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The FCA fines Brenntag for obstructing an antitrust investigation

  • France
  • Central government

13-02-2018

On 21 December 2017, the French Competition Authority (the FCA) published a decision imposing a fine of 30 million euros on Brenntag SA and Brenntag AG (together “Brenntag”) for obstructing longstanding investigations (the “Decision”).[1] It is the first time the FCA has fined a company for hindering an investigation.

Background

In 2003, the FCA opened an investigation against Brenntag, following complaints from Gaches Chimie (“Gaches”), one of Brenntag’s customers and distributors. Brenntag allegedly abused its dominant position on the French market of chemical commodities. In particular, Brenntag was said to have exerted pressure on distributors in order to obtain exclusivity for the distribution of certain commodities.

The FCA dismissed the case in 2006 on the ground that the dominant position of Brenntag was not established. On 13 March 2007, the Paris Court of Appeal decided to refer the case back to the FCA for further investigations on the merits.

Five years after the Court’s ruling, the FCA sent Brenntag several requests for information (“RFI”). Brenntag replied very partially. In 2015, the FCA reiterated the RFI but Brenntag expressly refused to communicate all of the documents requested. Brenntag argued that the RFIs were disproportionate and would have required involvement of the company’s resources to a large extent, in order to retrieve a significant amount of data manually.

First fine ever imposed by the FCA for obstruction

According to the FCA, the withholding of information by Brenntag was so significant that it prevented the FCA’s investigating officers from analysing the functioning of the market and assessing the alleged infringements. Therefore, the FCA said it could not adopt either a sanction or a dismissal decision.

It is the first time the FCA imposes a monetary penalty for obstruction of investigations under Article L. 464-2 V of the French Commercial Code (the “FCC”). When companies fail to cooperate loyally with the FCA, for example by supplying incorrect, incomplete or misleading information, the FCA is indeed entitled to impose a fine of up to 1% of the concerned group of companies’ global turnover before taxes.[2]

However, the Decision demonstrates a broad approach of Article L. 464-2 V, paragraph 2 of the FCC:

  • Firstly, the FCA held that no proof of intent is required. A mere negligent behaviour or passive reaction is enough to constitute an obstruction of investigations, which is in line with the EU law approach[3].
  • Secondly, the FCA imposed the fine without issuing a prior injunction ordering the company to disclose the requested information, although such injunction is provided by Article L. 464-2 V of the FCC as well.
  • Thirdly, the FCA considers that it is under no obligation to draw the companies’ attention to the applicable sanctions for obstructing RFIs.

Liability of the parent company

The FCA considered that the offence was attributable to Brenntag’s parent company because it had a decisive influence on Brenntag SA. It therefore decided to impose a quite significant fine of 30 million euros, which accounts for only 0.29% of the Brenntag’s Group global turnover but represents more than 8% of the amount generated in France.

Comments

The Decision however does not provide detailed explanations as to how the 30 million euro fine was assessed, which would have been useful. In this respect, the Decision only quotes some of the general criteria used for the assessments of fines. The FCA said it took into account not only the seriousness of the alleged offence (abuse of dominance due to exclusivity), but also the necessity to deter other companies from not cooperating with the FCA during investigations.

It is worth noting that, according to the FCA, the fine imposed for obstruction was not lower than the potential fine which would have imposed if the alleged anti-competitive practices would have been established. However, the FCA does not seem to have taken into account the fact that five years elapsed between the 2007 decision of the Court of Appeal to refer the case to the FCA, and the sending of new requests for information in 2012.

As regards rights of defence, it should also be mentioned that the RFIs from the FCA are not subject to a self-standing appeal.[4] In the Decision, the FCA declined its own jurisdiction to hear recourses against the investigation measures, so that the only way to challenge the RFIs would be to appeal against the final decision of the FCA on the merits, if any.

Severe fines for refusal to cooperate with investigators are not unprecedented on an EU level. The European Commission has already fined companies pursuant to Article 23 (1) of Regulation No 1/2003.[5] The FCA’s Decision therefore shows the need to be well prepared for potential investigations of competition authorities, whether they involve simple information requests or dawn-raids.



[1] Decision 17-D-27 of 21 December 2017 regarding obstruction practices implemented by Brenntag

[2] The FCA retains the highest turnover realised since the last financial year before the beginning of the practices

[3] Article 23 (1) of Regulation No 1/2003 prescribes a fine for obstruction to the Commission’s investigation committed “intentionally or negligently”. This was recalled by the General court in the case E.ON Energy AG / Commission, T-141/2010, 15 December 2010, then upheld by the ECJ

[4] French Supreme Court (“Court of cassation”), Commercial chamber, 23 April 2017, No 15-25.701

[5] See notably ECJ, C-89/11, 22 November 2012, E.ON Energy AG / Commission ; and Commission Decision C(2012)1999 final, 28 March 2012, Case COMP/39.793, EPH and others

 

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