New sanction by the French Competition Authority of a market-partitioning practice 

On July 8, 2019, the French Competition Authority fined the cooperative Back Europ France €1.7 million for having implemented since 1989, i.e. for 30 years, a horizontal agreement between its members, whose purpose was to share the market territorially. 

Cooperative Back Europ France, a leading network in the wholesale distribution of bakery products and equipment, operates a group purchasing organization and a logistics platform to supply the network’s members. It groups a large number of the wholesalers-distributors present on the entire domestic market.

From its creation, the cooperative shared the market and allocated to each of its 42 members an exclusive geographic distribution sector for the resale of products to bakers. The cooperative’s by-laws and internal rules themselves organized this practice. Road maps, captioned, dated and signed by the network’s members, determined very precisely, sometimes down to the very street, the areas allocated to each member. Only four cities – Paris, Lyon, Marseille and Bordeaux – were considered “free” and were not reserved for any member.

In order to ensure compliance with the exclusively allocated areas, a control and sanction mechanism had been put in place. Members reported any deviant behavior to the cooperative. In case of breach of these rules, the infringing member was convened and heard by Back Europ France’s board of directors, which reserved to itself the right to exclude this member from the network.

Moreover, it seems that in practice members systematically respected this discipline, only operating in the areas of territorial exclusivity that had been allocated to them and refusing to supply any client located outside these areas.

The allocation of exclusive geographic areas between cooperative members constitutes a form of non-aggression pact affecting intra-brand competition, preventing any effective competition between the wholesalers-distributors of the Back Europ France network.

Back Europe France, which did not deny the facts, benefited from the settlement procedure and was fined €1.7 million. The use of the settlement procedure justifies that the French Competition Authority did not comply with the Guidelines on Sanctions to determine the fine. However, the Authority stressed that this type of practice was one of the most serious restrictions of competition since it results in market partitioning between competitors. Moreover, it takes place on markets where competition is already intrinsically limited given their local scale. Furthermore, the practice continued over 30 years and thus had a lasting effect on how competition works in the sector in question.

This represents once again a decision sanctioning market-partitioning practices after the Commission’s recent reminders.  

First victory for a football club before the French Competition Authority 

On August 21, 2019, the French Competition Authority authorized without imposing conditions the takeover of SASP Olympique Gymnaste Club de Nice Côte d’Azur by the petrochemical group Ineos. 

The Authority took this opportunity to have a closer look at football markets. It thus defined the professional player transfer market that it considers European if not international in scale, where the different professional football clubs are in competition to attract the best players. In this respect, professional football players decide in light of five criteria: net remuneration, the club’s reputation, the contract’s duration, the competitiveness of the national championship and the international competitions in which the club competes. It also considered the market of sports marketing that is becoming international.

€2 million sanction for significant imbalance in the sector of gas turbines for energy production

In a case brought by the Minister of Economy, the Paris Court of Appeal fined GE Energy Products France €2 million on June 12, 2019 for submitting or trying to submit half of its co-contractors to obligations creating significant imbalance between their rights and obligations.

GE was first sanctioned for making its terms and conditions of purchase take prevail over its suppliers’ terms and conditions of sale. Then, the mechanism of early payment of bills was criticized as it gave GE significant reductions on its suppliers’ bills. These clauses cost GE’s French suppliers over €18 million.

To demonstrate the lack of actual negotiations between the parties, the Paris Court of Appeal first noted GE’s power in the market of gas turbine manufacturing (given its turnover, its place on the international scene and the market’s specificities) and the power balance that existed with its suppliers, as the latter could not do without this incontrovertible player. Moreover, numerous anonymous witness statements collected from suppliers, corroborated by the other documents in the file, allowed the Court to establish the non-negotiable nature of the clauses imposed by GE that can be found in the majority of its contracts.

In addition to being contrary to the provisions of the French Commercial Code, according to which the terms and conditions of sale constitute the sole basis for commercial negotiations, the clause of terms and conditions of purchase override reflects the obvious lack of negotiations. On the other hand, the early payment clause imposed by GE contains abusive rates that significantly reduce the final amount of the suppliers’ bill without this reduction corresponding to any service by GE and without the co-contractor having any clear visibility as to the final amount that will be paid to it. No concrete consideration is provided by GE to its suppliers to re-establish balance between the parties’ rights and obligations. 

This decision is particularly interesting not only because of the amount of the civil fine imposed that corresponds to the maximum amount that could be imposed on the basis of the text applicable at the time (the maximum fine today has been increased to €5 million), but also given the sector in which it occurs, since just this once, significant imbalance practices are sanctioned outside the food and non-food distribution sector.

Bercy fines EDF a record €1.8 million for late payment of its suppliers’ bills 

On August 1, 2019, the DGCCRF fined EDF €1.8 million for serious breaches of the regulation on payment terms. The DIRECCTE services noted that over 13,000 bills had been paid late by the first supplier of electricity in France, i.e. over 10% of its bills. More than 3,500 EDF suppliers suffered from these practices, representing a total amount of over €38 million. 

The fine imposed is the greatest to date in France for non-compliance with payment terms. The Minister of Economy ensured wanting to sanction bad payers strictly to achieve "increased awareness" among the major companies, whether public or private.