The Paris Court of Appeal upholds €30 million fine imposed on Brenntag for obstructing the French Competition Authority's investigation

In its ruling of November 21, 2024, the Paris Court of Appeal dismissed the appeal lodged by Brenntag SE (formerly Brenntag AG) and its French subsidiary Brenntag S.A. (together "Brenntag") and thus upheld the €30 million fine that had been imposed on them by the French Competition Authority (the "Authority") on December 21, 2017. This decision was unprecedented in that it was the first time the Authority had sanctioned a company for obstructing an investigation.

The Authority found that these companies, which operate in the chemicals wholesale sector, had obstructed the investigation, which was underway, because of practices that could constitute a vertical cartel and an abuse of a dominant position. More specifically, Brenntag was accused of having, firstly, transmitted incomplete, imprecise and untimely information and documents in response to requests for information, and secondly, of having refused to provide certain requested information. For two years, Brenntag had refrained from responding to requests from the investigating authorities, except to provide summary interim estimates and a list of suppliers. Following this silence, the investigating authorities repeatedly contacted Brenntag, with little success. Brenntag refused to provide certain information, or provided incomplete information, on the grounds, among others, that some of the requests made were invalid, and that the burden of proof lay with the Authority. 

As a reminder, in the event of a company obstructing a competition investigation, "in particular by providing incomplete or inaccurate information, or by communicating incomplete or distorted documents", Article L.464-2 V paragraph 2 of the French Commercial Code authorizes the Authority to impose a fine of up to 1% of the worldwide turnover of the company concerned. 

The Court of Appeal confirmed that Brenntag had committed a practice of obstruction.  The "express, deliberate and definitive refusal" to communicate requested information or documents was sufficient to characterize as such a practice, a behavior tended to obstruct, deliberately or through negligence, the acts of investigation or inquiry.

This case is reminiscent of a recent decision by the Authority dated September 24, 2024, in which it imposed a fine of €900,000 on the Loste group for having also obstructed the investigation carried out by the Authority. 

In this case, the facts were of a different nature, as they corresponded to the communication of false information during dawn raids. More specifically, the legal director of the Loste Group had told the case officers conducting the dawn raids that the head of the group was not present on the company's premises, even though she knew that this information was inaccurate, since he was. Moreover, the head of the Loste group, who is also vice-president of the French federation of prepared-meat industries, prepared-food suppliers and meat processors (FICT), had indicated during his telephone conversation with the FICT's delegate general, who had contacted him at the case officers’ request, that he was in the UK and not in Paris. The Authority considered that a heavy fine was deserved. Since the companies were required to cooperate fully during the visits, the conduct in question necessarily entailed, in the Authority's view, a risk of loss or alteration of evidence, by definition impossible to prove.

These two cases demonstrate the Authority's commitment to severely punishing any obstruction of its investigations, in order to create a dissuasive effect and prevent other players from implementing similar practices that undermine the effectiveness of its investigations.

The French Competition Authority imposes a €470 million fine on two manufacturers and two distributors in the low-voltage electrical equipment sector for having set up two vertical agreements

In a decision dated October 29, 2024, the French Competition Authority (the "Authority") imposed a €470 million fine on manufacturers Schneider Electric and Legrand, and distributors Rexel and Sonepar, for having set up two vertical price agreements. This type of anti-competitive practice is considered particularly serious by the Authority, the seriousness of the facts being heightened in this case by the fact that they were committed on a concentrated market, both upstream and downstream, and with full knowledge of the facts by the aforementioned companies. 

For information purposes, the facts were revealed by a report from the Authority’s General Case Handler, based on information contained in an article published by Mediapart describing these anti-competitive practices. Following this report, a judicial investigation was opened by the Paris Public Prosecutor. Criminal proceedings are therefore underway in parallel with the proceedings before the Authority.

The first vertical agreement, implemented from December 2012 to September 2018, by Schneider Electric, Rexel and Sonepar, and the second, implemented from May 2012 to September 2015, by Legrand and Rexel, involved similar practices. In response to the observation that end customers (private companies or local authorities in particular) of low-voltage electrical equipment regularly request prices lower than the purchase prices of products by distributors, a so-called "derogation" system was put in place. In practice, a discount on the standard purchase price was granted to distributors to enable them to offer their customers lower prices in line with their requests. This practice benefited both manufacturers and distributors, since manufacturers were able to control the resale price to end customers, while distributors were able to guarantee their margins and avoid selling at a loss. The Authority reminded that soliciting specific discounts for end-customers was not, by its very nature, illegal when the new purchase price obtained by the distributor was sufficiently low to enable it to grant, if it so wished, an additional reduction to the end-customer. However, the Authority considered in this specific case that the prices presented by manufacturers as maximum or recommended were, in practice, fixed, which is prohibited.

In its press release on the decision, the Authority asserts that "the purpose of the system of derogations was to maintain high standard prices in France by limiting, in particular, intra-brand competition, to the detriment of end customers".

An appeal has been lodged with the Paris Court of Appeal, so to be continued... 

The French Competition Authority publishes an opinion on rating systems designed to inform consumers about the sustainability-related features of consumer products and services

On February 8, 2024, the French Competition Authority (the "Authority") decided to start an inquiry ex officio to assess the competitive issues associated with rating systems designed to inform consumers about the sustainability-related features of consumer products and services. More and more brands are using a system of codes made up of numbers, letters and/or colors, the aim of which is to inform consumers in a simple and didactic way about the sustainability characteristics of products and services offered in France in particular.

It is in these circumstances, and after questioning numerous players in the sector as well as consumer associations, that the Authority published its opinion on these systems, insofar as they may raise competition concerns. 

In particular, the opinion states that the publisher of a rating system must be transparent about how it is set up, and ensure that it is reliable, since it influences a competitive parameter and can play an important role for consumers in comparing products and services. 

In addition, the Authority recalls that the introduction of a rating system must not be used as an opportunity for operators to engage in disparagement (by awarding a poor rating to a product containing a certain substance when its use is authorized) or anticompetitive practices (such as the exchange of sensitive commercial information between competitors, or an agreement between competitors not to compete on the sustainable development performance of their products/services by refraining from communicating about the lowest ratings).