By decision dated 11 March 2015, the French Competition Authority (“FCA”) fined a group of dairy manufacturers for price-fixing dairy products sold under private retail labels.
The ten dairy manufacturers concerned were found to have implemented a price-fixing agreement during a period from at least 2006 to 2012. This anti-competitive practice (made possible thanks to secret meetings and telephone conversations) aimed notably at coordinating price hikes and volume allocation in a concerted effort to distort and hinder competition in the dairy products market.
The dismantlement of the cartel by the FCA was the result of the leniency program, set out in the French Commercial Code, pursuant to which partial or total immunity may be granted to a company which comes forward to report an anti-competitive practice in which it took part. The information given voluntarily by the whistleblowing companies is therefore exchanged for reduced fines.
In this particular instance, before the FCA even suspected any wrongdoing, the anti-competitive practice was reported first by Yoplait, and later by Senagral. In order to reward these companies for their revelations, the FCA granted Yoplait a full exemption from prosecution. Senagral, which reported the violations second, was granted only partial exemption and therefore did not avoid paying fines altogether.
This decision is the ninth time a cartel has been dismantled in France thanks to the leniency program and is yet another resounding testimony to the success of this program.
It is widely considered that leniency programs encourage companies active in competition law violations to disclose their anti-competitive behaviour and that, as a result, consumers obtain a benefit from exempting whistleblowers rather than having them as heavily fined as the rest of the companies under scrutiny.
Interestingly, in order to try to have its fine further decreased, Senegral invoked the so-called “non-challenge” procedure in combination with the leniency program. In application of Article L.464-2 (III) of the French Commercial Code, the non-challenge procedure, whereby companies do not challenge the anti-competitive claims made against them by the FCA while also undertaking commitments to modify their actions in the future, can lead to a substantial reductions in fines.
In theory, the combination of the leniency and non-challenge programs is allowed. The FCA first admitted this possibility (without actually applying it) in its laundry detergent decision 11-D-17 dated 8 December 2011, Secteur des lessives, and then confirmed it in its procedural statement. The decision to grant the benefit of the non-challenge program in a case where the benefit of the leniency program is already awarded belongs to the General Reporter of the FCA. The procedural gains resulting from the combination of both programs must be deemed sufficient, which may be the case when the objections notified by the FCA to the company are different from the revelations made by the company in relation to the leniency program. Such differences, which may concern either the material, temporal, or personal scope of the companies’ involvements, were found lacking in Senagral’s case. The combination of both programs was granted only once by the FCA (decision 13-D-12 of 28 May 2013, Secteur de la commercialisation de produits chimiques).
As regards the severity of the fine in the present case, the amounts ordered were on the lower end of the scale, at 16% of annual sales in France of the infringing products, whereas the fines in similar cartel cases usually range from 15% to 30%.
Such a situation may be explained by the low level of profitability of dairy business.