Her an overview of the competition law in its strict sense (anti-competitive practices and merger control) and to expose the issues relating to the field of business law.
General information about competition law
Competition law, in the broad sense, designates all the laws and regulations aimed at guaranteeing identical and fair competition between the various economic players. In other words, competition law is one of the pillars of economic law in a liberal economy. It is one of the most important branches of European Union law.
Strictly speaking, competition law includes provisions prohibiting anti-competitive practices, as well as those governing the control of concentrations and the control of state aid.
In the broad sense, competition law also includes the prohibition of unfair competition – an offense falling under civil law (Article 1240 of the Civil Code) – which consists in implementing abusive commercial practices vis-à-vis of its competitors, as well as restrictive practices of competition, specific to France, which may constitute civil or criminal offenses.
Thus, a lawyer specializing in competition law may be led to deal with files relating both to the rules of civil and commercial law and to those relating to competition taken in its strict sense. A competition lawyer must therefore master these different bodies of rules.
Bélot Malan & Associés law firm specializes, as a lawyer in competition law in Paris, in all aspects of competition law, whether it be the control of anti-competitive practices and concentrations or restrictive practices of competition.
The following developments aim to set out, in a non-exhaustive manner, the different aspects of competition law taken in its strict sense (control of anti-competitive practices and concentrations) and then in its broad sense (practices restricting competition).
Competition law in the strict sense: control of anti-competitive practices and concentrations
It is the Competition Authority – associated with the courts – which is competent to implement and enforce competition law at the French level.
The control of anti-competitive practices
It is governed for in European Union law by Articles 101 and 102 of the Treaty on the Functioning of the European Union and, in French law, by Articles L. 420-1 to L. 420-7 of the Commercial Code.
The illegal agreement
The illicit cartel designates all agreements between companies, all decisions of associations of companies and all concerted practices, which are likely to undermine the free play of competition.
In European Union law, agreements are governed by and punished by article 101 of the Treaty on the Functioning of the European Union, while in French law, they are governed by the provisions of article L. 420 -1 of the commercial code.
Abuse of a dominant position
The abuse of a dominant position consists, for a company present on a market, or a group of companies, of adopting a behavior aimed at eliminating, forcing or even dissuading any new competitor from entering this market, and thus distorting the competition.
It is provided for and sanctioned by the provisions of Article 102 of the Treaty on the Functioning of the European Union and by those of Article L. 420-2 of the Commercial Code. Article L. 420-2 of the Commercial Code also sanctions the abuse of economic dependence.
Economic merger is the legal transaction generally resulting from an agreement concluded between two or more companies or between groups of companies which, either by merger, or by the means of control exercised by some of their managers, or by taking stakes in their respective capital or by the creation of a joint enterprise or by grouping or in any other way, manage to control all or part of all of these enterprises and therefore the economic activities that they exercise.
Unlike the law on anti-competitive practices, merger control implies a priori control of the planned transactions and attributes to the national competition authorities (the French Competition Authority) or, as the case may be, to the European Commission, the power to give or not to give their agreement to a project of merger between companies.
Concretely, the company which plans to take control of another must file a concentration dossier with the competent competition authority: this dossier mainly comprises an analysis of the economic effects of the proposed operation. In essence, merger control tends to check, beforehand, that the takeover of one company by another will not generate a level of market share such that the resulting new set would threaten normal competition.
The company which files a dossier with the Competition Authority must fill out a notification form, also called Form CO, which notably involves defining the markets concerned by the operation. Under French law, the control of concentrations is governed by the provisions of Articles L. 430-1 to L. 430-10 of the French Commercial Code.
State aid control
Articles 107 and 108 of the Treaty on the Functioning of the European Union lay down the principle of the prohibition of State aid, that is to say public subsidies to companies. This prohibition by competition law is based on the fact that a company benefiting from public aid from its country will have an advantage compared to a foreign company which would not benefit from it.
To rule on the legality of aid, the Commission has two months, otherwise the aid is accepted. In case of serious doubt, it is the formal examination procedure which opens, with a further period of eighteen months.
The Competition Authority
The French Competition Authority, located 11 rue de l’Echelle in Paris, was created in 2009, replacing the Competition Council. It is the independent administrative authority responsible for regulating competition and combating anti-competitive practices in France.
This authority has jurisdiction – with the courts – to impose sanctions on the companies guilty of illicit agreement or abuse of dominant position. Its sanctions are of a financial nature and can reach tens of millions of euros.
The Competition Authority is also responsible for controlling the concentration of companies. It regularly issues opinions or recommendations on competition, on its own initiative or at the request of public authorities. The Competition Authority therefore constitutes the competition policeman and has in this regard various powers of investigation, consultation and sanction.
Competition law in the broad sense: restrictive competition practices
Restrictive competition practices are abusive acts which engage the author’s civil and criminal liability. They are repressed as soon as they are noted and regardless of their impact on competition, which distinguishes them from anti-competitive practices which, in turn, necessarily harm competition and the market. Their ban is intended to protect the company.
The ordinance n ° 2019-359 of April 24, 2019 revising title IV of book IV of the Commercial Code relating to transparency, restrictive practices of competition and other prohibited practices largely contributed to clarify the state of the law of the restrictive practices and codified the main restrictive practices of competition in Articles L. 442-1 to L. 442-4 of the French Commercial Code.
The main restrictive practices of competition are presented below.
The unrequited advantage and the significant imbalance
These restrictive practices of competition are governed by the provisions of the new article L. 442-1, I, 1 ° and 2 ° of the commercial code.
The unrequited advantage
Under the terms of article L. 442-1, I, 1 °, “the fact of obtaining or attempting to obtain from the other party an advantage corresponding to no consideration or manifestly disproportionate with regard to the value of the agreed consideration ”constitutes a tort.
A service that does not correspond to any specific service will be considered as fictitious (Paris Court of Appeal, June 29, 2016, no 14/09786).
The service can also be considered as fictitious if it is already planned and remunerated in another form (either in the general conditions of sale of the supplier, or under another obligation provided for in the single agreement). When the counterpart does not exist, it is easy to establish that no “service” was actually rendered.
The significant imbalance
The fact of “subjecting or attempting to subject the other party to obligations creating a significant imbalance in the rights and obligations of the parties” constitutes a tort under Article L. 442-1, I, 2 ° of commercial code.
The prohibition of the establishment of a significant imbalance in the rights and obligations of the parties gives the judge control of the content of the contract. This control involves analyzing the behavior of the author and the situation of the parties with regard to the clauses likely to constitute the significant imbalance.
According to the Paris Court of Appeal, the significant imbalance “consists in imposing or attempting to impose on a commercial partner, due to the imbalance in the balance of power existing between the parties, unjustified and non-reciprocal obligations” (Cour d Paris Appeal, October 1, 2014, no 13/16336 and in the same terms, Paris Court of Appeal, October 29, 2014, no 13/11059).
The sudden termination of established business relationships
This civil offense is provided for by the provisions of article L. 442-2, II of the commercial code:
“Engages the responsibility of its author and obliges him to repair the damage caused by the fact, by any person carrying out production, distribution or service activities, abruptly, even partially, breaking off an established commercial relationship, in the absence of written notice which takes account in particular of the duration of the commercial relationship, with reference to commercial practices or inter-professional agreements.
In the event of a dispute between the parties during the period of notice, the responsibility of the author of the termination cannot be engaged on the grounds of an insufficient duration as soon as he has respected a notice of eighteen months ”.
The established nature of the relationship
Within the meaning of case law, a commercial relationship is not established in the event that the latter would be precarious, in particular in the event of systematic use of calls for tenders (see in particular Cass, com., October 18, 2017 n ° 16-15138). More broadly, the Commercial Code makes no distinction between contractually established relationships and others.
The brutality of the rupture
The plaintiff in the sudden termination action is required to establish how the practices alleged against his trading partner characterize a sudden termination (see in particular Com., March 27, 2019, n ° 17-18.676). This decline may indeed be due to other factors.
The people concerned
Since the reform introduced by the ordinance of April 24, 2019, the author of the rupture may be any person carrying out production, distribution or service activities.
The duration of the notice of termination
To assess the necessary length of notice, the courts use the following criteria (see in particular Com., June 20, 2018, n ° 16-24.163; Com., October 24, 2018, n ° 17-16.011, n ° 17-21.807) :
• the duration of the commercial relationship,
• the volume of business carried out,
• the reputation of the client,
• the sector concerned,
• the seasonality of the product,
• the absence of a state of economic dependence on the supplier,
• the time required to find another partner,
• the minimum notice period determined with reference to commercial practices.
In addition, the new provisions of article L. 442-1, II of the commercial code, establishes a ceiling of eighteen months as regards the notice to be respected.
The method of calculating the repair
Courts have relied on the concept of gross margin as a criterion for assessing injury in the event of an abrupt termination of established business relationships.
The gross margin corresponds to the turnover excluding taxes minus the costs excluding taxes (see in particular Com., January 23, 2019, n ° 17-26.870). If the relationship had continued on reasonable notice, the victim of the termination would have continued to provide goods and services to the person responsible for the termination – and would therefore have borne additional charges.