There are instances where an Authority can win its case but lose in practice. This was essentially the case in the legal battle between the French Competition Authority (FCA) and Sony before the French Constitutional Court (Conseil Constitutionnel). While the Court rejected Sony’s allegation that the provision at stake in the French Commercial Code would be unconstitutional, its findings are likely to materially impact the way the FCA will handle its commitments proceedings in the future.
Outline of the procedural steps
- In 2019, the FCA identified several competition concerns regarding a potential abuse of dominance in relation to Sony’s licencing policy for its PlayStation 4 controllers. Hoping to address these concerns and put an end to the investigation, Sony submitted a set of commitments, which after being market tested were rejected by the FCA.
- In 2020, Sony lodged an appeal against the decision refusing the commitments. However, the Paris Court of Appeal held that the application was inadmissible, as the French legislation only provided for the possibility to appeal decisions accepting commitments, not decisions rejecting commitments.
- In 2022, Sony sought the annulment of the appellate court’s decision to the French Supreme Court (Cour de cassation), arguing among other things, that French Law was unconstitutional, for not allowing an appeal against the FCA’s decisions rejecting commitments. This question was referred to the French Constitutional Court.
The Court’s ruling
According to Sony, the absence of a specific appeal against the FCA’s decision refusing commitments violated the right to an effective judicial remedy. On the contrary, the FCA was arguing that no specific appeal was necessary against such decisions, so long as companies could appeal the FCA’s final decision in the case it found an infringement of competition law.
The Constitutional Court agreed with the company’s reasoning, finding that:
- The FCA’s decision to reject commitments did adversely affect the undertakings, as it deprived them of an opportunity to terminate the procedure without the finding of an infringement and a fine;
- Such decisions fall therefore within the scope of the decisions adversely affecting undertakings which can be subject to an appeal for annulment or review (Article L.464-8 of the French Commercial Code).
The Court did not declare the provision under review as unconstitutional. Instead, it interpreted French Commercial Code provisions, as allowing an appeal against an FCA decision rejecting commitments, even if such decisions were not expressly listed in the French Commercial Code.
On a related topic, the Court also ruled that the purpose of a commitment decision was merely to decide if the commitments proposed by the company could adequately address the competition concerns identified by the FCA, not the existence of an actual infringement. Therefore, the fact that the same members of the FCA decision-making body participated in the commitment procedure and also in the subsequent sanction procedure did not breach the impartiality principle.
Next steps
In light of the Constitutional Court’s ruling, the French Supreme Court is likely to annul the appellate court’s decision denying Sony the right to appeal the FCA’s decision rejecting its commitment offer. However, the court’s judicial review will most probably remain limited to checking if the proposed commitments were proportional to the competition concerns identified and if the FCA’s rejection was properly motivated. One can expect that the FCA will keep a certain margin of discretion whether to accept companies’ commitments proposals.
The impact on the FCA’s decisional practice
One can only applaud the prospect of such important decisions, like refusing to promptly terminate a procedure in exchange for appropriate commitments, being subject to immediate judicial review. This will undoubtedly lead the FCA to seriously consider all commitment offers and strongly motivate its decisions in case of refusal, promoting greater reasoning for commitment rejection decisions to avoid censorship.
It is to be hoped that the FCA will play the game fully and will not become more reluctant to formally open the door to commitments or seek to discourage companies wanting to offer commitments, for fear of the risk of subsequent litigation. Nothing is less certain of course…
Comparative perspective
If this evolution leads the FCA to issue well-motivated decisions rejecting commitments, the French procedure could stand out compared to other countries. For instance at EU level, and similarly in a number of countries such as Germany or the UK, the Commission does not adopt any formal decision when it rejects antitrust commitments but merely a press release, preventing de facto companies from seeking redress before the courts.
For further information, please contact:
Thomas Elkins, Partner, Linklaters
thomas.elkins@linklaters.com
