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

According to the letter of Article L. 420-2 of the Commercial Code, abuse of a dominant position is prohibited but the dominant position itself is not. However, from an economic viewpoint, it is market power and consequently the dominant position that needs to be kept in check; the abuse is relevant insofar as it reveals such a position .
In practice, the purpose and the requirements for control h …

Scope of the prohibition

Article L. 420-2 of the Commercial Code prohibits “the abuse by an undertaking or group of undertakings or a dominant position in the initial market or a substantial part of this (...) in accordance with the conditions specified by Article L. 420-1”. Thus in the wording of the text, a dominant position can be individual or collective. Finally, the article sets out a non-exhaustive list of abuses including refusal to sell, tied sales, discriminatory terms of sale and range agreements.

The holding of a dominant position is not in itself abusive. A global offer can even be pro-competitive if it leads to the realization of economies of scale or the optimization of production. According to the competition authorities relying on the Commission's guidelines on exclusionary practices, some global offers contain exclusionary effects and must be regarded as anticompetitive . In order to determine the existence of an abuse of dominant position, the Commission recommends first an effects-based approach through direct evidence of an exclusionary strategy or factors which are closely related to the domination  thus at the same time relaxing the dividing line between dominant position and abuse, and then checking whether the behavior is justified. Abuse is established where the conduct will clearly create obstacles to competition and cannot be objectively justified or does not produce efficiency gains.

Competition Council decision No 09-D-10 of 27 February 2009, LawLex200900000798JBJ.

Position of undertaking suspected of dominance, its competitors, customers and suppliers, existence of entry barriers, impact of abuse or performance indicators.

Abuse of an individual or collective dominant position

According to the letter of Article L. 420-2 of the Commercial Code, abuse of a dominant position is prohibited but the dominant position itself is not. However, from an economic viewpoint, it is market power and consequently the dominant position that needs to be kept in check; the abuse is relevant insofar as it reveals such a position .

In practice, the purpose and the requirements for control have been inverted; initially (according to the legal texts) a dominant position was the requirement for an abuse to be subjected to control by the supervisory authorities. Then according to case law the abuse became the condition for control of the dominant position. Sanctions were no longer triggered by abusive behavior, which could be avoided by complying with the legal rules, but rather by the market situation, which might be inevitable. Control by the authorities was gradually losing its prescriptive character when the same behavior could be held to be either abusive or lawful depending on the size of the undertaking.

Eventually the courts reverted to a position which would ensure more legal certainty for companies. All behavior by an undertaking in a dominant position is not abusive. However, the struggle to win over customers does not excuse all behaviors, especially on the part of a company which, having a dominant position on a market, has a certain particular responsibility . Nevertheless, to be prohibited the behavior must be abnormal, i.e. beyond what is necessary to protect the legitimate interests of the undertaking in question . Initially assessed with regard to the intrinsic characteristics of the dominant undertaking's behavior - certain practices at the time being considered as abusive per se -, exceeding its legitimate interest is now assessed based on the effects of its behavior on the market . Thus, the competition authorities have re-introduced economic criteria within the test for proportionality itself.

According to the Authority, the extent of the dominance is a criterion for assessing the liability of a company insofar as the smaller the possibility for the clients of a dominant undertaking to obtain alternative services equivalent to those offered by the dominant firm, the greater its ability to abuse its position, which in return increases the liability it has towards its competitors, customers and consumers: Competition Authority decision No 19-D-26 of 19 December 2019, LawLex202000000177JBJ, considering that Google’s attractiveness and its power over advertisers are likely to increase its market power tenfold beyond that of a dominant operator since it has the ability to guide the economic model of advertisers, limit their  entrepreneurial freedom and ultimately to influence the quality and diversity of the supply to internet users, so that its responsibility as a dominant company on the market must be strictly assessed and that merely negligent behavior can be considered as abusive.

Competition Authority decision No 17-D-06 of 21 March 2017, LawLex201700000560JBJ, finding that, having regard to its particular responsibility, an incumbent operator in a dominant position must take care to avoid any abusive exploitation of means which cannot be reproduced by new entrants on the market open to competition at a reasonable cost and within acceptable time limits, either by favoring forms of organic and functional separation, if the solution seems appropriate, or by setting up internal procedures aimed at preventing  the competitive advantages linked to its status as a former monopoly and which therefore do not arise from competition on the merits, from being used in a way that could affect the competitive functioning of the market.

See ECJ Case 85/76 - Hoffmann-La Roche v Commission - [1979] ECR 461, LawLex200200004107JBJ; Case 27/76 - United Brands v Commission - [1978] ECR 207, LawLex200200004112JBJ.

See Competition Council decision No 05-D-13 of 18 March 2005, LawLex200500005289JBJ, upheld by CA Paris, 15 November 2005, LawLex200500010168JBJ, holding as lawful a bundled discount granted by a dominant undertaking as the discount amounted to less than the economies of scale achieved due to the bundling; See also DG Competition Discussion paper on the application of Article 82 exclusionary abuses, Memo 05-484, 19 December 2005.

Article L. 420-2, like Article 102 TFEU, does not provide a definition of a dominant position. Legal commentators usually distinguish two different concepts. The first, known as “static” looks first to the state of the market and identifies a position of dominance from the absence of competition. The second is called “dynamic” and does not directly refer to the market situation but defines the dominant position in terms of an economic power, with the market share held by the undertaking remaining an essential criterion but not constituting an exclusive indication thereof. French law employs the dynamic definition consistent with the EU law definition. The competition authorities define the dominant position of an undertaking as, “a position allowing it to evade competition from other operators present on the same market” .

The dominant position of an undertaking is simply the legal translation of its market power, which itself is a reflection of the degree of elasticity of supply and demand: the more consumer demand is insensitive to variations in price (inelasticity of demand) and the more difficult it is for other offerors to adapt their production to meet the same need (inelasticity of supply) then the greater the market power of the company in question will be. This is directly related to the market share held by that undertaking. Elasticity of supply and demand will be weaker the greater the market share of the undertaking, as consumers will find it more difficult to turn to other products in cases of prices rises instigated by the monopoly-holder. In other words, the market share held by the undertaking is an indirect means of measuring elasticity.

Competition Council Report for 1994, 60, LawLex200200000016JBA. See also Report for 1989, XXIV; 1990 XXXVI, LawLex200200000038JBA LawLex200200000043JBA, 1991; XLVIII, LawLex200200000047JBA; 1992, 55, LawLex200200000048JBA; 1993, 62, LawLex200200000050JBA. 

French Competition Law

342. Scope of the prohibition

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342. Scope of the prohibition

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