New provisions implementing the ECN + Directive will come into force in 2021 and will expose business associations to significantly heavier and more dissuasive sanctions.
Currently, the total amount of the fine that the French Competition Authority ("FCA") can impose to persons other than companies and businesses, including professional bodies and business associations, which are in breach of competition law, cannot exceed 3 million Euros. Under the provisions implementing the Directive (EU) 2019/1 of 11 December 2018 ("ECN+ Directive") currently in preparation, the cap on the fines incurred by business associations in France will be increased to 10% of the total turnover of their members.
As part of an approach aimed at promoting compliance, the FCA published end-January a study on the application of competition law to business associations.
Trade unions, professional bodies, and business associations often play a decisive role in the development and organization of anti-competitive practices among their members. In recent cases, FCA sanctioned a professional federation for having actively participated in the organization of secret anticompetitive information exchanges (Decision 15-D-19), a professional union for preparing and circulating instructions on pricing to its members (Decision 18-D-06), and a professional association for having implemented a fee calculation method for its members (Decision 19-D-19).
Based on decision-making practice and case law, the FCA study provides an overview of behaviors that are likely to raise competition issues, but also pro-competitive actions that can be taken by business associations. A useful overview of Do's & Don'ts is attached to the study (click to read FCA Study on professional bodies (in French).
Practices within business associations raising an antitrust risk are extremely varied. Typically, providing pricing guidelines or disseminating information by a business association may facilitate the creation of cartels. The exchange of sensitive information facilitated by such body can lead to collusive behaviors or an alignment of business practices by its members. Other restrictive practices relate to eviction strategies, including boycotts, restrictions of access to a profession or the implementation of unduly restrictive sector standards, or result from a misuse of the association's role in the representation and the defense of the professional interests of its members.
In order to address such antitrust risks, business associations need to be particularly careful in their internal exchanges and organizational rules, including on membership, and their external communication.
For instance, the processing and dissemination of information is one of the main tasks of professional associations, but it may facilitate the coordination of member's competitive behavior and the control of possible deviant conducts with respect to the resulting collusive balance. According to the FCA, best practices to avoid antitrust risks in this field include:
- Avoiding the exchange of individualized statistics on data about prices, market shares or any other strategically important information, both current and past;
- Avoiding the exchange of information about the results of the business activities of the current or the last month;
- Preventing conversations on sensitive information during meetings, especially on items which are not on the agenda ;
- Record keeping on exchanges during meeting;
- If participant disclose sensitive information during a meeting, putting an end to such communication, asking the participants to leave the meeting, and reporting the relevant conduct to competition authorities.
Considering the upcoming significant increase of the level of fines, resulting eventually in an increase of the financial risk for the members, companies may consider assessing the antitrust risk related to their participation to professional and business associations, and promoting the awareness of such risk by their staff.
Please contact our Competition & Distribution Team for further information on this subject.
New provisions implementing the ECN + Directive will come into force in 2021 and will expose business associations to significantly heavier and more dissuasive sanctions.
Currently, the total amount of the fine that the French Competition Authority ("FCA") can impose to persons other than companies and businesses, including professional bodies and business associations, which are in breach of competition law, cannot exceed 3 million Euros. Under the provisions implementing the Directive (EU) 2019/1 of 11 December 2018 ("ECN+ Directive") currently in preparation, the cap on the fines incurred by business associations in France will be increased to 10% of the total turnover of their members.
As part of an approach aimed at promoting compliance, the FCA published end-January a study on the application of competition law to business associations.
Trade unions, professional bodies, and business associations often play a decisive role in the development and organization of anti-competitive practices among their members. In recent cases, FCA sanctioned a professional federation for having actively participated in the organization of secret anticompetitive information exchanges (Decision 15-D-19), a professional union for preparing and circulating instructions on pricing to its members (Decision 18-D-06), and a professional association for having implemented a fee calculation method for its members (Decision 19-D-19).
Based on decision-making practice and case law, the FCA study provides an overview of behaviors that are likely to raise competition issues, but also pro-competitive actions that can be taken by business associations. A useful overview of Do's & Don'ts is attached to the study (click to read FCA Study on professional bodies (in French).
Practices within business associations raising an antitrust risk are extremely varied. Typically, providing pricing guidelines or disseminating information by a business association may facilitate the creation of cartels. The exchange of sensitive information facilitated by such body can lead to collusive behaviors or an alignment of business practices by its members. Other restrictive practices relate to eviction strategies, including boycotts, restrictions of access to a profession or the implementation of unduly restrictive sector standards, or result from a misuse of the association's role in the representation and the defense of the professional interests of its members.
In order to address such antitrust risks, business associations need to be particularly careful in their internal exchanges and organizational rules, including on membership, and their external communication.
For instance, the processing and dissemination of information is one of the main tasks of professional associations, but it may facilitate the coordination of member's competitive behavior and the control of possible deviant conducts with respect to the resulting collusive balance. According to the FCA, best practices to avoid antitrust risks in this field include:
- Avoiding the exchange of individualized statistics on data about prices, market shares or any other strategically important information, both current and past;
- Avoiding the exchange of information about the results of the business activities of the current or the last month;
- Preventing conversations on sensitive information during meetings, especially on items which are not on the agenda ;
- Record keeping on exchanges during meeting;
- If participant disclose sensitive information during a meeting, putting an end to such communication, asking the participants to leave the meeting, and reporting the relevant conduct to competition authorities.
Considering the upcoming significant increase of the level of fines, resulting eventually in an increase of the financial risk for the members, companies may consider assessing the antitrust risk related to their participation to professional and business associations, and promoting the awareness of such risk by their staff.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
