A sandwich cartel case, or how leniency can get you out of a pickle

The French Competition Authority (“FCA”) recently fined the three main French manufacturers of sandwiches for mass retail distribution for having implemented a volume and customer allocation plan over a six-year period and agreed on the price level to be offered to their customers (€24.5 million in total). All of them applied for leniency and obtained substantial reductions in fines.

The practices at stake consisted more particularly in an agreement between the three sandwich manufacturers to set up a non-aggression pact from 2010 until 2016, aiming at:

  • allocating between them the tenders issued by mass retail distribution and petrol stations, to determine in advance which company would win the tenders; and
  • coordinating their bilateral price negotiations with mass retail distribution, to obtain price increases during the execution of the awarded contracts.

The FCA concluded that the practices were anti-competitive by object.

For having disclosed the existence of the cartel to the FCA in May 2016 through its leniency application, one of the companies was granted immunity from fines (thus avoiding a €19 million fine). Based on the information it provided, the FCA was able to carry out dawn raids and gather additional evidence of the practices at stake.

On the day of the dawn raids, the two other companies involved both applied for leniency. The second leniency applicant was granted a 35% reduction in fine. However, as dawn raids did not start at the exact same time for both companies on that day, the third company argued that it could not have made its second-ranking leniency application before the other. However, the FCA stated that the late conduct of a dawn raid does not deprive the involved company of the possibility to apply for leniency, as it is up to each company to submit such application on its own initiative without expecting the FCA to trigger it with a dawn raid.

This did not prevent the FCA from granting the third leniency applicant with a fine reduction of 30%. Due to the high added value of the material evidence it provided, the latter was able to benefit from the “leniency plus” scheme, which allows the FCA to grant an additional fine reduction to a company which is the first to provide indisputable evidence of new facts that have a direct impact on the amount of fines imposed on the cartel members. In the case at hand, this resulted in an additional fine reduction of approximately €1 million for the company.

This case illustrates the benefits that companies can obtain through the leniency programme, which allows them to get substantial fine reductions even if they are not the first ones to disclose the anticompetitive practices. The full cooperation of the involved companies allowed them to obtain a cumulative fine reduction of nearly €35 million (i.e. a 59% cut compared to the total fine that the FCA could have imposed on them).

For more information, you can consult the FCA’s press release here (in English) and the full decision here (in French).

For more information contact Florence Leroux and Eliott Costet.

 

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