January 23, 2015
The Paris office of Gibson Dunn is pleased to provide this legal and regulatory update covering France for the second semester of 2014.
In this article, we aim at giving you a brief overview of some major legal changes which occurred in the second part of 2014. Some entail future developments that both French companies and potential investors in France should take into account with respect to their French operations in the coming months.
Please note that French legal concepts are translated into English for information only and not as legal advice. The concepts expressed in English may not exactly reflect or correspond to similar concepts existing under the laws of the jurisdictions of the readers.
1.1 Corporate, M&A, Private Equity — Valuation of Equity Shares by an Expert: Revision of Article 1843-4 of the French Civil Code
The French government has been empowered by the law n°2014-1 dated January 2, 2014 to simplify and secure the life of businesses and, notably, to amend, by way of order, the text of Article 1843-4 of the French Civil Code.
Pursuant to this Article, in its previous version, in all cases where there is a provision for equity shares to be transferred or purchased by the company, the value of such shares is determined, in case of dispute, by an expert appointed by the parties or, in case of failure by the parties to reach an agreement, by order issued by the president of the tribunal.
The purpose of the order n°2014-863 dated July 31, 2014 (the "Order"), by modifying the text of Article 1843-4, was to restore legal certainty which had been shaken by a series of decisions rendered by the French supreme court (Cour de cassation) since December 2007. Indeed, in the name of protecting seller against purchaser, the Cour de cassation had considerably extended the scope of this provision, considering (i) that this article should apply in hypotheses where a price had already been agreed upon between the parties and (ii) that it should also apply in cases where the sale of shares originated in an agreement, i.e., was not provided for by the law or the company’s by-laws (put-option, shareholders’ agreement). The Cour de cassation had also ruled that the expert was not bound, in performing his duties to assess the value of the company, by the directions agreed upon by the parties.
A majority of practitioners and scholars had criticized this case law, mainly because of the harm done to legal certainty with respect to sales and purchases of shares, and to contractual freedom.
The Cour de cassation seemed to have heard these critics since it had itself operated an overturn of its case law a few months prior to the issuance of the Order, considering that the provisions of Article 1843-4 of the French Civil Code, the purpose of which is to protect sellers’ interests, should not apply to transfers of equity shares resulting from the exercise of a freely-agreed put-option.
The Order therefore amended the text of Article 1843-4 as follows:
"I. In all cases where the law refers to this article for the determination of the pricing conditions applicable to the sale by a shareholder of equity shares or to the purchase of such shares by the company, the value of these shares is determined, in case of dispute, by an expert appointed by the parties or, in case of failure by the parties to reach an agreement, by order issued by the president of the tribunal […].
The expert is required to apply, whenever they exist, the rules and conditions applicable to the assessment of the value provided for in the by-laws of the company or in any other agreement by which the parties are bound.
II. In all cases where the by-laws provide for the sale by a shareholder of equity shares or for the purchase of such shares by the company without their value being determined or determinable, this value is established, in case of dispute, by an expert appointed under the conditions set forth in the first paragraph.
The expert is required to apply, whenever they exist, the rules and conditions applicable to the assessment of the value provided for in any agreement by which the parties are bound."
The limited scope of the new Article 1843-4 of the French Civil Code
The expert evaluation is now mandatory only (i) in all cases where the law refers to Article 1843-4 for the determination of the pricing conditions of a sale by a shareholder of its shares, or of a purchase by the company of such shares (e.g., for simplified joint stock companies — sociétés par actions simplifiées –, in case of purchase by the shareholders or the company of the shares of another shareholder, following a refusal to approve the sale by such shareholder of his shares, when such approval is required, or in case of exclusion of a shareholder pursuant to a provision of the by-laws) or (ii) if the by-laws of the company provide for the sale by a shareholder of its shares or for the purchase by the company of such shares, without their value being determined or determinable.
In both cases, the existence of a dispute is a condition for the applicability of Article 1843-4.
The new version of this article therefore excludes the automatic recourse to expert valuation with respect to all other hypotheses of sale or purchase of shares, notably those made pursuant to an extra-statutory act, such as a shareholders’ agreement or an infra-statutory act, such as internal rules.
An expert with restricted powers
The expert is now required to take into account, whenever such provisions exist, the rules and conditions applicable to the determination of the value of the shares provided for (i) in the by-laws of the company or in any other agreement by which the parties are bound for sales and purchases which are required by the law (Article 1843-4 I.) or (ii) in any agreement by which the parties are bound for sales and purchases provided for in the by-laws (Article 1843-4 II.).
The expert will only recover his freedom for assessing the value of the shares to be transferred in the absence of a statutory or extra-statutory provision relating to the determination of the price or if such provision is not sufficient to make such determination.
A reform welcomed by the business community which however leaves some questions unresolved
The new wording of the text, while having the merit of restoring legal certainty and their binding force to shareholders’ agreements, gives rise to academic questions and criticisms have been made by scholars.
Notably, some scholars regret that the new version of Article 1843-4 of the French Civil Code may not apply to transfers provided for by an agreement entered into between the parties (other than the by-laws). In this regard, the question as to whether the parties may choose to refer to Article 1843-4 rather than to other provisions of the French Civil Code (Article 1592 of the French Civil Code), in an agreement relating to shares in order to solve any dispute relating to pricing conditions of a transfer, is under debate. However, it is difficult to understand how the new wording of Article 1843-4 would prohibit such option.
Finally, the question of the immediate enforceability of the new version of Article 1843-4 of the French Civil Code to by-laws and extra-statutory agreements drafted prior to its coming into force is discussed. Indeed, pursuant to the general rules of contract law, contracts shall be governed by the law which was in force at the time of their conclusion. Even though a majority of commentators consider that this general principle should apply and that the new version of Article 1843-4 of the French Civil Code should only apply to by-laws and shareholders’ agreements entered into after its entry into force, i.e., after August 3, 2014, the question remains open.
The text of Article 1843-4, even in its new version, can thus be expected to remain a subject of debate and discussions.
1.2 Corporate, M&A, Private Equity — Introduction of a Legal Framework for Crowdfunding
The development of crowdfunding during the last decade as a new source of financing for entrepreneurs and start-ups has led to a need for regulation able to protect stakeholders and especially investors. The US acted first and promulgated the Jumpstart Our Business Startups (JOBS) Act of April 5, 2012. In Europe, the UK has a leading position but has not legislated yet. The European Commission has set up several meetings with Member States to prepare the upcoming regulation within the European Union.
French regulation on crowdfunding originates from the Statute n°2014-1 of January 2, 2014 capacitating the Government to simplify and secure corporate life. On this basis, the Order n° 2014-559 of May 30, 2014 (the « Order ») amended the French Monetary and Financial Code to create a protective legal framework. The text came into force on October 1, 2014. This new source of financing was widely expected among French authorities and economic actors, at a time when companies, particularly small ones, have difficulty finding funding.
In 2013, about 40 French crowdfunding platforms raised approximately EUR 78 million. This amount is still quite low but has tripled compared to 2012. In addition, more than EUR 65 million has already been invested during the first semester of 2014.
Most provisions of the Order relate to professionals that organize financing transactions (i.e. the crowdfunding platforms), which are subject to two different regimes depending on the type of financing instruments used.
Crowdfunding through securities issues
This type of crowdfunding is monitored by the French financial markets authority (Autorité des marchés financiers, hereafter, the "AMF"). It has four main characteristics:
The crowdfunding advisor status was created by the Order. It must be a legal entity that provides investment advice as a nearly exclusive activity. Furthermore, it must be registered with a specific authority called ORIAS and its managers shall meet proficiency and worthiness requirements. This status also generates several obligations in terms of organization, information, reliability and good behavior.
If the financing recipient is a société par actions simplifiée (for which securities offerings are very limited), its articles of association shall be modified to comply with the rules applicable to a société anonyme related to voting rights and shareholders general meetings. It shall also inform the investors on financial rights granted to shareholders and, as the case may be, on any temporary lock-up or exclusion provisions included in the by-laws.
Crowdfunding through loans or donations
This type of crowdfunding is monitored by the Autorité de contrôle prudentiel et de résolution (ACPR) (the French authority supervising banks and insurance companies).
The Order distinguishes between 3 categories of financing recipients:
Donations have no maximum amount and no detailed regulation, whereas loans are subject to several limitations: (i) the maximum amount of loans per project is EUR 1 million; (ii) each lender may lend up to EUR 1,000 per project in the case of an interest-bearing loan and EUR 4,000 per project in the case of an interest-free loan; (iii) the interest rate shall be fixed and cannot exceed the usury rate; and (iv) the loan agreement shall be written and its term cannot exceed 7 years.
Transactions shall be completed through crowdfunding intermediaries (intermédiaires en financement participatif). This new status was also created by the Order. They must be legal entities, whose activity is to put financing recipients in contact with potential donors or lenders through an Internet website. Like crowdfunding advisors, they must be registered with the ORIAS, their managers shall meet proficiency and worthiness requirements and they have obligations in terms of organization, information, reliability and good behavior. Crowdfunding intermediaries are subject to information and warning obligations similar to those applicable to crowdfunding advisors, but do not have to assess the personal situation of clients. This difference can be explained by the fact that the role of crowdfunding intermediaries is different from crowdfunding advisors’ since the former only bring into contact potential investors and project owners whereas the latter make customized recommendations to potential investors.
The future will tell us whether this new regulation on crowdfunding provides an adequate framework capable of supporting the growth of a promising sector but also able to secure investors and project owners.
1.3 Corporate, M&A, Private Equity —Impacts on M&A Practice of the Law Aimed at Promoting the Social Economy, dated July 31, 2014.
The recent law n°2014-586 aimed at promoting the social economy (also known as "Loi Hamon") dated July 31, 2014 (the "Statute") contains a chapter devoted to the information of the employees, which notably impacts the rules governing the confidentiality and the timeline of any M&A transactions in France.
These provisions, which were further detailed by a decree n°2014-1254 dated October 28, 2014 (the "Decree"), entered into force on November 1, 2014 and therefore apply to transactions concluded on or after such date.
Two information devices aiming at promoting employee buy-out
The Statute created two information obligations to be complied with by SMEs (i.e. companies which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or a balance sheet total not exceeding EUR 43 million). On the one hand, the employer has the obligation to inform its staff every three years about the possibility of employee takeovers. On the other hand, SME employees must be informed in case of (i) sale of the business or (ii) sale of more than 50% of the shares of a limited liability company (SARL) or transfer of shares or securities giving access to more than 50% of the equity interests in a stock company (société par actions) (all together, a "Sale").
The first obligation of information (vocational training relating to employee buy-out) is common to all SMEs and the Decree details the content of this obligation (information shall address notably the legal conditions of employee buy-outs, the benefits and challenges thereof and an overview of help features available to employees). The second mechanism (information obligation prior to Sales) is subject to different procedures, notably as to timing, depending on whether the company has a works council (comité d’entreprise) or not (i.e., mainly, whether it employs more than 49 employees or less than 50).
Uncertainties surrounding the scope of the obligation
The Statute clearly excludes certain transactions from the scope of the new information obligation: family transmissions and companies going through insolvency proceedings.
On the other hand, a number of criticisms have been made by the business and legal community right after the publication of the Statute because of the generality of its terms and the lack of clarity resulting therefrom. Some uncertainties were clarified by the Decree and the practical guide issued by the Ministry of Economy in October 2014 (the "Practical Guide"), but some questions still remain outstanding. In addition, certain clarifications provided for in the Practical Guide have since been contested by the French legal community.
As an example, while the Statute refers to "sales" of a business or of equity interests representing or giving access to more than 50% of the share capital of a company, the Practical Guide indicates that the information obligation would also apply to donations or share contributions (with the sole exception of any transaction resulting in a universal transfer of assets to another entity, such as mergers, spin-offs, or partial transfers of assets under the legal regime of spin-offs).
On the other hand, no exception is provided for in respect of private reorganizations completed within a group. Therefore, if an intra-group reorganization takes the form of a sale or of a contribution in kind of more than 50% of the equity interests of a given company qualifying as an SME, the new information obligation would apply, even though the proposed transaction would not modify the ultimate control of such company and therefore has no chance to result in an employee buy-out.
The practical solution that could be used by companies to avoid implementing this information obligation in the context of intra-group transactions could be to organize their reorganizations in several stages. In fact, the Practical Guide states that the progressive sale of minority stakes would not fall within the scope of the Statute.
Another uncertainty of the Statute is whether the new information obligation would apply to holding companies that do not have any employee. The first interpretation, in line with the very text of the Statute, would be that the employer would thus be relieved from its information obligation. According to another interpretation, taking also into account the spirit of this new device, such holding companies should be treated as transparent for the purpose of implementing this information obligation and the employer should thus inform employees of its subsidiaries in order to comply with the Statute. The severe legal consequences of a breach of this information obligation will probably lead companies to choose the second — more conservative — interpretation.
Content of the information to be delivered to employees
The Statute is silent on this question. Likely having in mind the confidentiality issues that would have been raised by the communication of business information (such as financial and strategic information, information on outstanding litigations, etc.) to all of the employees, the Practical Guide limits the scope of the information to be provided to two elements: (1) the circumstance that a Sale is contemplated and (2) the fact that the employees may, at their option, make a purchase offer.
Given that employees are only bound by a duty of discretion that would not be sufficient to protect any sensitive information that would be communicated by the employer (notably due to the difficulty in proving a breach of their discretion obligation by the employees), it was probably wise to limit the scope of the information to be delivered to employees. However, this will necessarily have a serious impact on the efficiency of the new device. Indeed, how can one imagine that employees will study the possibility to take over their company without any information on its assets, liabilities, its financial situation and its perspectives?
Timing and procedures for informing the employees
In companies where a works council (comité d’entreprise) has not been established, the information must be given to each and every employee no later than two months before the Sale, which is defined as the date of the transfer of ownership.
In SMEs which employ more than 49 persons, no specific delay is provided for, because the procedure relies on the existing obligations under French labor law, to inform and consult the works council (comité d’entreprise) prior to entering into corporate transactions. All employees shall be informed, at the latest, when the matter is put to the works council (comité d’entreprise) for its opinion in accordance with French labor law.
The Decree details the various forms that the information obligation may take: (i) information meeting with a signed presence sheet, (ii) information displayed on a board with a signed list, (iii) registered letter with acknowledgment of receipt or (iv) e-mail with acknowledgment of receipt, (v) letter handed directly with mandatory signature, (vi) extrajudicial document (writ served by a court bailiff or process-server) or (vii) any other means certifying the date of receipt. The Practical Guide specifies that in case of reluctance of employees (e.g. refusal to acknowledge receipt of registered letters or of letters handed over), the employer will have to use alternative means of delivery with unquestionable date of receipt. This means that the employer will have to use writs served by bailiff, which can be complex and very costly in case of collective opposition or dispute.
A harsh penalty heavily criticized
Failure to comply with these obligations may lead for the Sale to be considered as null and void. Hopefully, this sanction is facultative and it will be up to the judge to decide whether the nullity of the Sale would be an adequate penalty.
However, the obligation of information and its sanction are still strongly criticized by SMEs’ owners and M&A practitioners who are fiercely lobbying in order to get them repealed.
In this regard, several Parliament members tabled such an amendment in front of the Senate but it was rejected after failing to get the Government’s support.
A parliamentary commission has since been created in order to clarify some parts of the Statute and eventually discuss this controversial sanction in the course of 2015.
To conclude, French legislation already provides that in companies that have a works council (comité d’entreprise) (i.e. employees which employ 50 employees or more), the latter must be informed and consulted on transactions prior to their conclusion. For these companies, the new device created by the Loi Hamon, even though its purpose is different, appears redundant and excessively burdensome. More importantly, the new information obligation will probably be ineffective in light of the specific skills and the experience necessary to manage a company employing 50 to 250 persons.
Therefore, the main innovation of the Statute is probably to create a similar obligation in small enterprises comprising less than 50 employees. Because the likelihood of an employee buy-out is certainly higher in such small companies than in bigger ones counting up to 250 employees, a possible path to reduce the pressure on this new device coming from the business community but to maintain it may be to limit its scope to companies which employ less than 50 employees. Only time will tell whether the French Government will maintain its position or not.
1.4 Corporate, M&A, Private Equity — The French Law Proposal on the Protection of Trade Secrecy and its Potential Impact on the Enforceability of the French Blocking Statute
The development of companies nationally and abroad increases the need to protect confidential information and promote an economically efficient competition. In this context, the French government recently showed its determination to improve the protection granted by French law to business secrecy in France and abroad. Following an initial bill introduced in November 2011 and abandoned in 2012 (probably due to the timetable for the latest French presidential elections) and ahead of the European Commission, a new law proposal to protect confidential business information and deal with infringements of trade secrets was introduced by the French Assemblée Nationale on July 16, 2014 (the "Proposal").
The French legislator intends to create a legal framework to prevent, deter and punish the unfair use of trade information that could affect French competition and innovation. The main innovations of the Proposal are to provide for a uniform definition of trade secrecy and a wide range of civil measures aiming at enabling the judge to guarantee the protection of trade secrecy. More conventionally, the Proposal still contains criminal penalties sanctioning the unlawful use of trade secrecy.
Proposed definition of trade secrets
According to the Proposal, a trade secret is information that:
These three cumulative criteria are patterned on those set forth for the protection of undisclosed information in the TRIPS Agreement annexed to the Marrakesh Agreement Establishing the World Trade Organization dated April 15, 1994.
The protection afforded by the Proposal would not be absolute: the secret would be protected provided that it has an economic value. In other words, the secret must procure a competitive advantage to its holder. However, without any formal delimitation of the protected information, enterprises will be free to define the scope of the protection, which may lead to difficulties of implementation.
A coherent corpus of civil-law and criminal-law measures of protection of trade secrets
Proposal’s second major novelty is to adopt a civil approach and not only a criminal one, by introducing a principle of civil liability (referring to common French civil liability law) of anyone who would not only misappropriate trade secret information but also use or communicate to third parties any trade secret information (even if legally obtained). Using this same line, the Proposal grants considerable powers to the judge. It intends to establish civil seizure orders or enforcement measures that may be ordered by the judge to immediately prevent and repress the unlawful use of trade secrets. The Proposal also focuses on the victim and provides for the allowance of damages in order not only to compensate the negative effects of the violation but also to prevent unjust enrichment.
It is also worth noting that protection of trade secrets would be available in respect of any violation of trade secrets occurring in France, whatever the law applicable to the contractual relationships of the parties involved.
Finally, violation or attempted violation of trade secrets would be punished by three years imprisonment and by a fine of EUR 375,000. In order to better counter the industrial and economic espionage, these penalties would be increased where the violation harms the sovereignty, the security, or the essential economic interests of France.
An attempt to strengthen the enforceability of the French Blocking Statute?
First, Article 1 of the Proposal provides that criminal penalties are not applicable to competent judicial or administrative authorities while carrying out their mission of control, monitoring or sanction, but reserves the application of the law n°68-678 of July 26, 1968 (as amended by the law n°80-358 of July 17, 1980) known as the French "Blocking Statute", which, in essence, provides the following:
"Subject to international treaties or agreements and applicable laws and regulations, any individual is prohibited from requesting, seeking or disclosing, in writing, orally or in any other form, documents or information of an economic, commercial, industrial, financial or technical nature, with a view to establishing evidence in foreign judicial or administrative proceedings or in relation thereto."
Also, whereas the initial draft law on the protection of business secrets introduced in November 2011 and adopted on its first reading by the French Assemblée Nationale on January 23, 2012 intended to limit the scope of the French Blocking Statute to cover only defined information, the Proposal does not pursue this option and, on the contrary, intends to increase sentences applicable to infringements of the French Blocking Statute up to the same penalties as those created for violations of trade secrets.
Therefore, the question is whether these proposed changes will allow French litigants to efficiently challenge their obligation to comply with discovery processes in common law claims.
In practice, over the past few years, the French Blocking Statute defense was often rejected by foreign authorities in particular when it was raised in front of United States courts but also, more recently, before UK courts. To come to these solutions, courts generally apply a balance-of-interests test (defined, in the U.S., in the Aerospatiale case), and which includes notably the following factors: the importance of the documents or information requested to the litigation, the degree of specificity of the request, the availability of alternative means of securing the information.
As a result, French litigants face a difficult dilemma, to either comply with the Blocking Statute and face the consequences in the foreign proceedings or violate the Blocking Statute and face consequences in France.
However, the balance-of-interests test also takes into account the nature and likelihood of the hardship faced by the person infringing the Blocking Statute. As the French Blocking Statute is little-enforced in France (), such defense usually fails before U.S. courts.
By expressly referring to the French Blocking Statute in the exceptions to criminal measures of protection of trade secrets and increasing the sentences of its infringements, the Proposal on protection of trade secrets might support French litigants to oppose the communication of information constituting protected trade secrets to foreign authorities.
However, it remains unclear whether such improvement of the enforceability of the French Blocking Statute in France would lead to a greater efficiency of the Blocking Statute defense before foreign jurisdictions. Notably, the fact that the definition of the information protected by the French Blocking Statute still remains very wide (e.g. any document or information of an economic, commercial, industrial, financial or technical nature) may probably work against such a move.
2.1 Capital Markets — Double Jeopardy Rule Applied to Administrative and Criminal Violations Involving Identical Facts
Through a recent decision (Grande Stevens & Others v. Italy dated March 4, 2014), the European Court of Human Rights (the "ECHR"), has taken a stand on the possibility of imposing double sanctions for the offence of market manipulation (subject to both criminal and administrative sanctions). The impact of this decision on French law could possibly be significant.
Recent position of the European Court of Human Rights on the applicability of the ne bis in idem principle to administrative and criminal violations involving identical facts
Article 4 of Protocol n°7 of the European Convention of Human Rights lays down the ne bis in idem principle, also known as the double jeopardy rule, which has the purpose of preventing a person from being tried or punished twice in criminal matters (as defined in the convention) for the same offence, as follows: "No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State". Its scope being limited to trials and convictions arising from criminal proceedings, it does not preclude a person from being subject, for the same act, to an action of a different character/nature (e.g. civil proceedings or disciplinary action in the case of an official).
The Italian government has made a reservation (very similar to the reservation made by France) with regards to this provision limiting its application to sanctions, proceedings and decisions regarded as "criminal" by Italian law as opposed to European law.
In the Grande Stevens case, because Italian law does not consider Company and Stock Exchange Commission (the "CONSOB") inflicted penalties to be of a criminal nature, criminal proceedings were brought against the protagonists even though they had already been subject to a CONSOB market abuse penalty decision.
Italy was condemned in light of its market abuse legislation by the ECHR for having inflicted two sanctions against the same investor – the first by the CONSOB, and the second by a criminal court.
The court invalidated the aforementioned Italian reservation on the grounds of its general nature leading to the circumvention of the double jeopardy rule. A Protocol violation was identified since, despite the official administrative nature of the first sanction under Italian law, both sanctions were in fact criminal in nature and based on the same acts.
Pursuant to this decision, any time an administrative penalty is of criminal nature (as defined by European law), any subsequent criminal prosecution could constitute a violation of the ne bis in idem principle.
The ECHR’s interpretation of the ne bis in idem principle clearly condemns all European countries, including France, which have allowed successive administrative and criminal proceedings to be brought for stock market offences.
In this regard, French procedure is very similar to that of Italy, which was questioned eight months ago by the ECHR. Just like Italy, the French government has made a reservation stating that "only those offences which under French law fall within the jurisdiction of the French criminal courts may be regarded as offences within the meaning of Articles 2 to 4 of [Protocol n° 7]"
Decision by the Cour de cassation (French Supreme Court). – In a case relating to market manipulation, the Cour de cassation held that article 50 of the Charter of Fundamental Rights of the European Union (i.e. the ne bis in idem principle entitled "Right not to be tried or punished twice in criminal proceedings for the same criminal offence") does not preclude an individual sanctioned for a breach falling within the Autorité des marchés financiers‘ ("AMF") jurisdiction from being also prosecuted and sentenced through criminal proceedings relating to the conduct. This is subject to the global cumulative amount for potential fines not exceeding the highest incurred penalty under either regime (Cass. crim., January 22, 2014, n° 12-83.579).
This ruling seems in accordance with recent case-law of the European Court of Justice (the "ECJ") in the Aklagaren v Hans Akerberg Fransson case (ECJ, February 26, 2013, C-617/10) where the ECJ stated that the ne bis idem principle does not prohibit a Member State from imposing successively, for the same acts, a tax penalty and a criminal penalty "in so far as the first penalty is not criminal in nature, a matter which is for the national court to determine".
However, it should be noted that the ECJ stressed that the two sanctions should not be criminal, a requirement that was not clearly repeated by the Cour de cassation. As a consequence, it remains uncertain whether these two decisions are in line with each other.
In any case, although an AMF sanction is considered to be administrative under French law, its repressive and preventative nature and the degree of severity are clearly oriented in favor of a criminal categorization.
In view of this recent Cour de Cassation decision, there is a real risk that the ECHR will view the French jurisprudence to be at odds with the European Convention on Human Rights.
Decision by the Conseil Constitutionnel (French Constitutional Court). – In the aftermath of the Grande Stevens case, members of the French legal community are currently trying to have the Conseil constitutionnel change its position and acknowledge that the accumulation of administrative and criminal sanctions regarding the same offence is a violation of the ne bis in idem principle.
Through a priority preliminary ruling on constitutionality dated October 24, 2014 (decision n° 2014-423), the Conseil constitutionnel has however confirmed its traditional jurisprudence concerning the double jeopardy rule: cumulating sanctions is consistent with the French Constitution provided that the total penalties do not exceed the maximum incurred amount.
What’s to come in France? – Recently (in October), a trial involving allegations of insider trading was adjourned by the Tribunal correctionnel of Paris (Criminal Court) pending the Cour de cassation’s decision to defer to the Conseil constitutionnel the constitutionality assessment of the possibility to criminally prosecute acts having already been subject to a final ruling by the AMF’s Commission des sanctions (Enforcement Committee).
The AMF has recently addressed this issue. In fact, under French law and due to the influence of European legislation, the most serious market violations are also criminal offences — the most familiar ones being market manipulation, dissemination of false information and use of inside information. According to the regulator, these criminal and administrative means to sanction are easily articulated and the number of cases where two decisions ruled on identical facts is significantly low. Nevertheless, the few occurring cases where a double jeopardy violation can be raised are generally emblematic due to its severity and extensive media coverage. While it recognizes that a better coordination between criminal and administrative procedures revolving around the same reprehensible behavior should be sought, it is likely that the AMF will attempt to keep a lead role in fighting financial crime.
The coming months will be crucial in distinguishing a trend illustrating the French response to these latest developments. In any case, the final outcome remains unclear.
2.2 Capital Markets – A New Contemplated Framework for French IPOs
Following the public consultation on a proposed new framework for initial public offerings (thereafter "IPO"), the French financial regulator, the Autorité des marchés financiers (hereafter "AMF"), has published on December 1, 2014 the final set of measures approved by its Board. The entirety of the initial proposals put forward by the AMF working group dedicated to initial public offerings (thereafter "WG") and published on September 25, 2014, have been accepted. The proposed AMF General Regulation modifications have now been submitted to the French Minister of finance for ratification.
The planned modifications can be summarized as follows:
To enable analysts outside the syndicate to carry on an in-depth dialogue with senior managers, the consultation participants have agreed on the principle that companies applying for a listing should invite analysts to discuss with them once the base document has been published, through a face-to-face meeting or a conference call.
The AMF foresees that this new IPO framework, aiming at increasing flexibility and French competitiveness, should be implemented by (no later than) the end of the first quarter of 2015.
3.1 Tax — Recent tax changes (2014 and 2015 Financial Laws)
Some of the main 2014 and 2015 tax changes resulting from the Financial Laws passed in December 2015 by the French Parliament are the following:
3.2 Tax – Renegotiation of the France and Luxembourg Tax Treaty; Taxation of Real Estate Capital Gains Expanded by Way of a September 5, 2014 Amendment to the Treaty
A fourth amendment to the tax treaty between France and Luxembourg has been signed on September 5, 2014. It gives the State where real estate assets are located the right to tax capital gains on the sale of shares in companies owning such real estate assets. This amendment will enter into force at the beginning of the calendar year following its ratification by both States (in the case of income taxes levied by deduction at source) or to financial years opened after the calendar year following the ratification (in the case of income taxes not collected by deduction at source). In practice, the amendment should enter into force on January 1, 2016 for most investments.
The amendment may prompt a growing use by investors of tax-favored real estate vehicles such as OPCI (organisme de placement collectif en immobilier), which are not taxed on real estate income so long as they comply with certain profit distribution requirements and which should remain eligible to the benefit of reduced withholding tax rate on dividends paid to Luxembourg shareholders in accordance with the provisions of the France Luxembourg tax treaty.
For further details on this new Decree, please see the Gibson Dunn Client Alert of September 5, 2014: http://www.gibsondunn.com/publications/pages/Renegotiation-of-France-and-Luxembourg-Tax-Treaty–Taxation-of-Real-Estate-Capital-Gains-Expanded–Sept-5-2014-Amendment.aspx.
3.3 Tax — Foreign Account Tax Compliance Act Will Increase Compliance Costs for Clients
The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 to strengthen the legislative framework against tax evasion by U.S. taxpayers with foreign bank accounts. On November 14, 2013, France and the U.S. signed a bilateral agreement whereby France committed to drafting locally applicable laws and regulations with scope covering all financial institutions resident in France. Participating Foreign Financial Institutions, that is, those institutions that have entered into an agreement with U.S. tax authorities (such as the IRS), are engaged in identifying and documenting all potential accounts that may be eligible for U.S. contribution and inform the French authority who will then transmit the information to the IRS. If Foreign Financial Institutions do not enter into such an agreement, a 30% withholding tax will be levied on all related U.S. sourced payments. Examples of these payments may include dividends by U.S. corporations or sale proceeds from the sale of U.S. property.
The new reporting requirements will also have an impact on some entities outside of the traditional financial services sector. The first reporting requirements will enter into force in France on September 30, 2015 relating to information collected from July 1, 2014.
Discussions have been engaged within the European Union as well as the OECD in order to further strengthen the international cooperation regarding tax data following the FATCA model.
As of November 5, 2014, the new regime applicable to commercial leases prohibits that a series of charges be imposed by lessors to lessees.
The so-called "Pinel Law" makes it mandatory to include a specific inventory regarding the nature of taxes, fees, royalties and charges, as well as their allocation between the lessor and the lessee, thus putting an end to the contractual freedom of former commercial leases.
The Decree confirms the abolition of the widespread practice of "triple net" leases in France for offices or commercial shops. Indeed, from now on, the following charges can no longer be imposed on lessees:
This limitation on the ability to pass service charges on to the lessee is just one of the main changes introduced by the "Pinel Law" that may be of interest to investors. One of the concerns elicited by such change is that it may result, in the medium term, in an increase in rents to compensate for the fact that some of the running costs that were previously passed on to the lessee will now be borne by the lessor.
5.1 Labor and Employment — Conflicts of Law in Cross-Border Acquisitions by a U.S.-Listed Company: Duty to Inform the French Works Council vs. Risks of Insider Trading in the United States.
In a cross-border acquisition involving a French subsidiary by a listed U.S. company, the U.S. and French legal systems often conflict, notably in terms of labor law requirements. Indeed, it is often the case that the contemplated acquisition would require consulting the works council (comité d’entreprise) of the French entity. And yet, providing sensitive, material, non-public information to employee representatives in France could also potentially violate U.S. law requirements not to disclose any confidential information before the deal is completed.
However, it is difficult to do without a consultation of the works council, since failure to do so could result in having French courts postpone the acquisition process until a proper consultation is undertaken. Furthermore, failure to consult the works council in due time could be qualified as obstruction (délit d’entrave), which is sanctioned under French criminal law. The works council must be provided with precise written information made available by the employer, as well as an argued answer from the employer to its questions.
A practical solution is therefore to perform such consultation by relying on the confidentiality duty imposed on the members of the works council, the breach of which is sanctioned by disciplinary measures. However, such confidentiality duty only applies to information that is expressly presented by the employer as being confidential prior to being disclosed to the works council, provided that such confidentiality is justified by the legitimate interest of the company. In other words, this means that not every kind of information can be presented as confidential by the employer and consequently, that the confidentiality duty provided for by French labor law is not intended to apply to any kind of information. This is notably justified by the fact that such confidentiality duty infringes employee representatives’ freedom of expression, and should thus be constrained in proportion to the legitimate interest of the company.
It is thus highly recommended to carefully prepare the consultation of the works council to determine which information is confidential and which is not. Also, the information presented by the employer as confidential will not be mentioned in the minutes of the works council to be displayed in the premises of the company.
5.2 Labor and Employment — On the Difficulties to Implement a Whistleblowing Hotline in France…
Though the implementation of whistleblowing hotlines is required for U.S. companies under the Sarbanes-Oxley Act of 2002, the reception in France of such procedures still triggers significant validity issues.
While U.S.-style whistleblowing hotlines are notably characterized by their wide scope, French so-called alertes professionnelles are strictly limited to the five following areas:
Furthermore, the French Data Protection Authority (Commission Nationale de l’Informatique et des Libertés – the "CNIL") requires that companies that implement a whistleblowing hotline clearly inform their employees that such procedure is restricted to the aforementioned areas and can only be used to collect objective data in relation thereto. Anonymous alerts are banned, save under very specific circumstances, as the CNIL requires that the procedure ensures the confidentiality of the alert while asking for the whistleblower to state his/her identity, position and contact information.
A recent decision of the High Court of Caen (Tribunal de Grande Instance) confirms that a whistleblowing procedure implemented in a French subsidiary of a U.S.-listed company that does not strictly comply with such requirements is illegal. In the case at hand, the French court sanctioned the company for having implemented a whistleblowing hotline (handled by a third-party provider) which allowed "reporting anonymously any suspected misconduct or other problems to the company". De facto, the complaints could target any French employee regarding facts that did not necessarily fall within the scope of the limited pre-identified areas.
The High Court of Caen considered the whistleblowing procedure to be unlawful, for the reporting system available to employees did not clearly set the type of information that could be submitted. According to the Court, the risk attached to this reporting device was a potential escalation into an organized system of denunciation and false accusation based on facts relating to privacy.
This decision illustrates the fact that, in order to be valid, a French whistleblowing procedure must, among other applicable French legal requirements, clearly limit the information that may be reported by employees to the areas previously identified. Moreover, this restriction must be ensured by both the company itself and a third-party service provider used by the company, if any.
If the whistleblowing hotline is intended to report potential violations in domains that fall out of the aforementioned limited scope, it is then subject to a prior authorization issued by the CNIL. Such extension of scope could potentially be authorized taking into consideration the specific characteristics of the company’s business activity. However, such extension of scope is rarely approved by the CNIL, which is reluctant to consider it as being justified by the legitimate interest of the company.
Enacted on March 17, 2014, the Statute n°2014-344 relating to consumers (the "Statute") (the so-called "Hamon Statute") focuses on improving the protection of consumers in a variety of domains, from the introduction of class actions into French law, to the enhancement of pre-contractual information of consumers, through the modification of obligations applicable to e-commerce.
The Statute notably introduces a new preliminary article to the French Consumer Code which defines the notion of consumer, as required by the European directive on consumers. It also reinforces the protection of consumers by enhancing requirements in terms of pre-contractual information, which shall be provided "in a legible and understandable" manner. Pre-contractual information covers:
These provisions are mandatory and cannot be skirted by professionals, notably through contractual clauses or agreements. All agreements entered into after June 13, 2014 are subject to these mandatory obligations in terms of pre-contractual information.
The Statute strengthens the "double-click" process prior to moving forward with an online acquisition by requiring that a new statement reading "order with purchase obligation" be added. It also puts an end to the widespread practice of pre-selected boxes on e-commerce websites, which are now forbidden. The Statute indeed intends to fight against consent by default (notably via pre-selected boxes) and allows for the consumers to obtain full reimbursement if they have involuntarily purchased a good or service they had not initially selected (via the system of pre-selected boxes).
Furthermore, professionals must indicate the date or timeframe within which the contract is to be executed; if not, the tacit timeframe for the execution of the contract is of 30 days, as opposed to the immediate execution of the contract required by the former applicable regime. In addition, in case the professional fails to deliver the product within the indicated (or tacit) timeframe, then consumers shall first and foremost send a formal order requesting its execution prior to terminating the agreement, unless the timeframe of delivery was an essential condition of the contract. If terminated, consumers shall be reimbursed within 14 days at the latest following termination. Failure to do so results in penalties which increase as time goes by.
The Statute also increases the withdrawal period, during which consumers can annul the contract, from 7 to 14 days starting on the date on which the consumer receives the product (or the date on which the service contract is entered into). In case of contracts involving sequential performance, the withdrawal period starts running upon delivery or execution of the last item. As under the former regime, this withdrawal period can be exercised without any justification. The professional is required to fully reimburse the consumer, including the costs incurred to send the product back. In case of late reimbursement, the abovementioned penalties apply. Furthermore, the Statute now strictly limits the circumstances where this right of withdrawal can be excluded to thirteen different situations.
Finally, the Statute strengthens product conformity warranties, notably by raising from 6 months to two years the presumption of default in conformity. Consequently, any default in conformity which occurs within the two years of the delivery of the product shall be deemed to have existed originally on the delivery date, thus easing the implementation of the guarantee process. This new provision will only enter into force on March 17, 2016.
In order to ensure enforceability of these new provisions, the Statute also improves the prerogatives of the National Agency in charge of Competition Policy, Consumer Affairs and Fraud Control. Sanctions incurred, whether administrative or criminal, have also been enhanced by the new law.
The Statute covers a great range of additional subjects relating to consumer protection, and significantly modifies the applicable law in terms of loans and insurance, geographic indications, deceptive marketing practices, over-indebtedness of individuals, etc. The Statute also impacts French lawyers, who are now authorized to advertise their practice and canvass new clients, in line with the European directive on services in the internal market of 2006.
7.1 Data Protection — CNIL Enforcement Actions
In 2014, the French Data Protection Authority (Commission Nationale de l’Informatique et des Libertés — CNIL) has pursued a number of enforcement actions, with several resulting in sanctions of up to €150,000, the maximum amount that may be imposed. In particular, the CNIL fined a search engine €150,000 for failure to comply with the requirements of the Data Protection Act. Following the investigations performed by EU data protection authorities, the Article 29 Data Protection Working Party adopted a compliance package of dedicated measures, aimed at offering specific and practical measures that could be implemented quickly by any search engine to meet the requirements of the European data protection framework.
In addition, France (alongside Germany) urges upon the largest search engines to put an end to their anticompetitive practices and to foster transparency for the ranking of websites. The two countries seek to have the European Commission issue a more stringent regulatory framework designed to take a tougher line on those companies and other internet giants. A draft motion is now calling for the European Commission to consider the "unbundling" of search engines from other commercial services.
7.2 Data Protection — Social networking services’ unfair contract terms
On November 7, 2014, the French Commission on unfair terms (Commission des clauses abusives) issued a recommendation advocating for the removal of several unfair terms generally included in contracts of so-called "social networking services", notably in connection with data protection. For instance, it recommends removing clauses according to which the user implicitly agrees to the processing of his/her personal data by the professional, or which organize the transfer of personal data to undesignated third parties, with no need for any formal consent from the user, or which provide for longer retention period than what is provided for by the CNIL, etc.
The statute n°2014-617 dated June 13, 2014 (the "Statute") has increased banks and insurers’ obligations in connection with inactive bank accounts and unclaimed life-insurance policies. The general purpose of the Statute is to (i) increase the protection of property rights of account holders and beneficiaries of life-insurance contracts and (ii) facilitate the transfer of unclaimed amounts, after the legal statute of limitations has expired, to the State.
A new set of obligations for banks in connection with inactive bank accounts
In this regard, a definition of "inactive bank accounts" (comptes bancaires inactifs) has been introduced in the French Monetary and Financial Code (Code monétaire et financier), which designates all bank accounts for which either (i) a 12-month period has elapsed without any operation on the account and without any contact from the account holder or (ii), if the account holder is deceased, a 12-month period has elapsed without any contact from his/her right holders.
In connection with inactive bank accounts, banks now shall:
These amounts shall be held by the CDC on behalf of the right holders and are then transferred to the State upon the expiry of a 30-year period after the death of the account holder or the last operation or contact, as the case may be.
An existing set of rules binding upon insurers in relation to unclaimed life-insurance contracts clarified and reinforced
The Statute has also completed, specified or strengthened the obligations already borne by insurers in connection with unclaimed life-insurance contracts, which were introduced by several statutes enacted since 2005. More specifically, insurers are now required to:
Such transfer to the CDC relieves the insurer from any obligation in connection with such insurance contracts, except for the preservation of all related information and documents; the insurer shall inform the insured party or beneficiary of this upcoming transfer 6 months in advance.
Since 2007, insurers are also required to proactively identify and look for the beneficiaries of unclaimed life-insurance policies in order to inform them of their rights. The Statute expressly prevents insurers from deducting from the insurance benefits due under any life-insurance policy the information and research costs incurred in relation thereto.
Yet some of the hardships faced by insurers in their research have been lifted by the Statute since public notaries and the tax administration now have to disclose to insurers the identity of the insured party’s heirs or right holders or the contact details of the beneficiary of a life-insurance policy.
As a counterpart, public notaries and right holders are now allowed to obtain information relating to unclaimed bank accounts from the tax administration and the CDC and to consult a public record (FICOVIE) registering all unclaimed life-insurance policies, in order to verify whether or not a particular person may be the beneficiary of a life-insurance policy.
The provisions of this Statute will enter into force on January 1, 2016, except for those requiring the public notaries and the tax administration to assist insurers in their research and those relating to public notaries and right holders’ new information right which entered into force on January 1, 2015.
9.1 Public Law — The application of the principle "the silence of the administration is deemed to equal acceptance" and its exceptions
Since November 12, 2014 the principle that the silence of the public administration regarding a citizens’ demand for more than two months is deemed to equal acceptance, came into force. This key measure of the simplification process, provided by the law authorizing the government to simplify the relations between government and citizens (art. 1, II., 2 of Law No. 2013- 1005 of November 12, 2013, modifying the Law 2000-321 of April 12, 2000), replaces the old principle which provides that silence equals refusal, devoted in French law in 1864.
Through this legal change, the government aims to facilitate administrative procedures and hopes that individuals and companies will no longer see their rights "limited by administrative inertia". No less than 1,200 procedures, ranging from changing the civil status to registration at the university, are concerned. They will be listed, ultimately, on a website.
Nevertheless, the revolutionary character of this new principle should be weighted since it suffers from a significant number of exceptions detailed in no less than 42 decrees published in the Official Journal on November 1, 2014. These exceptions fall into three perspectives:
From November 12, 2015, local authorities, their public institutions, social security agencies and other bodies responsible for the management of a public administrative service will be also concerned by this new principle.
9.2 Public Law — Validation by Law of the structured loan agreements signed by public local authorities.
Law No. 2014-844 of July 29, 2014, concerning the security of structured loan agreements entered into by a credit institution and legal persons governed by public law valid the loan agreements’ provisions setting out interests, considering that the validity of these provisions cannot be challenged by the plea or lack of mention of the annual percentage rate of charge (Taux Effectif Global / TEG), the rate period or period of time, or the erroneous entry of a TEG, a period of rates or a period of time.
The adoption of the Law was motivated by several decisions of the High Court of Nanterre (Tribunal de Grande Instance), which (i) estimated that the faxes which had preceded the signing of the loan agreements so-called "structured" could be qualified as "loan agreements" and (ii) decided to apply the official interest rate (taux légal) instead of the contractual rate in case of formal lack of mention in the fax of the TEG or intermediary data with which to calculate the TEG.
In order to comply with the case law of the European Court of Human rights, the legislator has strictly limited the scope of the validation to the "structured" loan agreements entered into by legal persons governed by public law. Moreover, it relates to the sanction of an irregularity affecting the borrower on the overall cost of credit, but doesn’t affect the general economy of the signed loan agreements. Last but not least, the infringement of the rights of the legal persons governed by public law can only be justified by an overriding reason of general interest.
In its decision 2014-695 DC of July 24, 2014, the French Constitutional Council confirmed the conformity of the law with the French Constitutional rules. He has notably pointed out that the legislator, by adopting these provisions, intended to prevent the direct or indirect financial consequences, exceeding ten billion euros, resulting for credit institutions that have granted "structured" loans to communities territorial, their public bodies or local public institutions.
It shall be underlined that in order to find a permanent and comprehensive solution for the most sensitive loans, the French Government has created a multi-year support fund endowed with significant resources enabling local governments to finance the unwinding of structured loans. It is endowed with EUR 1.5 billion (60% coming from the banks) and has a life span of 15 years maximum (EUR 100 million per year). Any entity benefiting from the fund shall withdraw from current litigation or renounce to future litigation on the loans benefiting from the fund.
9.3 Public Law — In a decision "Département du Tarn et Garonne" of April 4, 2014, the French Administrative Supreme Court (Conseil d’Etat), open a new way for the third parties to contest the validity of a public contract before French administrative courts.
If traditionally, only parties to a contract were able to contest the validity of a public contract, this construction was made more flexible in 2007, with the opportunity for the unsuccessful candidates to the contract award to contest the validity of a public contract.
With the decision "Département du Tarn et Garonne", third parties, who have an interest that could be prejudiced by a public contract, may contest its validity before French administrative courts. This new way to contest the validity of a public contract is however strictly circumscribed: (i) the prejudice to the interest of the third parties must be direct and certain; (ii) the third parties can only raise defects that are directly bound to the prejudiced interest. The judge will appreciate the importance of the defect. He can decide the further execution of the contract, or invite the parties to regularize matters. If there is an irregularity such as the continuation of the contract is impossible, then the judge can terminate it totally or partially. In certain cases, the judge can sentence the parties to pay compensation to the injured party, who brought the case.
It shall be underlined that the Conseil d’Etat judged that a similar action can be brought by the Prefect (local State representative) and members of local authorities’ council concerned. At the difference of the private third parties, they can invoke all defects affecting the contract in order to contest the validity of the contract.
The French Competition Authority (Autorité de la concurrence, hereafter, the "FCA") remained very active in the second half of 2014 and imposed significant fines. The French Supreme Court also ruled several important decisions, in particular regarding the determination of the financial penalty.
10.1 Competition Law — The FCA has fined 5.7 million euros to Cegedim for having abusively refused to sell its medical information database to certain pharmaceutical laboratories (Decision 14-D-06 of July 8, 2014)
Cegedim is leader in the medical database information market, and enjoys a dominant position. It offers both databases and management software to laboratories, whereas its competitor Euris only produces customer management software. Euris accused Cegedim of abusing its dominant position by refusing to sell its database to laboratories using or intending to use it with Euris management software. In fact, Cegedim refused to sell its OneKey database — the benchmark for the sector — to laboratories that were using software marketed by Euris, although it had agreed to sell it to laboratories that were using other competing software. Cegedim justified its refusal since it claimed to be suing Euris for counterfeiting. This abusively discriminatory treatment — the existence of a lawsuit for counterfeiting not constituting justification for the implementation of anti-competitive practices – caused Euris to lose any possibility of expansion in the management software market. The laboratories that used its software or that were interested in its software solution could not access the leading database in the market and consequently were deterred from working with Euris. This practice, which was instituted in October 2007 despite the fact that Cegedim was fully aware of the illegal nature thereof, had a seriously harmful effect on Euris which lost 70% of its customers between 2008 and 2012, and restricted the laboratories in their choice of customer management software. Consequently, the FCA has fined Cegedim 5.7 million euros, in view of the length of time the breach lasted, namely from April 2007 to April 2013, the gravity of the practice and the damage caused to the economy. It also enjoined Cegedim to cease to discriminate between its customers according to the software they are using. This Decision was appealed before the Paris Court of Appeal (pending case).
10.2 Competition Law — The impact of group membership on the determination of the financial penalty imposed to a cartel: the French Civil Supreme Court requests justification on how belonging to a group may be considered an aggravating factor in setting antitrust fines (French civil Supreme Court, Entreprise Pradeau et Morin e.a., Cases No. 12-27643, 12-27697, 12-27698, 12-2700, 12-28026, February 18, 2014, and Allez / Spie, Cases No. 13-16602, 13-16696, and 13-16905, October 21, 2014)
According to Article L. 464-2 of the French Commercial Code, the financial penalties are determined individually and justifiably for each company or organization sanctioned.
In these decisions, the French Supreme Court strictly applied this principle of individualization of penalties by considering that the mere fact to belong to a group is not sufficient to justify an increase in the amount of the fine or to reject elements of proof related to the financial capacity of the subsidiary to contribute.
Thus, in its decisions dated February 18, 2014, the French Supreme Court held that an appellate court which, after noting that a company had acted independently, considers that its membership in a group with significant annual turnover constitute an individual circumstance leading to increase the amount of the penalty in order to ensure its character both deterrent and proportionate, disregarding whether this belonging to the group played a major role in the implementation of anti-competitive practices or was likely to affect the assessment of the gravity of these practices, deprives its decision of a legal basis.
The French Supreme Court clearly confirmed its position in its decisions dated October 21, 2014, requesting justification on how belonging to a group may be considered an aggravating factor in setting antitrust fines. In those cases, the FCA had found ten undertakings guilty of submitting cover bids in several tender offers (decision No. 11-D-13 of October 5, 2011). The fact that some of those undertakings were subsidiaries of larger groups was taken into account in the setting of 10 million euros total fines for violation of Article L. 420-1 of the French Commercial Code. This was made possible because, in its guidelines on the method relating to the setting of financial penalties, dated May 16, 2011, the FCA states that a fine can be aggravated in consideration of the fact that ”the group to which the undertaking belongs itself has a size, an economic power or overall resources that is or are important, this factor being taken into consideration, in particular, where the undertaking that controls the undertaking at stake within the group is also liable for the infringement”. The French Civil Supreme Court, on the basis of Article L. 464-2 of the French Commercial Code pursuant to which fines are set individually for each undertaking and must be justified, stated that where an undertaking implemented anticompetitive practices, autonomously, it would be unlawful to aggravate its fine automatically without providing explanation, if the group had not taken part in the infringement.
10.3 Competition Law — On December 15, 2014, within the scope of a procedure by the French main hotel unions, the FCA indicated that Booking.com has proposed to remove the so-called "pricing parity clause" obliging hotels to grant it pricing conditions that are at least as favorable as those granted to the other online platforms.
The commitments taken, that Booking.com proposes to extend to all EEA countries, should enable the hotels referenced on booking.com to be free to propose rooms at different prices according to the platform used. They may be able to vary the prices depending on the conditions applied to them. The proposed commitments are submitted to market test with stakeholders in the sector to check if the proposed commitments are adequate to address the competition concerns identified. Once the market test has been completed, the FCA’s college will hear the parties and examine the observations formulated by third parties. Where applicable, the FCA may require such commitments to be amended or supplemented then, once the commitments have been made compulsory, the proceedings will be closed. Should the FCA find that the commitments, even where amended, remain unsatisfactory, it will resume the standard litigation procedure.
10.4 Competition Law — The FCA fines concerted practices between manufacturers a total of 345.2 million euros and 605.9 million euros on each market concerned (Decision 14-D-19; December 18, 2014 relating to home and personal care products sold in supermarkets)
The FCA issued a decision whereby it fines home care products and personal care products manufacturers for having implemented concerted practices. The FCA was informed of the existence of these concerted practices by three players which successively applied to benefit from the leniency procedure. Thanks to information disclosed by the leniency applicants, raids were carried out in France. The very first raid even occurred during a lunch organized in a Parisian restaurant called "le Royal Villiers". Some of the players were caught in act. Between 2003 and 2006, on both markets, major companies coordinated their commercial policy towards supermarkets, and in particular their price increases. These two fines rank among the most significant fines pronounced by the FCA, until now. The supermarket suppliers for home and personal care products coordinated their commercial policy towards their distributors, to avoid any increase of competition between them. The concerted practices were particularly sophisticated. To discuss about each sector, they met regularly and secretly to coordinate their commercial policies and discuss their pricing policies. The collusive practices were intended to bring together the positions held by suppliers during the commercial negotiations with distributors. The concerted practices distorted negotiations with distributors to the benefit of suppliers. They allowed maintaining artificially high selling prices to retailers, which were then passed on prices paid by end consumers. The concerted practices aimed at distorting the main components of commercial negotiations, especially price evolutions. The FCA also pointed out that these infringements harmed the economy and also had an important impact on consumers. It shall be underlined that two companies have received full immunity under the terms of the leniency program, others having been partially exempted. Some companies, which have not challenged the facts and have proposed compliance commitments for the future, benefited from a reduction of their fines.
 It should be noted that intermediaries that only offer financing through donations may choose this legal status but are not necessarily subject to it.
 On November 28, 2013, the European Commission submitted a proposal for a directive regarding the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. On May 26, 2014, the European Council agreed on a general approach for establishing a new legal framework for the protection of trade secrets in European Member States and abroad. Discussions in plenary sitting at the European Parliament may start in late April 2015.
 The initial draft law adopted by the French Assemblée Nationale intended to limit the scope of protection of the French Blocking Statute to information (i) the communication of which would harm the sovereignty, the security, or the essential economic interests of France or (ii) constituting trade secrets as per the definition created by the bill.
 Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct. for the S. Dist. of Iowa, 482 U.S. 522 (1987).
 Secretary of State for Health v. Servier Laboratories Ltd; National Grid Electricity Transmission plc v ABB Ltd and others  EWCA Civ 1234.
 United States v. First National City Bank, 379 U.S. 378 (1965).
 Only one criminal case of a prosecution known under the French Blocking Statute in the last 40 years (Cass. Crim., Christopher X / MAAF, Dec. 12, 2007, n°07-83.228)
 Law No. 2014-626 of Jun. 18, 2014
 Such a list is set by Decree n°2014-1317 of Nov. 3, 2014
 New Article L. 145-40-2 of the French commercial Code
 The new article applies to leases entered into or renewed on or after November 5, 2014
 So-called contribution économique territoriale
 Article L. 2323-19 of the French Labor Code requires consulting the works council in case of modification impacting the economic organization or legal structure of the company.
 Cass. soc., Nov. 28, 2000, n°98-19.594
 Cass. soc., Nov. 5, 2014, n°13-17.270
 If not, the whistleblowing will be subject to a special authorization from the CNIL
 Tribunal de Grande Instance de Caen (High Court of Caen), second chamber, Sept. 15, 2014, No. 10/00290, Benoist Gérard.
 From the name of the former minister in charge of the social and solidarity economy, Mr. Benoit Hamon.
 Preliminary article of the French Consumer Code: "any individual whose action is not driven by his/her commercial, industrial, craft or liberal activity is considered a consumer under this code"
 EU Directive n°2011/83/UE of Oct. 25, 2011 relating to consumers’ rights.
 Article 34 of Statute n°2014-344
 The withdrawal period can even be extended to 12 months if all mandatory information is not provided (Art. L. 121-21-1 of the French Consumer Code).
 Autorité administrative chargée de la concurrence, de la consommation et de la répression des fraudes — Art. L. 141-1 et seq. of the French Consumer Code
 In France, the protection of personal data is governed by the Loi Informatique et Libertés of January 6, 1978 (hereafter the "Data Protection Act"), which is implemented by the CNIL.
 Recommendation n°2014-02 of November 7, 2014.
 Press Release available at http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=591
 The FCA indicated that seven competition authorities in Europe (in France, Germany, Sweden, UK, Italy, Austria, Ireland) have opened cases concerning online booking platforms. Under the aegis of the European Commission, national authorities have set up closed cooperation in order to harmonize the handling of these issues. France, Sweden and Italy have led the way in this cooperation.
 The leniency procedure allows a company which informs the FCA de la concurrence of anticompetitive practices in which it takes or took part, to benefit from a full or partial immunity from fines, under certain conditions in particular on the basis of the rank of arrival of its leniency application, the ‘added value’ of the information given as well as its full cooperation with the FCA to establish the existence of the infringement.
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