The French Competition Authority sanctions a grouping of road hauliers for customer allocation 

On October 28, 2019, the French Competition Authority fined the first European grouping for transport and logistics Astre €3.8 million for having implemented since 1997, i.e. over twenty years, an unlawful agreement between its members, aimed as allocating customers, on the grounds of a non-competition obligation. In this decision, the French competition watchdog clarified two aspects of the conditions for the application of the settlement procedure. 

Regrouping small and medium-sized road transport companies, the grouping Astre is structured around two entities, Astre Coopérative, which ensures compliance with the grouping’s internal rules and is in charge of recruiting new members, and Astre Commercial, which markets the transport and logistics services to the grouping’s members. 

In practice, the members − the “Astrians” − were prohibited until 2016, through various clauses contained in Astre Coopérative’s internal regulations, by-laws and membership agreement, from sollociting or answering requests from clients referenced by other Astrians. The French Competition Authority considered that this non-competition obligation, which was effectively implemented in the grouping, resulted in a prohibition from active and passive solicitation of referenced clients. 

In 2016, following a DGCCRF (French General Directorate for Competition Policy, Consumer Affairs and Fraud Control) investigation, the grouping undertook to delete the clauses in issue from its internal regulations. However, the practice was reinstated for calls for tenders through a priority rule introduced in Astre Commercial’s internal regulations. For instance, Astre Commercial reserved the right to communicate the calls for tenders from clients only to Astrians that had already worked with these clients. 

The reintroduction of the non-competition obligation only a few months after the grouping had informed the DGCCRF that the non-competition clauses highlighted in its investigation reports had been deleted, is likely to increase the gravity of the practice. 

Likewise, the seriousness of the practice can be increased by the monitoring and sanction mechanisms put in place by the grouping to ensure compliance with the obligations to declare referenced clients and non-competition obligations. Each Astrian had a “label” with 12 points that could be taken away in case of non-compliance with the obligations set out in the internal regulations. Loss of all the points would result in the withdrawal of the label and exclusion from the grouping. The withdrawal of points also resulted in financial penalties of up to €250 per point.
Astre Commercial and Astre Coopérative, which waived contesting the facts, were able to benefit from the settlement procedure. However, the review of the conditions of eligibility of the case for a settlement raised two questions that were clarified. 

Firstly, the French Competition Authority recalled that by requesting a settlement, the company engaging in this procedural path must provide sufficient guarantees to put an end to the practice in issue as quickly as possible as from the signature of the minutes of settlement. This compliance with competition law does not constitute per se a commitment likely to entitle companies to a reduced sanction. 

Secondly, when a company signs minutes of settlement, this implies that the contemplated sanction brackets are compatible with its contributory capacity. Therefore, it cannot then argue that the contemplated sanction is incompatible with its financial situation, unless the latter has deteriorated since the signature of the minutes. 

This decision recalls once again the need for groupings to be more vigilant to competition rules when their very structure encourages unlawful attitudes; a vigilance made indispensable in light of the future increased sanctions pursuant to the ECN+ directive.

Gun-jumping: The Commission sanctions the “warehousing” two-step transaction structure involving an interim buyer implemented by Canon

The European Commission fined Canon €28 million on the occasion of its takeover of Toshiba Medical Systems Corporation (TMSC) for implementing this transaction in advance before obtaining the Commission’s authorization.

Toshiba, which faced serious financial difficulties, launched a call for tenders for the sale of its subsidiary, TMSC, specialized in medical equipment. To win the call for tenders, Canon submitted an offer in which the transfer purchase price was not conditioned by the authorizations related to merger control. This transaction structure allowed Toshiba to receive the purchase price in an accelerated and irreversible manner.

For this acquisition, Canon used a two-step transaction structure with an interim buyer in the first step. For this first step, an ad-hoc vehicle was created (Ms Holding) in charge of purchasing 100% of the target’s shares. This first step was completed without any notification to the Commission. The second step, consisting in the purchase by Canon of 100% of TMSC’s shares from the interim buyer, was for its part notified to the Commission and completed after its go-ahead.

After the interim transaction, an anonymous complaint relating to the nominee transaction was filed with the Commission, which resulted in a statement of objections.

The Commission considered that the two steps of the transaction structure formed together a single notifiable merger. Toshiba had ceased to control its subsidiary and Canon was certain to control ultimately the target. It participated in the creation of the ad hoc structure and bore the entire economic risk as it had paid the price thereof. Therefore, Canon was fined a total of €28 million for breach of its notification and standstill obligations.

To determine the gravity of the practice, the Commission noted that in light of its international dimension and its resources, Canon could not be unaware of the merger control rules. It suggested that, as a minimum, companies doubting the notifiable nature of a merger should refer to it for its opinion.

Algorithms: publication of the joint study of the French Competition Authority and Bundeskartellamt

In the era of the digital economy, algorithms constitute undeniable technological levers increasingly used by companies.

In a joint study, the French Competition Authority and the Bundeskartellamt set out to determine whether, and to what extent, algorithms can have adverse effects on the competitive operation of markets, notably by facilitating horizontal collusions.

As part of their study, the competition authorities identified three types of situations where algorithms can have an impact on the market. In the first case, the algorithm supports a horizontal collusion by facilitating its implementation or monitoring. In the second case, the algorithm is at the origin of the unlawful agreement, even if it was set up by a third party. The study refers to “code level” for the alignment at the algorithm’s level and to “data level” for the alignment at data level. In the absence of direct communication between the members of the alleged unlawful agreement, this situation nevertheless supposes that these members are aware or should have been aware that use of the same algorithm via the same third party provider could have an anti-competitive purpose or effect. Finally, in the third case, the study considers, in the absence of collusion, the alignment of behavior that may result from the application of algorithms.

The study concludes that in the current legal context, in particular Article 101 TFEU and its case law, competition authorities can today rule on competition issues linked to algorithms and do not yet require the adoption of specific rules.

The publication of this study thus calls for user companies to examine more closely the content and implementation of the algorithms they use, notably when these algorithms are entrusted to third parties.