French regulatory framework is undergoing an important shift in terms of sanctions imposed by the French Data Protection Authority (the ‘CNIL’) in case of non-compliance with French Data Protection Law as the administrative fine has been multiplied by 10. This trend is related to the new General Data Protection Regulation (the ‘GDPR’) that is due to come into force in May 2018. France visibly acts as a precursor and set the example for other data protection authorities.
When the French Parliament was discussing the so-called “Bill on a Digital Republic”, questions were raised as to whether this bill, which mainly concerns the modernisation of the access to administrative files in France, as well as regulation granting a right to digital access for all, could possibly have an impact on the adoption by France of the General Data Protection Regulation (GDPR). The short answer to this, until the adoption of the law, was ‘No’ for the main part. As it happens, this answer needs to be strongly revised since an important change was made in the very last minute to this bill, which was adopted as law No. 2016-1321 on 7 October 2016: this regulation significantly changes the administrative fines that can be imposed by the French Data Protection Authority (the ‘CNIL’) in case of non-compliance with French Data Protection Law.
Fines have been seen for a long period of time as the Achilles’ heel of French regulation. That should end, as the new law has multiplied by 10 the fine incurred in case of breach of French Data Protection Law, by increasing the former maximum amount of €300,000 to a new fine of up to €3 million.
What are the underlying reasons of such a significant change?
The aforementioned amount does not correspond to the maximum fines as they have been set forth by the GDPR (European Regulation No. 2016/679). The GDPR provides that infringements to the rules on data protection can be subject to administrative fines up to €20 million, or up to 4% of the total worldwide annual turnover of the company.
Nonetheless, the French regulator was considerably inspired by the GDPR to align the sanctions that can be imposed by the CNIL. In fact, the discussed options in Parliament either aligned the French law to the GDPR by allowing the CNIL to impose a fine up to €20 million, or “reduced” the amount to €1.5 million. It was finally set up at €3 million.
To quote the French Minister of Economy, who initially proposed the French Law for a Digital Republic, the previous maximum threshold of sanctions imposed by the CNIL (€300,000) were “peanuts for big media companies”.
The CNIL itself had repeatedly asked for the maximum amounts of fines to be increased (as an example: CNIL opinion of 13 January 2015).
As a result, the French law-maker obviously took the option not to allow a smooth transition to the GDPR, but to strengthen the enforcement arsenal in order to make companies react now rather than in the next two years.
What is the process for the CNIL to impose a fine?
The CNIL vaunts itself as a cooperative authority in the enforcement process. Therefore, it will not immediately impose any sanctions in case of non-compliance. In fact, the CNIL will first liaise with the company in breach of its obligations in terms of data protection.
After hearing the company, and if the latter persists in violating the provisions of the French Data Protection Law, the CNIL may serve a formal order to comply and to cease the non-compliance within a given deadline. If the company complies with the notice served, the CNIL will close the procedure.
Otherwise, the CNIL may impose the following sanctions:
- A warning
- An injunction to cease the data processing or a withdrawal of the authorisation of the CNIL
- A financial sanction up to €3 million
- In imposing the fine, the CNIL will take into account:
- Whether the breach was intentional or was the result of negligence
- The measures taken by the company in order to mitigate the damage to individuals involved
- The degree of cooperation with the CNIL in order to remedy the breach and mitigate its potential negative effects
- The categories of personal data involved
- How the breach was brought to the attention of the CNIL
What does this change for companies?
This change of the sanctions’ scope highlights France’s willingness to be the first country to anticipate the GDPR’s application. This is certainly to be seen as a strong signal towards companies, and in particular digital and media companies.
These have been increasingly targeted since the beginning of 2016, according to new enforcement procedures where the CNIL joined forces with other French regulators, in particular with the French Directorate-General for Competition, Consumer Affairs and Prevention of Fraud, in order to have a greater impact - See our alert on this topic here.
This new evolution should therefore not be underestimated: being it is under the angle of consumer protection or data protection compliance (for privacy policies in particular), times are changing and should be better anticipated now.
Client Alert 2016-275