, in accordance with Article 6 above, these sanctions are not applicable to anti-competitive practices that ended before the Ordinance came into force. However, in cases where their application has the effect of reducing the maximum amount of the sanction incurred by the association of undertakings concerned, they apply immediately to sanction proceedings in progress.
Finally, it should be noted that the adoption of the ratification bill will have to take place within three months from May 26, 2021. In the meantime, the Authority welcomes the adoption of the Ordinance, which in its view contains major advances for the modernization of competition law.
[2] Texte de l’Ordonnance n°2021-649 du 26 mai 2021.
[3] Articles 17 to 22 of Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018.