French Competition Law provides a comprehensive review of the French rules relating to competition: restrictive agreements, commercial negotiation, abuses of a dominant position, procedure and merger control.

French Competition Law

As the courts were not satisfied with the criteria used so far, a new criterion was established which is not unlike the condition of absence of competition between undertakings in a position of collective dominance laid down in the second indent of Article 19 (2) of the German law on restraints of competition (GWB). Ruling in a case referred from the Court of Cassation , the Paris Court of Appeal  …

Collective independence of undertakings' behavior 

From its first report, the Competition Authority adopted a conservative position as regards the concept of collective dominance, insisting that for several undertakings simultaneously present on the same market to be considered as a group that holds a dominant position, there must be an actual link between them , and not merely a structural interdependence in their behavior. Thus undertakings on the same market, none of which enjoys a dominant position individually, cannot be deemed collectively dominant merely because it is later established that they chose identical market strategies . Further, the competition authorities have held that the link in question may be either structural  financial  or commercial . However, in so holding, they appear to have deprived Article L. 420-2 of a great deal of its usefulness; if the companies are affiliates, they may already be treated as one and the same entity under Article L. 420-2, whereas concerted practices between separate firms are already prohibited under Article L. 420-1. Finally, while a link between the undertakings is considered a necessary condition, the competition authorities also require behavioral evidence suggesting intent . 

The position of the French supervisory authorities thus differed from that of the European authorities as the latter consider, at least for matters of merger control that economic links in the broad sense, i.e. a market situation, may in some cases suffice to establish a collective dominant position .

The French authorities have eventually relaxed their position. Referring to the Gencor judgment  they found that the existence of a tight oligopoly could suffice to establish a collective dominant position where:

i) a parent company would automatically be informed if the other parent companies of a joint subsidiary were to win a market,

ii) the conduct of the parent companies is predictable and parallel and a decision by one of them to submit a tender in order to oust a joint undertaking could lead to retaliatory measures by the other parent company, and

iii) it found that the product marketed by both companies is homogeneous and the demand for the product is price inelastic and they operate on a market where there are few challenges from competitors .

This interpretation brings to mind the solution adopted by the General Court in the Airtours judgment  which held that collective dominance could be inferred from the structure of the market where three conditions were met: first, there must be sufficient market transparency for all members of the dominant oligopoly to know, sufficiently precisely and quickly, how the other members are behaving in order to monitor whether or not they are adopting the common policy; second, there must be an incentive not to depart from the common policy; and third, it must also be established that the anticipated reaction of current and future competitors, as well as of consumers, would not jeopardize the results expected from the common policy. Although the Competition Authority continues to apply the traditional criteria of collective dominance , it seems ready to accept that a collective dominant position can be inferred just because of the structure of the market and, in the absence of any agreement or capital ties between undertakings, when the conditions laid down in the Airtours judgment are fulfilled . This exceeds the position of the EU authorities, which, for the time being, have limited the Airtours doctrine to matters of merger control .

This position is to be contrasted with the position adopted by it predecessor the "Commission de la concurrence" which considered that even without any affiliation or concerted practice, undertakings could find themselves in a position of collective dominance resulting from the structural interdependence of their behavior.

Competition Council decision No 98-D-76 of 9 December 1998, LawLex200200002472JBJ; No 00-D-80 of 31 January 2001, LawLex200200002688JBJ, independent networks do not form a group of undertakings. 

For EIGs: Competition Authority decision No 12-D-06 of 26 January 2012, LawLex201200000163JBJ; No 13-D-13 of 30 May 2013, LawLex201300001000JBJ.

Competition Council decision No 06-D-02 of 20 February 2006, LawLex200600000745JBJ: in the absence of structural links between the undertakings, the structure of the market by itself is sufficient to characterize a collective dominant position if the cumulative criteria laid down in the Airtours judgment are met. On the contestability of the market, see Competition Council decision No 06-D-18 of 28 June, LawLex200600001590JBJ:  the collective dominance of the national film advertising network market is not likely to be called into question insofar as no competitor, French or foreign, has attempted to enter the market either before or during the years in question, and there are no potential "mavericks" likely to destabilize the market equilibrium; No 07-D-08 of 12 March 2007, LawLex200700000313JBJ: the condition of non-contestability of the market is satisfied when the small operators that may remain in the market (mavericks) or the plaintiffs do not have sufficient market power to challenge the behavior of the collectively dominant undertakings ; No 07-D-42 of 30 November 2007, LawLex200700001950JBJ, considering that the asymmetrical position of the four operators present on the market, two multi-product players and two single-market players, precludes the existence of a collective dominant position; Competition Authority decision No 10-D-36 of 17 December 2010, LawLex201000001408JBJ, no collective dominance where insufficient barriers to entry ensure rapid and effective contestability of the oligopoly's joint course of action; No 12-D-13 of 15 May 2012, LawLex201200000774JBJ:  low barriers to entry may make the market open to challenge, with collective dominance becoming unlikely. Also see Competition Authority decision No 20-D-21 of 8 December 2020, LawLex202000003547JBJ: the structure of the market alone does not support the existence of a collective dominant position, when the case involves ninety airlines and not a restricted oligopoly, when these airlines are heterogeneous, serve a variety of destinations and do not have the same position on all the routes concerned by the alleged practices, and when their sizes and economic models i.e. "low cost" or "full carrier" are different, as those factors make any possibility of coordination between these operators complex and improbable.

CJEU Case C-140/94, DIP (SpA), LIDL Italia (Srl), Lingral (Srl) v Comune di Chioggia, Comune di Bassano del Grappa, Judgment of 17 October 1995, LawLex200400002894JBJ. But see Case T-193/02 Piau, Judgment of 26 January 2005, LawLex200500006260JBJ, which refers to Airtours without applying the test.

Shareholder and joint manager: Competition Council decision No 97-D-21 of 25 March1997, LawLex200200002454JBJ; CA Paris, 23 January 1998, LawLex200200003188JBJ; Competition Council decision No 03-MC-04 of 22 December 2003, LawLex200400000006JBJ; joint subsidiary: Competition Council decision No 94-D-13 of 22 February 1994, LawLex200200003070JBJ; EIGs: Competition Council decision No 93-D-42 of 19 October 1993, LawLex200200002459JBJ, upheld by CA Paris, 6 July 1994, LawLex200200003254JBJ, and approved by Cass. com., 5 March 1996, LawLex200200003253JBJ.

CA Paris, 27 September 1990, LawLex200200003074JBJ.  According to the Competition Council, the holding of a 10% stake in the capital of an undertaking, even if it is supplemented by a seat, with no voting rights, on its board of directors, constitutes in itself only a weak structural link: Competition Council decision No 02-D-68 of 14 November 2002, LawLex200300000569JBJ; CA Paris, 30 June2011, LawLex201100001238JBJ, which considers the capital ties between two undertakings in a dominant position in separate markets, consisting of the holding by one of them of 4% of the other and one seat out of fifteen on its board of directors insufficient to characterize the existence of a collective dominant position.

Competition Council decision No 91-D-51 of 19 November 1991, LawLex200200003243JBJ; No 08-D-05 of 27 mars 2008, LawLex200800000350JBJ : absence of a collective dominant position in the event of commercial tensions between competing operators structurally linked by a joint subsidiary.

CA Paris, 27 September 1990, LawLex200200003074JBJ ; Competition Council decision No 93-D-42 of 19 October 1993, upheld by CA Paris, 6 July 1994, LawLex200200003254JBJ, and upheld by the Cass. com., 5 March 1996, LawLex200200003253JBJ; Competition Council decision No 98-D-76 of 9 December 1998; Competition Council decision No 00-D-83 of 13 February 2001, LawLex200200002427JBJ, upheld by CA Paris, 30 October 2001, LawLex200200003435JBJ.

See GC Case T-102/96 - Gencor v Commission - [1999] ECR II-753, LawLex200200003656JBJ.

Competition Council decision No 02-D-44 of 11 July 2002, LawLex200200002118JBJ. On the transparency criterion, see also Competition Authority decision No 12-D-13 of 15 May 2012, LawLex201200000774JBJ, which specifies that transparency does not assume full knowledge of all competitors' actions, but sufficient knowledge of strategic market data and the possibility of monitoring the course of action taken by them.

 Case T-342/99 - Airtours v Commission - [2002] ECR II-2585, LawLex200200003474JBJ.

Concept of collective dominance

As the courts were not satisfied with the criteria used so far, a new criterion was established which is not unlike the condition of absence of competition between undertakings in a position of collective dominance laid down in the second indent of Article 19 (2) of the German law on restraints of competition (GWB). Ruling in a case referred from the Court of Cassation , the Paris Court of Appeal disapproved a decision of the Competition Authority which was based at the same time on the Airtours ruling  and on the more usual conditions of structural links and common commercial strategy. To establish collective dominance, the Court of Appeal said, it was not only necessary to establish structural links, a common strategy or oligopolistic market characteristics, but also to show that the undertakings at issue could, to an appreciable extent, collectively behave in an independent manner on the market in respect of competitors, customers and consumers . In line with this position, the Competition Authority has specified that collective dominance refers to a group of undertakings that have, in common, a market power similar to that of an undertaking in a single dominant position, i.e. allowing it to extricate itself from the competition of other undertakings active on the same market, such that the concept combines interdependence and dominance .

Cass. com., 7 July 2009, LawLex200900002638JBJ: the existence of contractual links between the entities concerned permitting them to present themselves as a collective entity with a common strategy - in a market structure making such collective dominance possible - is not sufficient in the absence of any restrictive agreement with their customers to establish that they are jointly capable, in the relevant market, and in an appreciable manner, of acting independently towards their competitors, their customers or consumers, and that they are thereby abusing their collective dominant position.

See CA Paris, 18 February 2003, LawLex200300001094JBJ, in which the court found collective domination by two parent companies controlling 85 % of the market insofar as their behavior was - in the areas of influence of the joint undertakings they had created - parallel and predictable namely when account was taken of the homogeneous nature of the product at issue and the inelasticity of demand of that product in relation to its price.

CA Paris, 15 April 2010, LawLex201000000468JBJ.

Competition Authority No 20-D-08 of 30 April 2020, LawLex202000000412JBJ, which found that since the creation of Salto had been authorized subject, inter alia, to mandatory commitments aimed at preventing its parent companies from adopting a common stance on the market through their joint subsidiary, the existence of a collective dominant position on the part of the latter proved difficult to establish; No 20-D-21 of 8 December 2020, LawLex202000003547JBJ: the existence of a common course of action consisting in a refusal to refund cancelled flights has not been demonstrated, even if the practice of credit notes has clearly been very widespread among airlines, particularly during the first period of lockdown, since the responses provided by the airlines in question have been varied and have considerably evolved over time.

French Competition Law

358. Collective independence of undertakings' behavior

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358. Collective independence of undertakings' behavior

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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