French Competition Authority’s study on professional bodies

The French Competition Authority (FCA) published its study on trade unions and professional bodies on 27 January 2021.

In the context of the transposition of the ECN+ Directive increasing the pecuniary liability of professional bodies, the FCA insists on the pivotal role of these bodies, which are just as likely to be at the centre of anti-competitive practices as they are to be the driving force in the implementation of competition rules. With a pedagogical purpose, the FCA reviews its decisional practice and draws interesting lessons about the practices of professional bodies involving risks with regard to competition law.

The transposition of the ECN+ Directive

The FCA's study is set in the context of the adoption, at the end of 2020, of the law laying down various provisions for adapting to European Union law on economic and financial matters (DDADUE law) giving the French Government until 3^rd^ May 2021 to transpose Directive 2019/1 of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (ECN+ Directive).

Indeed, the ECN+ Directive includes an important change for professional bodies, by providing that when an infringement relating to the activities of their members is committed, the maximum amount of the fine is now increased to 10% of the addition of the turnover of their members, whereas the cap was previously set at €3 million under French law.

In addition, the ECN+ Directive specifies that where the professional body is not solvent and has issued a call for contributions from its members but these have not been paid in full, the competition authorities may directly require payment of the fine by any undertaking whose representatives were members of the decision-making bodies of that body. If this is not sufficient, competition authorities may also require payment of the outstanding amount of the fine by any member of the body which was active on the market on which the infringement was committed. The French regime is thus fully in line with the one already implemented by the European Commission.

The pivotal role of professional bodies

The FCA first highlights that the primary objective of professional bodies is to represent and defend the interests of all businesses in a given profession or sector, by playing a rallying and intermediation role vis-à-vis the public authorities. Their role has gradually been strengthened and now enables them to take legal action, provide services and advice to their members, disseminate market information to them, define technical standards, enact good practices and negotiate social standards applicable to a sector.

The multiplication of the tasks entrusted to professional bodies leads to increased competitive risks when these activities facilitate the establishment of close links between autonomous and competing businesses. However, these professional bodies can play a key role in the implementation of competition rules, in particular by initiating a consultative procedure (by a formal or informal referral to the FCA for an opinion on a given issue, recently used by a union of opticians in the context of the sanitary crisis) or a contentious procedure (by denouncing practices to which their members are victims). A professional body must also work to disseminate a culture of compliance with competition law among its members.

Application of competition law to professional bodies

Although a professional body does not, in general, carry out activities of its own, it falls within the scope of competition law when it goes beyond the mission of information, advice and defence of professional interests given by law and intervenes on a market, most often through its members.

Its decisions are then subject to competition law provisions, prohibiting both cartels and abuses of dominant position. Because its functioning presupposes contacts between its members, there are many opportunities to exchange information or to agree on a commercial parameter, and it is therefore mainly the rules on cartels that apply to these professional bodies.

In the event of a breach of competition law, only the professional body will be liable if it was the sole initiator and organiser of the agreement in dispute. Otherwise, its members may be held liable, with or without that of the body.

List of high-risk practices

The FCA explains that the practices of professional organisations resulting from legislative texts or implementing regulations are exempt and therefore not prosecuted. Exemption is also possible in the event of efficiency gains, as it is classically provided for under the rules of competition law.

However, as the conditions remain strict and limited, most anti-competitive practices committed by a professional body will not benefit from an exemption. Thus, as part of its wish to support the compliance efforts already undertaken or that the professional bodies will have to put in place following this study, the FCA identifies the main high-risk practices as already examined in its decisional practice, in particular cartels, the dissemination of pricing instructions and of commercially sensitive strategic information, calls for boycotts, the implementation of conditions for membership of a professional body, the enactment of unduly restrictive standards or technical agreements, practices arising from misinterpretation of regulations as well as practices that may be committed in the course of lobbying activities or collective bargaining.

More than fifteen years after the UK Office of Fair Trading (OFT) published its own guidelines on the subject (OFT, Trade associations, professions and self-regulating bodies, 2004), the publication of this study is appreciated, as it responds to the needs of practitioners asking for clarification of the rules applicable to professional bodies.

Professional bodies must provide themselves with the means to ensure and promote compliance with competition law, in particular by facilitating the dissemination of good practices among their members.

On all these subjects, our team has more than 15 years' experience in assisting professional bodies, based on our knowledge of the decisional practice of competition authorities.

Our practice involves raising awareness of competition law by organising training and disseminating a culture of compliance, as well as assisting professional bodies in carrying out their missions to their members and in their dealings with public authorities. We also represent professional bodies, whether they are plaintiffs or defendants, in proceedings before competition authorities and courts.