Financial penalties for obstruction to investigations by the French Competition Authority: the bitter taste of candies.

Written on 7 Jun 2019

On 22 May 22 2019, the French Competition Authority (FCA) imposed a €900,000 fine on a company operating in the engineering and technology consulting, IT services and software publishing businesses. The fine was imposed for obstruction to inspections. Notably, seals affixed by the FCA’s agents on an office were breached, allegedly by a careless employee looking for candies.

Background

In November 2018, the FCA performed dawn raids on two sites of the company in the Paris and Bordeaux area for suspected anticompetitive practices. During these raids, two incidents were reported:

  • employees altered the receipt of e-mails on the messaging of one of their colleagues (e.g. “please remove X from the mailing list”) and deleted relevant emails from their computers while the investigation was ongoing.
  • offices of key individuals were sealed in the morning to prevent access and the disappearance of evidence during the inspection, but those seals had been broken before the investigation resumed in the afternoon.

French law prohibits obstruction to FCA (or DGCCRF) investigations, for example by “providing incomplete or inaccurate information, or by providing incomplete or misleading documents” (article L.464-2 V of the French Code of commerce). The FCA therefore found that such prohibition applies to breach of seals affixed by FCA agents in the context of implementing their investigation powers.

Companies subject to dawn raids are subject to an obligation of active and loyal cooperation with FCA agents. Where the concerned companies do not comply with such obligation, the FCA considers that obstruction is evidenced by any behaviour leading to hinder investigation (see our article on the Brenntag case). No intention is required, which means that obstruction may be deliberate or negligent, such as in this case where an employee allegedly entered the sealed premises, even if it was just to look for candies.

The FCA is empowered to sanction obstruction with a fine. This fine is calculated on the basis of the worldwide consolidated turnover of the group to which the concerned company belongs. The fine may not exceed 1% of the highest amount of worldwide pre-tax turnover achieved during one of the financial years ended since the financial year preceding the one in which the obstruction took place.

In this case, the FCA imposed a €900,000 fine and reiterated in this respect that such fine is first and foremost made to ensure deterrence. Indeed, the company faces from now on another (and possibly more significant) financial risk that could result from the fine to be imposed by the FCA on the merits. Moreover, exposure of such non-cooperative or negligent behaviour generates negative publicity for the company.

Decisions by which the FCA sanctions obstruction to investigations are scarce (only two such decisions have been made). However, it is the second decision in two years, which tends to show that the FCA is willing to punish such behaviours. From an in-house perspective, this case highlights the necessity to maintain and repeat teams’ training on competition law compliance. The FCA now considers these programs as rather a must have than a nice to have.