The French Competition Authority imposes a heavy fine on EDF for abuse of dominant position

In its decision dated February 22, 2022, the French Competition Authority fined EDF for having abusively exploited the means at its disposal as an electricity supplier offering regulated electricity tariffs (TRV).

EDF’s contested practices took place from 2004-2021, beginning when the sector was still in the early stages of opening up to competition, which started in 1999. To give some perspective, all consumers in France have been eligible for market offers since 2007, and some TRV progressively disappeared (i.e. TRV green and TRV yellow, intended for companies). Only TRV blue was maintained, notably for individuals and SMEs.

In this case, the Authority criticized EDF for having used means that were at its disposal, thanks to its status as the operator in charge of electricity supply at TRV, but such means were non-reproducible by its competitors. EDF acted to consolidate its position on the markets for electricity supply and to reinforce its position on related markets for the supply of gas and energy services. In practice, the operator used data taken from its files of customers eligible for TRV, and used commercial infrastructures dedicated to managing TRV contracts to develop its market offers in gas and energy services with its TRV customers.

The French Competition Authority found that these practices allowed EDF to use a non-reproducible competitive advantage, thus solidifying its position across the entire energy sector and delaying the development of alternative suppliers on the relevant markets. 

EDF and its subsidiaries asked to benefit from the settlement procedure, which limits the fine within a set range when a company does not intend to contest the charges against it. EDF has also undertaken to (i) provide its TRV blue customer files to its competitors, upon request, and (ii) separate the telephone subscription paths for clients and prospects under TRV blue, from clients and prospects in market offers. These commitments are compulsory for a three-year period. EDF will also have to pay a fine of €300 million for these practices.

France’s highest court rules on the compliance with civil law and competition law of the refusal of approval in selective distribution networks 

In three decisions rendered on February 16, 2022, France’s highest court, the Court of Cassation ruled on the issue of denying appointments of dealerships to selective automobile distribution networks by the heads of those networks.

In the first case (appeal No. 20-11.754), the Court of Cassation addressed Mercedes-Benz’s refusal to reappoint a former dealership as an authorized repairer. Mercedes-Benz justified its refusal because of a dispute that occurred while under the previous contract.

In the two other cases (appeals No. 20-18.615 and 21-10.451), Hyundai Motor France refused to grant a new approval to several companies with which it had previously concluded contracts for distribution and as an authorized repairer. In the first decision, the contract concluded with one of the dealers had been terminated due to the commission of a fault. In the second decision, the supplier simply did not wish to renew the approval previously granted.

These decisions are interesting in various respects. 

First, it appears from these three decisions that the principle of contractual freedom and the prohibition of perpetual commitments are contrary to the recognition in principle of the right of approval of a former member of a distribution network.

In this respect, the Court of Cassation recalled that a supplier’s refusal to conclude a new contract can be justified by a lack of trust, notably due to the commission of a fault justifying the termination of a previous contract, with all liability borne by its co-contractor. Failing any abuse of rights by the supplier, the Court of Cassation rejected the former dealer’s claim.

Secondly, the Court of Cassation ruled that, under civil law, the head of a distribution network cannot be criticized for not reviewing a dealer’s application. The contractual good-faith obligation does not require a distribution network head to determine and implement a process to select distributors on the basis of defined and objectively set criteria, or even to apply them in a non-discriminatory manner.

In these circumstances, Hyundai Motor France, which had not undertaken an examination of the applications for approval of outgoing dealers, could not be accused of any fault in this respect.

Finally, the Court of Cassation indicated that neither European law (Article 101§1 of TFEU) nor French competition law (Article L.420-41 of the French Commercial Code) prohibits the refusal by the head of a qualitative selective distribution network to approve distributors that meet the selection criteria set out by it. However, this implies that the implementation of these criteria is consistent and non-discriminatory, and that it does not in its purpose or effect distort competition. In this respect, the Court of Cassation specified that such distribution system does not lose the benefit of the exemption conferred by Regulation No. 330/2010, where each party’s market share does not exceed 30 percent and that no hardcore or excluded restriction is observed.

European Commission study: More than half of websites screened violate EU rules on unfair trading practices 

In conjunction with national consumer protection authorities, the European Commission conducted, a screening to verify the compliance of websites with European consumer protection rules against misleading reviews posted by consumers.

For the record, misleading practices on consumer reviews are covered by the directive on unfair trading practices. This regulation was clarified by the directive as regards better enforcement and modernization of Union consumer protection rules ((EU) Directive 2019/2161), of November 27, 2019, whose provisions will apply from May 28, 2022. This text now explicitly states that it is prohibited to submit false consumer reviews or false consumer recommendations (for example by asking individuals to promote their products, manipulating reviews or deleting negative reviews). Moreover, this text states that professionals must provide information on how consumer reviews are monitored and how reviews are processed.

The study conducted by the Commission shows that 55 percent of the websites screened could not prove that the reviews published come from consumers who actually purchased the product or used the service reviewed.

Moreover, contrary to their obligations, some commercial websites also seem to fail to meet their obligations to inform consumers how reviews are collected and processed or to indicate whether remunerated reviews are prohibited by their internal policies.

Publishing the results of this screening serves as a reminder of the need to comply with all these rules, as violating them risks the penalty of a fine of up to €300,000 and two years of imprisonment (Article L132-2 of the French Consumer Code).

French Competition Authority fines four companies a total of €1.5 million for having colluded and presented coverage offers in response to calls for tenders

By its decision dated March 3, 2022, the French Competition Authority sanctioned four companies active in waste removal and management in Haute-Savoie (Ortec Environnement, Excoffier Recyclage, Trigénium and Tredi) for participation in a cartel. 

After carrying out dawn raids and having received an investigation report sent by the Auvergne-Rhône-Alpes Interregional Competition Investigation Brigade, the French Competition Authority obtained evidence that between 2010 and 2018, the aforementioned companies divided among themselves calls for tenders launched by public authorities in various markets. 

First, in response to the calls for tenders launched on the markets for the removal and management of non-hazardous waste, three companies had jointly determined price instructions to submit coverage offers. In so doing, the three companies presented competing offers and ensured that the designated company would be certain to win the market in question.

Secondly, in response to a call for tenders launched on the market for the removal and management of hazardous waste by the Annemasse urban community in 2016, Tredi informed Excoffier Frères of its decision to respond to this call for tenders, and more generally, of its general response policy to calls for tenders. Although the recipient of this email did not reply, the Authority found that he had not distanced himself publicly and that he had taken this information into account since he failed to respond to this call for tenders. The French Competition Authority found that this exchange was sufficient to be qualified as a concerted action.

The French Competition Authority concluded that these practices had undermined free competition and placed a burden on the budgets of the local authorities, which were misled. 

The four companies that participated in this cartel did not contest the charges, so a settlement procedure was concluded and a total fine of €1.5 million was imposed on them.