Competition Newsletter January 2021

Dentons

In 2021, we bring you an overview of European competition news. In collaboration with our European offices, each month we will focus on one competition news item from another jurisdiction. Naturally, we start in January with the United Kingdom to present to you in a few words the practical consequences of Brexit on the application of competition law.

How does Brexit affect your competition law risk?

On 31 December, the UK and the EU finally parted ways. It is likely that businesses on both sides of the Channel will need time to adapt to the unique challenges presented by Brexit. There will be many new risks to contend with, including, potentially, heightened competition law risk. Our UK antitrust team set out below a few things for French (and other EU) businesses to think about.

Double jeopardy

As well as national and EU competition law, French businesses will now have UK competition law to think about. Parallel UK and EU investigations into the same conduct are now possible. A business could be fined in the UK by the Competition and Markets Authority (CMA) and by the European Commission for cases based on the same facts from 1 January 2021.

In practice, for UK competition law to be brought into play, all or part of the anti-competitive conduct by a French company would need to be implemented in the UK.

For example, a French manufacturer participating in a price-fixing cartel covering goods sold by it in France, UK and Germany could now face investigation in the UK (including criminal charges), as well as enforcement by the European Commission. Direct sales of cartelised products into the UK, or a cartel meeting in the UK, would likely be enough to constitute implementation in the UK.

The CMA and the Commission could yet decide to cooperate in relation to cases involving the same conduct, but nothing has yet been formalised.

It is also important to remember that applications for immunity or a reduction in fine in the EU will not give any protection in the UK.

Obtaining evidence

The CMA cannot carry out unannounced inspections in France (or ask French authorities to do so on its behalf). However, the CMA could inspect the premises of a UK subsidiary of a French company to obtain electronic evidence accessible from the UK. Written requests for information from companies located in France will also be possible.

Diverging interpretation

Initially, the CMA must ensure there is no inconsistency between its future decisions and the principles identified in EU law prior to 31 December. However, there are a range of exceptions to that principle (as well as the possibility to modify UK legislation). It is not excluded that we see in the future a difference in approach by UK and EU authorities to competition matters.

It is unclear for example how the CMA will deal with the rules on the restrictions relating to distribution. The EU rules have been developed largely to protect the EU's internal market, an aim no longer of relevance in the UK.

No "one-stop shop" for mergers

Companies will now have to refer their Community dimension mergers also exceeding the UK thresholds to both the Commission and the CMA. The CMA may adopt different decision if it thinks it is merited (it has recently prohibited cases which were cleared in the US and elsewhere).

Although notifications in the UK remain "voluntary", the fact that the CMA can order the suspension of a merger may lead to this voluntary nature being rather theoretical if the CMA decided to intervene in a merger. The CMA has recalled that it can step in to investigate (and prevent the merger) even if the merger has already been cleared by the European Commission. This should make buyers think twice before ignoring UK merger control.

The Commission has made public its proposal for regulations intended to subject some digital platforms to ex-ante obligations and prohibitions

On December 15, 2020, the European Commission published two proposals for regulations intended notably to better regulate digital services and platforms: the Digital Services Act and the Digital Markets Act (the “DMA”). The second of these proposals focuses more specifically on competition law.

The DMA is intended to apply to different digital services (such as cloud services, online platforms, online intermediation services, etc.) provided or offered to companies or final users domiciled in the European Union by digital industry players qualified as “gatekeepers”.

The Commission defines these gatekeepers as players that (i) have an entrenched and durable position, (ii) have a significant impact on the internal market (which is presumed when the operator generates annual turnover in excess of €6.5 billion in the EEA or has market capitalization equivalent to this amount, and provides its services in at least three Member States), and (iii) control a significant access point for user companies to reach final consumers (this is notably presumed if the service concerned has on average over 45 million users monthly and over 10,000 professional active users per year established in the Union).

This gatekeeper status will have to be notified to the Commission and will entail, for the relevant operator, a wide range of ex-ante obligations and prohibitions (Articles 5 and 6). For instance, the gatekeeper has to apply fair and non-discriminatory terms and conditions for access to user companies, and authorize professional users to promote their offer and contract with their clients outside its platform. It also has to make it possible to uninstall all software and applications preinstalled by final users, as well as use third party applications. The list is long and the Commission will have broad investigative powers in this area.

In case of failure to comply with these obligations and prohibitions, the Commission may adopt a non-compliance decision and impose fines of up to 10% of the gatekeeper’s global annual turnover. It can further order interim measures and make enforceable the commitments made by the gatekeeper. In case of non-compliance qualified as “systematic”, the Commission may also consider behavioral, or even structural, corrective measures.

The proposal for regulation also provides that the gatekeepers will have to inform ex-ante the Commission of their intended concentrations involving another platform service or digital service provider, regardless of whether the merger is notifiable to a national or European competition authority.

The proposals for regulations will now be submitted for approval to the European Parliament and the Council.

The French Supreme Court (Cour de Cassation) recalls the criteria for the application of the protection of the confidentiality of lawyer-client correspondence in dawn raids

By a decision dated November 15, 2020, the Criminal Chamber of the Cour de Cassation confirmed that the principle of protection of communications between a lawyer and his client is strictly limited and does not apply automatically to all types of communication.

In April 2018, dawn raids were carried out by the DGCCRF in Au vieux campeur’s premises, and emails exchanged between the company and its lawyer were seized. Au vieux campeur then filed an action for annulment and obtained from the First President of the Chambéry Court of Appeal the withdrawal from the documents seized of the emails listed in a summary table produced in support of the protection claim.

The DGCCRF then lodged an appeal against this order and won. In its decision, the Cour de Cassation recalled that only the communications between the lawyer and its client relating to the exercise of the right of defense are not seizable. The Court noted that the elements produced by the claimant did not adequately demonstrate that the content of the emails met this last requirement, and considered that accordingly, Au vieux campeur could not invoke the legal protection of lawyer-client communications for the correspondences in question.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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