Quashing of the Conseil de la Concurrence's Decision in the Perfumes Case on Account of the Excessive Length of the Proceedings
One will recall that, in its Decision n°06-D-04 dated 13th March 2006, the Conseil de la Concurrence (Competition Council) had imposed heavy fines on thirteen suppliers and three distributors of luxury perfumes and cosmetics on the grounds of vertical concerted practices relating to pricing by applying a method specific to the French Authority. In a ruling dated 26th June 2007, the Cour d'Appel (Court of Appeal) of Paris had ratified the method used by the Conseil, but had reduced the amount of the fines ordered by the latter for having established certain price fixing practices (evidence of a recommended resale price, significant application and policing of such prices).
A Cour de Cassation (French Supreme Court of Appeal) ruling dated 10th July 2008 had subsequently partially suppressed the appeal court ruling on the ground that the Conseil had appointed itself to act of its own motion and referred the case back to the Cour d'Appel.
To everyone's surprise and apparently for the first time, the Paris Cour d'Appel, ruling in connection with the latter referral and presided over for such event by its President, quashed the entire Conseil de la Concurrence decision. The Appeal Court considered that there has been "an irremediable, effective and concrete violation of the rights of defence, by the exceeding of a reasonable period of time between the date of the alleged conduct and the date on which the business undertakings became aware of the fact that they would be required to submit a defence in such respect" and considered that such violation must lead to the quashing of the Conseil's investigation and decision "which failed to observe the prerequisites of a fair trial".
Proceedings in connection with this case had commenced on 21st October 1998 by the Conseil de la Concurrence appointing itself to look into the nature of competition within the luxury perfume sector. During the course of 1999, the DGCCRF (French Authority responsible for competition, consumer affairs and fraud) had drawn up certain price lists applied by the distributors and had requested disclosure of information from the suppliers. The DGCCRF had subsequently submitted its report to the Conseil on 19th September 2000. Yet it was only on 5th April 2005, i.e. close to 4 and a half years later, that the parties were informed of the grounds for complaint.
The Cour d'Appel considered that such period of time has seriously undermined the parties' rights of defence. Indeed, in the case in point, the offences established by the Conseil were mainly based on information such as price lists, reports of comments made by the distributors' representatives or certain alleged references to pricing between manufacturers and distributors. In order to be able to challenge such evidence gathered by the Authority, the accused suppliers would have needed to draw up price lists in other geographical areas, carry out their own assessment of the level of application of the recommended prices by their distributors, etc. The extended silence of the Authority with regard to the precise subject of the enquiry had not given the parties any reason to keep certain documents for purposes of compiling evidence for their defence. Under cover of the excessive period of time taken for the enquiry, the Cour d'Appel would thus also appears to accuse the Conseil of having failed to act transparently in its dealings with the relevant business undertakings which were not in a position to prepare their defence properly since they were not precisely aware of what the Conseil was accusing them of.
The Authority will certainly file an appeal before the Cour de Cassation against such ruling.