Real Property Law
A look back at the commitment procedure
The commitment procedure is an alternative procedure to the ordinary sanction procedure of the Autorité de la concurrence.
The aim of this procedure is to get the company to cease or modify potentially anti-competitive behaviour in the future, unlike a condemnation decision, which establishes the anti-competitive nature of the behaviour in question, requires the behaviour to cease or be modified and imposes a penalty where appropriate[1]. The commitment procedure is generally used when a case is referred to the ADLC concerning abuse of a dominant position or vertical agreements[2].
The types of commitments proposed may be structural or behavioural in nature. Commitments are structural when, for example, they require access to infrastructure or resources in order to facilitate the entry of competitors into the market. They are described as behavioural when they relate to a company's commercial behaviour or strategy[3].
This commitment procedure was introduced in France in Article L. 464-2 of the French Commercial Code by Order no. 2004-1173 of 4 November 2004 following the adoption of European Regulation (EC) no. 1/2003 of 16 December 2002.
Under this article, the ADLC "may accept commitments, for a fixed or indefinite period, proposed by undertakings or associations of undertakings and likely to put an end to its competition concerns that may constitute prohibited practices referred to in Articles L. 420-1 to L. 420-2-2 and L. 420-5 or contrary to the measures taken pursuant to Article L. 410-3".
Article L. 464-8 of the French Commercial Code also provides that "the decisions of the Autorité de la concurrence referred to in articles L. 462-8, L. 464-2, L. 464-3, L. 464-6, L. 464-6-1 and L. 752-27 shall be notified to the parties involved and to the Minister for Economic Affairs, who may, within one month, bring an action for annulment or reversal before the Paris Court of Appeal".
These articles expressly provide for the right to appeal against decisions to accept proposed commitments from the ADLC, but are silent on the question of whether such a decision can also be appealed. This was the question submitted to the Cour de cassation in the case before us.
The facts of the case
In this case, a French manufacturer of video game controllers compatible with the PlayStation 4 console, produced by Sony, referred potentially anti-competitive practices committed by Sony to the ADLC in October 2016. Sony was accused of abusing its dominant position by preventing third-party manufacturers of controllers compatible with the PlayStation 4 games console from competing fully with Sony's controllers.
In response to these competition concerns, Sony submitted an initial set of commitments in November 2019, which the Authority put out to public consultation to gather the views of interested third parties. Sony subsequently submitted new commitment proposals in June, July and September 2020. Considering that the last proposal of commitments still did not provide a relevant response to the competition concerns, the ADLC terminated the commitment procedure and referred the case back to the investigation[4].
As a result, Sony lodged two separate actions for annulment, one before the Paris Court of Appeal and the other before the Conseil d'État. The Conseil d'État declined jurisdiction in a decision dated 1 July 2022[5].
The position of the Paris Court of Appeal
In a ruling dated 21 April 2022[6], the Paris Court of Appeal dismissed the Japanese manufacturer's appeal, holding that only decisions accepting commitments proposed by undertakings would be subject to appeal, to the exclusion of decisions rejecting such commitments.
According to the Court of Appeal, the wording of Article L. 464-8 of the French Commercial Code limited appeals for annulment or reversal to the decisions of the ADLC, which are listed exhaustively. However, Article L. 464-2 of the French Commercial Code, to which the aforementioned article refers, provides only that the ADLC may "accept commitments" without expressly envisaging the possibility of the ADLC refusing them.
Sony therefore appealed against the Paris Court of Appeal's ruling.
In the meantime, on 20 December 2023, the ADLC fined Sony €13.5 million for abusing its dominant position on the market for the supply of video game controllers for Playstation 4 for more than four years[7].
The position of the Cour de cassation
In a ruling dated 31 January 2024[8], the Court of Cassation, after pointing out that undertakings do not have a right to commitments[9], ruled that the aforementioned articles of the French Commercial Code do not preclude the possibility of immediately appealing on grounds of legality against a decision to refuse a proposed commitment.
The decision of the Paris Court of Appeal was therefore quashed and set aside by the judges of the Quai de l'Horloge, who referred the parties back to the Paris Court of Appeal, otherwise composed.
However, the scope of this action for annulment remains limited. The Paris Court of Appeal will only be able to check that the companies in question were able to submit a proposal for commitments to put an end to the competition concerns previously identified by the Autorité, within the time limits and under the conditions provided for by the applicable legal and regulatory provisions. The purpose of this appeal is not to call into question the Authority's analysis of the appropriateness of the proposed commitments.
If the ADLC's refusal decision is annulled, the case will be referred back to the ADLC to remedy the defect.
Softening of the position of the Paris Court of Appeal
The Paris Court of Appeal recently relaxed its position on refusals by the ADLC to lift commitments, adopting an approach similar to that of the Court of Cassation in the Sony case.
In a recent decision dated 30 November 2023[10], subsequent to its decision in the Sony case, Chamber 5-7 of the Paris Court of Appeal ruled that TDF's appeal against a decision by the ADLC refusing its request to lift the commitments that TDF had entered into in 2015 in response to competition concerns raised by the ADLC in the mobile telephony equipment hosting sector[11] was admissible.
Following the example of the Paris Court of Appeal in the Sony case, the ADLC considered that it had "broad discretion as to whether or not to grant such a request" and that "Article L. 464-8 of the French Commercial Code does not provide for any appeal against a decision to reject a request for review, since it refers to Article L. 464-2 of the French Commercial Code, which does not mention such decisions".
These arguments did not convince the Paris Court of Appeal, which held that "decisions amending commitments that have been made binding or refusing such requests are thus included in the scope of Article L. 464-8 of the French Commercial Code, regardless of the negotiated nature of the procedure, in view of the consequences that a refusal to amend commitments may have for the company in question when one of the facts on which the commitment decision is based has undergone a significant change".
The Court of Appeal thus ruled that TDF's appeal was admissible and ordered the partial lifting of the commitments after annulling the ADLC's decision. To our knowledge, this is the first time that the Paris Court of Appeal has granted a request to lift commitments initially refused by the ADLC.
[1] Autorité de la concurrence procedural notice of 2 March 2009 on competition commitments
[3] Autorité de la concurrence study on behavioural commitments in competition law, 2020.
[4] Autorité de la concurrence decision no. 20-S-01 of 23 October 2020.
[5] Conseil d'État, 3rd - 8th joint chambers, 01/07/2022, 448061.
[6] Paris Court of Appeal, 21 April 2022, no. 20/169537.
[7] Autorité de la concurrence decision no. 23-D-14 of 20 December 2023.
[8] Court of Cassation, Commercial Division, 31 January 2024, appeal no. 22-16.616.
[10] Paris Court of Appeal, Pôle 5, Chamber 7, 30 November 2023, No. 23/01145.
[11] Autorité de la concurrence decision no. 15-D-09 of 4 June 2015.
