On 19 October 2017, the French competition authority (FCA) published its decision to impose a €302 million fine on three leading companies in the PVC and linoleum floor covering sector. The fines were: Tarkett - €165 million, Forbo - €75 million and Gerflor - €62 million. It also fined the industry’s trade association, Syndicat Français des Enducteurs Calandreurs et Fabricants de Revêtements de Sols et Murs (SFEC), €300,000.
The case arose out of proceedings initiated by the FCA in 2013, acting upon information submitted by the Directorate General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF), which revealed three anticompetitive practices:
- Price-fixing through meetings, agreements and sophisticated communication methods, in the context of a complex single and continuous infringement; which is usually considered a very serious infringement.
- Exchange of sensitive confidential information, in this case with the active help of the trade association SFEC.
- An agreement not to compete with regards to a specific issue: communication on individual environmental performance.
In determining the applicable sanctions, the FCA particularly considered the very serious nature of the infringements, their duration and the fact that these market players account for 65 per cent to 85 per cent of the market.
Since two of the three companies benefited from a leniency procedure, and all entered into a parallel settlement procedure, the fines were reduced. However, the precise amount of reduction granted is not mentioned in the decision.
This decision is the first case where the new settlement procedure - introduced by the Macron Law of 6 August 2015 - has been used. Under the new procedure, companies are able to discuss the minimum and maximum amount of fine with the FCA, and are no longer limited to discussing the reduction rate applicable to a hypothetical amount of fine.
The FCA is expected to publish a document on its new settlement procedure.
The FCA has also changed its policy on compliance programmes, and will no longer automatically reward companies implementing such programmes. The FCA has declared in this decision that the sole objective of companies’ internal compliance programmes should be to guide and help them comply with competition law, not to obtain fine reductions, especially for large companies and for serious infringements like those in this case.
The new FCA position was officially confirmed in a notice on the settlement procedure and compliance programmes, issued on the same day (19 October 2017). The notice states that compliance programmes should no longer automatically allow companies to be granted a reduced fine.
How Reed Smith can help
With extensive experience of competition investigations and litigation before competition authorities and courts, Reed Smith’s EU, competition and regulatory team can assist you by reviewing your practices, and advise you from the start of an investigation, by devising the best litigation strategy, including whether to enter into negotiated procedures with the EU and French competition authorities. We also assist clients in the context of private follow-on claims for damages linked to anticompetitive practices.
Client Alert 2017-267
