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Introduction of class action in France for the private enforcement of competition law infringements
Article Competition, Retail and Consumer Law Commercial and International Contracts | 21/03/14 | 4 min. | Renaud Christol
The French Consumer Law of March 17, 2014, introduces class action into French law, and more particularly into competition law.
Article 1 of the law will enable consumers who allegedly sustained damage caused by anti-competitive practices to obtain compensation through a class action before the entire decision of the French Competition Authority (the “FCA “) becomes final.
An undeniable contribution
The first draft text provided that only consumer associations could bring a class action and that they could only do so “on the basis of a decision acknowledging the infringements, which is no longer likely to be the subject of an appeal, and which was delivered against the professional by the competent French or EU competition authorities or courts.”
A number of voices were raised1 to deplore the fact that SMEs do not benefit from the class action procedure. Indeed, such companies often sustain damage due to anti-competitive practices, in particular when they produce or market intermediary goods. The initial wording of the draft text was also criticized as it could have, as a result, dissuaded consumers from bringing class actions due to the relatively long wait (sometimes up to ten years) to obtain a final decision from the FCA.
The text which was finally adopted provides only one answer to the two aforementioned concerns as SMEs are not included in the scope of the text.
However, the wording regarding the grounds of the action has been amended: a class action can be brought immediately after a decision has been handed down by the FCA, either because no appeal has been lodged within the statutory timeframe2, or because an appeal has been lodged but concerns only elements determining the sanction and not the existence of anti-competitive practices and the participation of the convicted companies in such practices. In any case, the law irrefutably presumes that all competition law infringements acknowledged by the decision and which are not subject to appeal constitute breaches qualifying for compensation.
Implementation troubles
Such wording will have at the very least two consequences.
First, class actions will only be possible on the basis of a decision handed down by the FCA acknowledging a competition law infringement. No class action may be brought on the basis of a decision accepting and rendering mandatory the commitments put forward by a company3, or let alone on the basis of an opinion issued by the FCA. Indeed, in those two different procedures, the FCA does not acknowledge anti-competitive practices4.
Second, said wording poses certain practical difficulties.
Although the existence of an appeal lodged against a decision handed down by the FCA is made public with the mention thereof by the FCA on its website, the entities who are not parties to the appeal do not have knowledge of the arguments raised and the motives put forward within the framework of such appeal. In other words, as matters stand, it does not seem possible for a consumer association which is not a party to the appeal, to know if the appeal in question concerns the characterization of the anti-competitive practices or the elements determining the sanction, and therefore to know whether it can immediately bring a class action or if it must wait for the decision to become final.
Under such conditions, consumer associations may be tempted to voluntarily intervene in every appeal lodged against the decisions handed down by the FCA in order to know the purpose and scope of said appeal. The admissibility of such interventions will very likely be a subject of debate.
Furthermore, and in any event, it cannot be excluded that the companies convicted by the FCA might decide to systematically lodge appeals against the entire decision in order to delay the introduction of class actions against them, even if their critical remarks are exclusively about the elements determining the sanction.
1 See in particular the hearing of the President of the French Competition Authority by the Committee on Economic Affairs of the Senate on 07.03.2013.
2 Future Article L. 423-17 of the French Consumer Code provides that “the professional’s liability can only be held (…) on the basis of a decision delivered against the professional (…) acknowledging the infringements and no longer likely to be the subject of an appeal on the part relating to the finding of the infringements”.
3 Article L. 464-2 of the French Consumer Code.
4 Report on the FCA’s procedure dated March 2, 2009 regarding competition-related commitments, §7 and judgment of the Paris Court of Appeal of 12.19. 2013.
Renaud Christol, Counsel
Elsa Pinon, Associate