The Paris Court of Appeal confirms the Competition Council’s decision condemning cartel between three French mobile phone operators

26 March 2007

Romain Ferla

On 12 December 2006, the Paris Court of Appeal rejected the appeals lodged by the three French mobile phone operators (Orange, SFR and Bouygues Telecom) against the decision of the French Competition Council on 30 November, 2005, imposing on the three operators fines which, in total, amounted to more than €500 million (€256 million for Orange France, €220 million for SFR and €58 million for Bouygues Telecom).

The Court of Appeal accepted none of the procedural or economic arguments put forward by the parties in order to obtain the annulment of the Council’s decision, which had found the mobile operators guilty for, inter alia, having exchanged information every month on their sales/market shares and for having agreed on a stabilisation of their market shares (a “market share Yalta”).

The most interesting point in the judgment of the Court of Appeal is its rejection of the request made by a consumers association (UFC-Que Choisir), which was also a party to the appeal procedure, and which called for a criminal prosecution of the managers involved in the implementation of the cartel. Pursuant to Article L 420-6 of the Code of Commerce, the Competition Council can always refer to criminal courts a cartel case in which identified natural persons played a decisive role. These persons can then be prosecuted and ultimately sent to prison. In the mobile phone cartel case, there was evidence that high level managers had indeed taken an important part in designing and implementing the concerted practices. However, the Council refused to apply Article L 420-6 and it is this refusal which was appealed by UFC-Que Choisir, which is currently advocating a stronger private and criminal enforcement of competition law in France. The Paris Court of Appeal refused to criticise the Competition Council for its decision not to refer the case to criminal courts, thereby recognising that such a decision remains exclusively in the hands of the regulator. In this respect, the judgment of the Court of Appeal eradicates the hopes of certain association of consumers which expected that a certain degree of criminalisation of competition law at the initiative of victims of cartels could have a more effective deterrent effect on would-be cartelists.

Source: Decision of the Court of Appeal of Paris, No 33, 12 December 2006 (in french only) - http://www.conseil-concurrence.fr/doc/ca05d65_mobiles.pdf