Availability of civil claims
Scope for civil claims in France
In principle, civil claims for damages caused by infringements of competition law may be brought in France by and against companies and individuals. In practice, such actions are most often initiated against companies.
The scope to bring civil claims in France is very wide. The basis for this kind of action may be contract, tort or criminal law. In addition to EU law, there are several provisions under French law dealing with infringement of competition law. Articles L. 420-1 and L. 420-2 of the French Commercial Code reflect Articles 101 and 102 TFEU. Article L. 420-6 of the French Commercial Code deals with the situation where an individual plays a personal and decisive role in the setting up or implementation of competition law infringement and provides criminal penalties for such conduct.
Parties to a contract may bring an action for damages based on breach of contract if, for example, one of the clauses of the contract violates competition law (whether EU or domestic law). If upheld, the claimant is entitled to request that the relevant clause or, if not severable, the entire contract, be declared null and void.
A complaint may also be filed with the French Competition Authority (Autorité de la Concurrence) requesting that it investigates and sanctions an infringement of competition law. If the authority decides to accept the complaint, it will then carry out an investigation to determine whether an infringement has occurred and impose penalties if appropriate. Investigations often take several years and it is unusual for potential claimants to initiate a civil claim while investigations are ongoing (if possible), except to avoid the claim being time-barred. In such cases, the action is generally stayed until the competition authority issues a decision. Such protective actions will however no longer be required after the implementation into French law of the EU Antitrust Damages Directive which provides that claimants will have one year after an infringement decision has become final to initiate a damages action.
Actions for damages for infringement of competition law (EU law or domestic law) are generally based in tort (Article 1382 of the French Civil Code). Such actions may be brought before the Commercial Court (Tribunal de Commerce) if it is between companies or commercial entities, or otherwise before the Civil Court (Tribunal de Grande Instance) if the Commercial Court does not have jurisdiction to hear the claim. For competition matters, the Civil Courts and Commercial Courts of Marseille, Bordeaux, Lille, Fort-de-France, Lyon, Nancy and Rennes have exclusive jurisdiction (Decree No. 2009-1384 dated November 11, 2009). Consumer class actions can be brought before the regional courts of the place of the defendant.
Actions based on criminal law must be brought before the Criminal Court (Tribunal Correctionnel). Victims may, if they are party to criminal proceedings (parties civiles) request, before the Criminal Court, damages on the basis of Article 1382 of the French Civil Code. They would then have to demonstrate both causation of harm and loss actually suffered.
Applicable limitation periods
The French legislation on statutes of limitations was amended in 2008 (Law No. 2008-561 dated June 17, 2008). The rules on limitation differ depending upon the legal basis of the action brought.
The general limitation for bringing an action (whether civil or commercial) for damages is five years from the date on which the claimant discovers the existence of the cause of action or should reasonably have discovered it. In practice, claimants may argue that they discovered the cause of action only upon publication of the decision delivered by the French Competition Authority confirming that a company has engaged in anti-competitive practices. The EU directive on follow-on damages, to be implemented by December 27, 2016, provides that claimants will have one year from the issuance of a final infringement decision to initiate a damages action.
The French Competition Authority will not investigate allegations relating to facts dating back more than five years if no previous or ongoing attempt has been made to investigate, establish or punish the relevant entities or individuals (Article L. 462-7 of the French Commercial Code). If the breach is characterized as a continuing offense, the limitation period will begin to run from the date upon which the infringement ceases. An action by the French Competition Authority is in any case barred 10 years after the date on which the breach of competition law ceased if no decision has been issued.
The limitation for bringing a criminal action is three years from the date that the breach is committed.
Consumers’ class actions can be brought up to five years from the date of issuance of a final decision of a national or European authority or court establishing an infringement of competition rules. The limitation period for individual damages actions is suspended by the launch of a class action. The period resumes for at least six months from the date on which a final class action decision establishing liability for damages has been issued.
Parties may appeal on a point of fact or law against a judgment delivered by lower courts on the merits (i.e., by a civil court, commercial court and/or criminal court) before the Court of Appeal within one month from notification of the judgment. The Paris Court of Appeal has exclusive jurisdiction to hear appeals on competition law matters when the judgment is delivered by a lower court specialized in competition law matters. The Paris Court of Appeal also has exclusive jurisdiction to rule on decisions delivered by the French Competition Authority (Article D. 311-9 of the French Code of Judicial Organization).
A further appeal from the Court of Appeal on points of law may be brought to the Supreme Court (Cour de cassation) and may be filed with the court within two months from notification of the appeal judgment.
Appeals against judgments delivered by an administrative court (Tribunal Administratif) may be brought to the Administrative Court of Appeal (Cour Administrative d’Appel). A further appeal from the Administrative Court of Appeal may be brought to the Council of State (Conseil d’Etat).
Availability of class actions for infringement of competition law and/or damages in France
A specific class action procedure related to competition and consumer law infringements has been adopted by the so-called “loi Hamon” of March 17, 2014 and is set forth under Article L. 423-1 et seq. of the French Commercial Code. Class actions are possible to repair the individual harm caused by the infringement of competition law provisions to consumers placed in an identical or similar situation. Class actions can only be initiated by authorized consumers’ associations.
In order to be authorized, a consumers’ association must:
i) have been in existence for a period of at least one year;
ii) demonstrate that the organization carries out effective public activity in defense of the interests of consumers;
iii) if purported to be a national organization, have a membership of at least 10,000 members; and
iv) be independent from any form of professional activities.
Approval is granted for a period of five years and may be renewed subject to the same conditions. To date, 15 authorized consumers’ associations have been registered.
Authorized associations may only represent consumers, defined by the French Consumer Code as individuals acting for purposes that are primarily outside their trade, business, craft or profession.
The procedure of this new class action is twofold. First, the court must establish the liability of the professional, identify the group of consumers concerned and set the amount to be paid as compensation for each consumer. Once such a ruling has been issued, the consumers concerned then have two to six months to join the group and be compensated.
A simplified procedure allows for direct and individual compensation when the number and identity of consumers harmed is known and when these consumers have suffered a damage of the same amount.
Aside from this new type of class action for competition law infringements, the traditional representative action (“action of joint representation”), provided by Articles L. 422-1 to L. 422-3 of the French Consumer Code, still exists. This action is only open to registered consumers’ associations and may be brought before any French court, including criminal courts, to represent either an individual interest or a number of interests where the individuals involved have sustained damage as the result of the same infringement. In order to initiate an action of joint representation, the consumers’ association must first obtain a written proxy from at least two of the consumers affected by the infringement. The consumers’ association cannot publicly call for proxies or otherwise seek these out – it must wait for complaints to be made to the association directly. The action of joint representation has rarely been used because of the very strict requirements applying to those who have standing to bring such claims and to the initiation of any action. This procedure is of a lesser interest in light of the new class action procedure introduced by the “loi Hamon.”
Conduct of proceedings and costs
Burden of proof
The claimant normally bears the burden of proof in establishing whether there has been an infringement of competition law and in evidencing causation and loss. In practice, if a final prior decision of the French Competition Authority or the European Commission has already established that the defendant has infringed competition law, the claimant may only need to prove causation and loss. The EU directive on follow-on damages provides that a final infringement decision of a national competition authority or of a court of appeal constitutes irrebuttable evidence of infringement of competition law. Findings of infringement issued by other national competition authorities are not binding upon French courts but may be taken into account as evidence of an infringement. In any event, the quantification of the damage suffered and the causal link between the infringement and damage must still be demonstrated to the court by the claimant.
As far as consumer class actions are concerned, Article L. 423-17 of the Consumer Code provides that infringements to competition law are irrefutably established on the basis of a final decision of national or European authorities or courts (including competition authorities and courts of all Member States of the European Union). However, the authorized consumers’ association or the claimant still needs to provide evidence of damage and a link between the infringement and the damage.
There is no strict burden of proof defined by French law; courts enjoy wide discretionary powers to appraise the evidence brought before them and decide whether it is sufficiently convincing.
The courts may seek advice from the French Competition Authority as to whether an infringement has occurred and the proceedings initiated before the court will be stayed until the competition authority issues its opinion. The French Competition Authority may choose to conduct an investigation before taking a view and will only issue an opinion after hearing submission from all parties.
It can be difficult for private parties to gather evidence to prove that anti-competitive practices have taken place without a pre-existing decision identifying an infringement. As a result, in practice most civil actions are based upon a decision of a competition authority (i.e., follow-on actions), which obviates the need for the court to seek advice from the French Competition Authority on this issue.
Joint and several liability of cartel participants
Liability will ordinarily be joint and several for infringements of competition law involving several defendants. This means that a claimant may potentially bring an action for damages against any one party for the entire loss caused by all infringers. In cases where only one cartelist is sued, it can seek to join others to the action and/or initiate a claim against them at a later stage for a contribution to any damages paid out. To date, French claimants (as purchasers of cartelized products) have tended to claim damages from their own supplier(s), rather than involve all cartelists in the claim or seek to recover all damages suffered from one cartelist only.
If an award of damages is made against a group of defendants on the basis that their liability is joint and several, it is for the court to assess how liability should be apportioned between the defendants. French courts generally either apportion damages between co-defendants by reference to the harm caused by each or, if such apportionment is not possible, by dividing damages between them equally.
Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
Under French law, parties have a duty to disclose all documents on which they rely. However, claimants do not have to disclose documents that would adversely affect their case or support the other party’s case.
In the course of proceedings, a party may request the court to order the other party to disclose documents relevant to the case that are not already within the control of the requesting party (Articles 138 to 142 of the French Code of Civil Procedure). Such requests should normally expressly identify the documents requested – “fishing expeditions” are not permitted under French law.
The court may decide on its own initiative that documents should be produced by a party (Articles 143, 144 and 146 et seq. of the French Code of Civil Procedure). The court may also request, at its own initiative or upon request from any of the parties, the assistance of an expert to clarify factual elements of the case (Articles 232 et seq. of the French Code of Civil Procedure).
The main exception to disclosure ordered under these provisions is that confidential and privileged documents cannot be disclosed. Confidentiality and legal privilege must, however, be justified and the court may consider that the documents should nonetheless be disclosed. If the court requires the disclosure of a confidential document, it may decide that this document will not be divulged to the opposing party or that the document will be examined only by an appointed expert. These measures are rarely taken in practice since they raise due process issues.
If the success of an action for damages resulting from a competition law breach depends on factual elements that need to be recorded, the claimant may request, on a summary or without notice basis, that a bailiff be appointed to record these facts. This request would be filed on the basis of Article 145 of the French Code of Civil Procedure (see below) and the report of the bailiff may be produced before the court in any subsequent action based upon those facts.
Investigation evidence is ordinarily confidential and therefore cannot be disclosed in judicial proceedings. According to Article L. 462-3 of the Commercial Code, the French Competition Authority will not disclose documents created or submitted in the context of a leniency application.
The French Competition Authority may also be reluctant to provide documents submitted in the context of settlement or commitment procedures. However, courts have in the past already ordered the French Competition Authority to disclose a non-confidential version of statements or documents relating to such settlement or commitment procedures. The Commission has adopted amendments to a number of key procedural rules in order to bring them into line with the EU Damages Directive. The amendments focus on the use of evidence included in the Commission’s case file, and in particular aim to protect leniency corporate statements and settlement submissions from being used in damages action in national courts.
Judgments and decisions are public so third parties have access to the full content of each judgment/decision. The courts and the French Competition Authority may also order the publication of the judgment in newspapers or magazines.
Pre-action disclosure is not generally available under French law. However, parties may apply for an order prior to initiating proceedings requiring the potential defendant to produce documents or information that could be relevant to an action.
These requests are based on Article 145 of the French Code of Civil Procedure, which provides that “If there is a legitimate reason to preserve or establish, before any legal process, the evidence of the facts upon which the resolution of the dispute depends, legally permissible preparatory inquiries may be ordered at the request of any interested party, by way of a petition or by way of a summary procedure.” The court will not issue such an order if it considers that the evidence sought is unlikely to be relevant to the anticipated action or if the evidence sought is not sufficiently defined. As noted above, courts want to avoid “fishing expeditions” on the part of the potential claimant. However, it is not difficult to obtain this measure if the required conditions are met.
The claimant may also potentially request the court to order that the defendant discloses documents relevant to the action pursuant to Articles 138 to 142 of the French Code of Civil Procedure.
Average length of time from issue of claim to judgment in France
The average length of time for this type of proceeding will vary according to the complexity of the case and the measures ordered by the judge (production of documents, appointment of an expert, consultation with the French Competition Authority, etc.). The proceedings will also take longer if the defendant brings interlocutory applications, for instance, to challenge the jurisdiction of the court.
Taking these elements into account, a claim in the Commercial, Civil or Criminal courts typically takes between one and two years from the issuance of the claim to the delivery of the judgment, and sometimes longer.
Appeals before the Court of Appeal will generally add at least 18 months to the proceedings.
Average cost from issue of claim to judgment in France
It is very difficult to quantify the potential costs of defending a claim for infringement of competition law since, for the same reasons as set out above, costs will depend on a range of factors. It is all the more difficult since civil claims resulting from an infringement of competition law are rare in France. The range of average costs of first instance proceedings is probably between EUR100,000 and EUR200,000.
It should be noted that, under French law, courts ordinarily order that the losing party should bear the costs of the proceedings (translation fees, witnesses, experts, etc.). Recoverable costs are listed in Article 695 of the French Code of Civil Procedure and do not include lawyers’ fees. Courts may order the losing party to bear lawyers’ fees as part of the legal costs recoverable under Article 700 of the French Code of Civil Procedure. The court, however, has discretionary powers to set the amount of legal costs to be paid by the losing party and the sums ordered are rarely the full amount of lawyers’ fees charged.
Third party/alternative funding of litigation
Except in limited cases relating to insolvency proceedings, alternative forms of funding are not permitted in France.
There is, however, a mechanism governed by rules contained in the French Civil Code which would make it permissible, under certain circumstances, for a company to purchase claims from victims and then pursue them in its own right. To our knowledge, no one has yet pursued this course of action in a competition context.
Contingency fees are allowed under French law but lawyers cannot agree “no win, no fee” deals. Lawyers could agree with their client that the fees will be composed of both a fixed amount (paid regardless of the result) and a contingency fee. The fee will not be reduced in the event of losing but will increase in the event that the claim succeeds.
In the case of a class action, the authorized association, as opposed to the consumers, bears the costs associated with representation and the proceedings in general. If the action is successful, the authorized consumers’ association can ask the court to request the losing party to pay part of their judicial expenses.
Alternative methods of dispute resolution
Parties who do not wish to bring their case before a court may resort to arbitration or mediation to resolve disputes involving competition law issues.
The opportunity of mediation is also open for authorized associations in the context of a class action, at all stages of the proceedings. The negotiated agreement must be confirmed by a judge, who must ascertain that the agreement has been reached in the interests of consumers and will be enforceable.
With respect to arbitration, the Paris Court of Appeal confirmed in 1993 that, although arbitrators lack the power to impose fines for infringements of competition law, they could decide upon the consequences of such infringements (e.g., liability to pay damages and the amount to be paid by way of compensation) (Société Labinal v Sociétés Mors et Westland Aerospace, Paris Court of Appeal, May 19, 1993).
Availability of damages and quantification
Under French law, damages are exclusively compensatory: their purpose is to restore the victim to the position that it would have been in had the breach never been committed.
As a general rule, damages will be awarded only if the harm sustained is direct, personal, certain and foreseeable (Articles 1149 to 1151 of the French Civil Code). The claimant must show that there is a causal link between the infringement and the damages suffered. This means that the passing-on defense is in principle available in cartel cases and the defendant may argue that no damages should be recovered by buyers that have themselves resold the cartelized goods to final purchasers and passed on the unlawful overcharge to final customers.
Consequential damages are available if certain and foreseeable. French courts will therefore award damages for loss of chance and loss of earnings if appropriate. Compensation for loss of chance is calculated by reference to the probability of the missed opportunity occurring (and so will never be 100%).
The court may request the assistance of an expert to assess the amount of damages to be awarded to the parties if it considers it necessary. The parties can also submit their own expert reports.
The amount of damages awarded varies greatly. Examples of recent cases are as follows:
i) A travel agency was awarded EUR20,000 for the damages suffered from the loss of customers caused by a cartel (Court of Appeal of Paris, December 14, 2011).
ii) A major internet search provider was ordered to pay the company directory cartographers EUR500,000 (Commercial Court of Paris, January 31, 2012).
iii) A lysine producer was ordered to pay EUR1,612,347 to several poultry producers (Court of Appeal of Paris, February 27, 2014).
Punitive and exemplary damages
Punitive damages that exist, for instance, in the US are not available under French law. This is because, as stated above, the purpose of damages under French law is to compensate the victim for the harm sustained rather than to reform or deter the defendant and others from engaging in infringing conduct.
Availability of interim or final injunctions in respect of an alleged competition law infringement
A party may apply for an interim order to stop an alleged violation of competition law pending a substantive action on the merits. Such an injunction may be requested before civil courts (Articles 808 and 809 of the French Code of Civil Procedure) or the commercial courts (Articles 872 and 873 of the French Code of Civil Procedure).
Pursuant to Article 808 of the French Code of Civil Procedure (or Article 872 of the French Code of Civil Procedure), French courts will grant interim measures if:
i) there is urgency; and
ii) the party applying for interim measures proves either of the following:
a) the measure cannot seriously be challenged by the other party; and
b) the measure is justified by the existence of the dispute.
In addition, pursuant to Article 809 of the French Code of Civil Procedure (or Article 873), summary proceedings may be introduced in order to require cessation of an obviously unlawful act. Indeed, the president of the court may, even where confronted with a serious challenge, order in a summary procedure such protective measure or measures to restore the parties to their previous state as required, to avoid an imminent damage or to abate a manifestly illegal nuisance.
It should be noted that the powers to grant relief under these provisions are very wide and the court may, if the conditions set forth by the law are fulfilled, order any conservatory measure as well as any measure of restoration.
Final injunctions are also available when an action is brought on the merits. Injunctions, whether interim or final, are often backed up by a daily penalty (astreinte).
Up until now, civil claims for damages resulting from an infringement of competition law have been rare in France.
Claims for damages resulting from a competition law infringement often settle before final judgment without the details of such settlements being publicly reported.
Commentators have suggested that the reason for the low number of civil claims brought in France to date may be that the judicial proceedings take too long and that the amount of damages awarded is generally too low. Another reason may be that end-consumers, taken individually, generally suffer very small losses and therefore have no incentive to act alone, so as to initiate costly legal actions. The class action procedure recently introduced by the “loi Hamon” and which came into force on October 1, 2014, has been designed to remedy some of these obstacles. However, a year after its entry into force, only six class actions have been introduced before the French courts (one of the reasons put forward by the consumer associations is the length of the proceedings).
In parallel, the number of follow-on actions by companies seems to be on the rise due to the increasing awareness of the possibility for aggrieved companies to obtain damages. The recent adoption of the EU Damages Directive has certainly contributed to such awareness.