Decision no. 2012-280 QPC of 12 October 2012

On 17 July 2012 the Constitutional Council, in the conditions provided for by Article 61-1 of the Constitution, received an application for a priority preliminary ruling on the issue of constitutionality raised by the Conseil d’État (decision no. 353856 of 17 July 2012) on behalf of the company Groupe Canal Plus and the company Vivendi Universal, raising the conformity of paragraph IV of Article L. 430-8 of the Commercial Code and paragraph II of Article L. 461-1, Article L. 461-3 and paragraph III of Article L. 462-5 of the Code with the rights and freedoms guaranteed by the Constitution.
 
THE CONSTITUTIONAL COUNCIL,
 
Having regard to the Constitution;
 
Having regard to Ordinance no. 58-1067 of 7 November 1958 as amended, concerning the basic law on the Constitutional Council;
 
Having regard to the Commercial Code;
 
Having regard to Law no. 2008-776 of 4 August 2008 on the modernisation of the economy;
 
Having regard to Ordinance no. 2008-1161 of 13 November 2008 on the modernisation of trade regulation;
 
Having regard to Law no. 2009-526 of 12 May 2009 on the simplification and clarification of the law and the streamlining of procedures;
 
Having regard to the Law no. 2010-838 of 23 July 2010 on the application of the fifth subparagraph of Article 13 of the Constitution;
 
Having regard to the Regulation of 4 February 2010 on the procedure applicable before the Constitutional Council with respect to applications for priority preliminary rulings on the issue of constitutionality;
 
Having regard to the observations in intervention on behalf of the association of counsel practising competition law by the SCP Defrénois et Lévis, Attorney at the Conseil d’État and the Cour de Cassation, registered on 7 August and 17 September 2012;
 
Having regard to the observations file on behalf of the applicant companies by Bird & Bird AARPI, Attorney at the Paris bar, and by the firm Veil Jourde, Attorney at the Paris bar, registered on 30 August and 17 September 2012;
 
Having regard to the observations on behalf of the Competition Authority filed by SCP Baraduc & Duhamel, Attorney at the Conseil d’État and the Cour de Cassation, registered on 31 August and 17 September 2012;
 
Having regard to the observations of the Prime Minister, registered on 31 August 2012;
 
Having regard to the documents produced and appended to the case files;
 
Having heard Emmanuel Glaser Esq. and Claude Lazarus Esq. on behalf of the applicant companies, Élisabeth Baraduc-Bénabent Esq. on behalf of the defendant, Marc Lévis Esq. on behalf of the intervener, and Mr Thierry-Xavier Girardot, appointed by the Prime Minister, at the public hearing of 2 October 2012;
 
Having heard the Rapporteur;
 

1. Considering that the Constitutional Council was seized in relation to paragraph II of Article L. 461-1 of the Commercial Code "as in force following the issue of the Ordinance of 13 November 2008"; that this paragraph, which was amended by the aforementioned Law of 4 August 2008, was not subject to any further amendment until the aforementioned Law of 23 July 2010; that the application for a priority preliminary ruling on the issue of constitutionality must be deemed to relate to the provisions applicable to the dispute at the time it was filed; that accordingly the Constitutional Council was seized in relation to paragraph II of Article L. 461-1 of the Commercial Code as in force following the enactment of the aforementioned Law of 23 July 2010; that the Constitutional Council was seized in relation to Article L. 461-3 of the Code "as in force following the issue of the ordinance of 13 November 2008"; that Article 139 of the aforementioned Law of 12 May 2009, which confirmed this Ordinance, at the same time amended the wording of the fourth subparagraph of Article L. 461-3; that the Constitutional Council may only be seized in relation to provisions with the status of legislative provisions for the purposes of Article 61-1 of the Constitution; that accordingly, the Constitutional Council was seized in relation to Article L. 461-3 of the Commercial Code as in force following the enactment of the aforementioned Law of 12 May 2009;
    
2. Considering that pursuant to paragraph IV of Article L. 430-8 of the Commercial Code as in force following the enactment of the aforementioned Law of 4 August 2008: "If it considers that the parties have not fulfilled an order, requirement or commitment within the fixed periods stipulated in its decision or in the decision of the minister ruling on the operation pursuant to Article L. 430-7-1, the Competition Authority shall issue a declaration of non-compliance. It may:
   "1. Withdraw the decision authorisating the operation. Unless the situation is returned to the state prevailing prior to the concentration, the parties shall be required to notify the concentration again, within one month from the withdrawal of the decision, failing which they will incur the penalties specified in paragraph I;
   "2. Subject to the limit laid down in paragraph II of Article Article L. 464-2, enjoin the parties on which the unfulfilled obligation was incumbent, subject to a penalty, to comply with the orders, requirements or commitments within such a period as it may determine.
   "Moreover, the Competition Authority may impose on the parties on which the unfulfilled obligation was incumbent a financial penalty which may not exceed the amount specified in paragraph I.
   "The applicable procedure shall be that provided for under the second subparagraph of Article L. 463-2 and Articles L. 463-4, L. 463-6 and L. 463-7. However, any parties which have served notice and the Government commissioner shall submit their observations in response to notification of the report within a time limit of fifteen working days.
   "The Competition Authority shall issue its ruling within a time limit of seventy-five working days";
    
3. Considering that pursuant to paragraph II of Article L. 461-1 of the Code as in force following the enactment of the aforementioned Law of 23 July 2010: "The powers vested in the Competition Authority shall be exercised by a board comprised of seventeen members, including a chairman, who shall be appointed for a term of five years by decree issued following receipt of a report from the minister in charge of the economy.
    
   "The chairman shall be appointed on the basis of his expertise in the legal and economic field.
   "The board shall also include:
   "1. Six members or former members of the Conseil d'Etat, Cour de Cassation, Auditor-General’s department or other administrative or ordinary courts;
   "2. Five persons chosen due to their expertise in economic affairs or in competition and consumer affairs;
   "3. Five persons who carry out or have carried out their activities in the sectors of production, distribution, craftwork, services or professions.
   "Four vice-chairmen shall be appointed from the members of the board, two of whom at least shall be chosen from the persons referred to in subparagraphs 2 and 3";
    
4. Considering that pursuant to Article L. 461-3 of the Code as in force following the enactment of the aforementioned Law of 12 May 2009: "The Competition Authority may meet in a plenary session, in sections, or as a permanent commission. The permanent commission shall be composed of the chairman and the four vice-chairmen
    
   "The bodies of the Authority shall resolve by a majority of the members present. The internal regulations of the Authority shall determine the rules specifying the quorum applicable to each of these bodies.
   "In the event of a tied vote, the chairman of the body shall have a casting vote.
   "The chairman, or a vice-chairman designated by him, may only adopt the decisions provided for under Article L. 462-8 and those provided for under Articles L. 464-2 to L. 464-6 if they relate to circumstances in relation to which the Competition Authority was seized by the minister pursuant to the fourth subparagraph of Article L. 464-9. He may also take such action in relation to the decisions provided for under Article L. 430-5";
    
5. Considering that pursuant to paragraph III of Article L. 462-5 of the Code as in force following the issue of the ordinance Law of 13 November 2008: "The Rapporteur General may recommend that the Competition Authority refer to itself the cases mentioned in paragraphs I and II of Article L. 430-8 and the failure to comply with commitments taken in relation to decisions authorising concentration operations adopted prior to the entry into force of Ordinance no. 2008-1161 of 13 November 2008 on the modernisation of trade regulation";
    
6. Considering that the applicant companies contest on the one hand the provisions of paragraph IV of Article L. 430-8 of the Commercial Code on the penalties which may be imposed against companies in respect of which a concentration has been authorised, and on the other hand the provisions of paragraph II of Article L. 461-1, Article L. 461-3 and paragraph III of Article L. 462-5 of the Commercial Code on the composition of the Competition Authority, rules governing its resolutions and the procedures for references to it;
    

• PARAGRAPH IV OF ARTICLE L. 430-8 OF THE COMMERCIAL CODE:
   

7. Considering that, according to the applicant companies, in enabling the Competition Authority to withdraw authorisation for a concentration which has already been granted and, accordingly, to call into question a concentration operation which has taken effect or to require the company concerned to comply with new obligations, the provisions of paragraph IV of Article L. 430-8 of the Commercial Code violate the freedom of enterprise in a disproportionate manner; that in failing to specify the nature of the analysis of the competitive situation which is to be conducted by the Competition Authority and the starting point for the procedure leading to the withdrawal of authorisation for a concentration, these provisions are also claimed to breach the objective of constitutional standing that the law should be intelligible and accessible and the constitutional requirement of clarity and precision within the law. With regard to the freedom of enterprise:
    
8. Considering that the legislator is free to subject the freedom of enterprise, as resulting from Article 4 of the 1789 Declaration of the Rights of Man and the Citizen, to limitations associated with constitutional requirements or which are justified by the general interest, provided that this does not result in harm that is disproportionate to the objective pursued;
    
9. Considering in the first place that in adopting the provisions of paragraph IV of Article L. 430-8 of the Commercial Code, the legislature granted the Competition Authority the power, in the event of a failure to comply with an order, requirement or commitment contained in a decision authorising a concentration operation, to withdraw the decision authorising the completion of the concentration operation and to impose a financial penalty on the parties on which the unfulfilled obligation was incumbent; that the withdrawal of the decision authorising the concentration operation is only applicable when this authorisation was granted subject to conditions; that if the decision authorising the operation is withdrawn, unless the situation is returned to the state prevailing prior to the concentration, the parties are required to notify the concentration again to the Competition Authority within one month from the withdrawal of authorisation, failing which they will be liable to other penalties; that according to these provisions, the legislature sought to ensure effective compliance with the orders, requirements or commitments associated with concentration authorisations;
    
10. Considering secondly that the penalties provided for under paragraph IV of Article L. 430-8 of the Commercial Code will only be incurred if a concentration operation has been authorised "subject to a requirement on the parties to take all suitable measures in order to ensure sufficient competition or an obligation upon them to comply with requirements of such a nature as to make a sufficient contribution to economic progress in order to offset the anti-competitive effects"; that moreover, pursuant to Article L. 462-7 of the Code: "The Authority may not be seized in relation to circumstances dating back longer than five years unless an attempt has been made to investigate, establish or punish them"; that finally, the decisions adopted by the Competition Authority on the basis of paragraph IV of Article L. 430-8 may be challenged through the courts; that it is for the court seized of any such challenge to satisfy itself that the decision is well-founded;
     
11. Considering that the contested provisions on the control of concentration operations have the objective of assuring the competitive operation of the market within a specific sector; that in adopting them, the legislature did not breach the principle of freedom of enterprise in a manner which was not justified by the objectives of upholding the economic public order which it has allocated to itself and which was not proportionate having regard to this goal; that accordingly, the challenge objecting to the breach of the freedom of enterprise must be rejected. With regard to the intelligibility and accessibility of the law:
     
12. Considering that the breach of the objective of constitutional standing that the law should be intelligible and accessible cannot in itself be invoked in support of a priority preliminary ruling on the issue of constitutionality on the basis of Article 61-1 of the Constitution; that accordingly, the challenge objecting to the breach of this objective is procedurally inadmissible;
     
13. Considering that paragraph IV of Article L. 430-8 of the Commercial Code is not contrary to any right or freedom guaranteed under the Constitution; that it must be upheld as constitutional;
     

• PARAGRAPH II OF ARTICLE L. 461-1, ARTICLE L. 461-3 AND PARAGRAPH III OF ARTICLE L. 462-5 OF THE COMMERCIAL CODE:
   

14. Considering that, according to the applicant companies, the provisions of paragraph II of Article L. 461-1, Article L. 461-3 and paragraph III of Article L. 462-5 of the Commercial Code, which do not guarantee any separation between the bodies of the Competition Authority charged with issuing authorisations for concentrations and those charged with imposing sanction following controls of concentration operations, or any separation between the powers relating to the investigation and sanctioning of concentration operations within the Competition Authority violate the principles of the independence and impartiality of judicial bodies resulting from Article 16 of the 1789 Declaration;
     
15. Considering that Article 16 of the 1789 Declaration provides: “A society in which the observance of the law is not assured, nor the separation of powers defined, has no constitution at all”;
     
16. Considering that the principle of the separation of powers, or any other principle or rule of constitutional standing, does not preclude an independent administrative authority, acting within the scope of its prerogatives as a public authority, from exercising a power to impose penalties insofar as necessary to fulfil its mission, provided that the exercise of this power is associated by law with measures intended to ensure protection for rights and freedoms guaranteed under the Constitution; that in particular, the principle of the legality of criminal offences and punishments as well as the right to a defence - which are applicable to any sanction having the character of a punishment, even if the legislature left the task of imposing it to an authority of a non-judicial nature - must be respected; that the principles of independence and impartiality resulting from Article 16 of the 1789 Declaration must also be respected;
     
17. Considering in the first place that the provisions of paragraph II of Article L. 461-1 of the Commercial Code make provision for the composition of the board of the Competition Authority, of which different bodies are competent to exercise the powers to impose penalties vested by the legislature in this independent administrative authority; that Article L. 461-2 of the Code makes provision for the obligations to which the members of the Authority are required to adhere; that the third and fourth subparagraphs of this Article provide in particular that: "All members of the Council must inform the chairman of the interests which they hold or have recently acquired and of the functions which they perform in relation to an economic activity. - No member of the Authority may participate in a matter in which they have an interest or in which they represent or have represented one of the interested parties"; that Article L. 461-3 of the Code lays down the rules governing the adoption of resolutions by the Authority;
     
18. Considering on the other hand that the first three subparagraphs of Article L. 461-4 of the Commercial Code provide that: "The Competition Authority disposes of investigation services directed by a general rapporteur appointed by decision of the minister in charge of the economy after hearing the views of the board.- These services shall carry out the investigations necessary in relation to the application of titles II and III of this book. - The assistant rapporteurs general, the permanent or non-permanent rapporteurs and the researchers with the investigation services shall be appointed by the rapporteur general by decision published in the Journal Officiel"; that according to the penultimate subparagraph of that Article: "The chairman shall oversee the income and expenditure of the Authority. He shall delegate the payment orders relating to the expenses of the investigation services to the rapporteur general"; that these provisions have the objective of guaranteeing the independence of the rapporteur general and of the services vis-à-vis the bodies of the Competition Authority which are competent to impose penalties;
     
19. Considering that having regard to these legal guarantees, the control of compliance with which is a matter for the courts, paragraph II of Article L. 461-1 and Article L. 461-3 of the Commercial Code do not violate the principles of independence and impartiality which are indissociable from the exercise by an independent administrative authority of the power to impose penalties;
     
20. Considering secondly that whilst the provisions of paragraph III of Article L. 462-5 of the Commercial Code authorise the Competition Authority to refer "to itself" certain cases and the failure to comply with commitments taken in relation to decisions authorising concentration operations, this is subject to the condition that this referral has been proposed by the rapporteur general; that these dispositions applicable to the initiation of the procedure controlling the fulfilment of orders, requirements or commitments imposed by a decision authorising a concentration operation do not lead the authority to formulate a prior opinion in relation to the failures under examination; that the examination of the case is thereafter assured by the rapporteur general under the conditions and according to the guarantees laid down under Articles L. 463-1 and L. 463-2 of the said Code; that the board of the Authority is for its part competent to rule, according to the procedures laid down under Article L. 463-7 of the Code, on objections notified by the rapporteur general and, as the case may be, to impose penalties; that the two last subparagraphs of this Article provide that the rapporteur general may make observations during the session, whilst also providing that if the authority is to rule on cases in which it was seized in accordance with Article L. 462-5, the rapporteur general and the rapporteur will not attend the meeting at which it reaches its decision;
     
21. Considering that having regard to these legal guarantees, the control of compliance with which is a matter for the courts, the referral of a case to the Competition Authority does not involve any confusion between the functions of initiating legal proceedings and investigation and the power to impose penalties; that, under these conditions, the provisions of paragraph III of Article L. 462-5 of the Commercial Code do not cause any violation to the principles of independence and impartiality resulting from Article 16 of the 1789 Declaration;
     
22. Considering that paragraph II of Article L. 461-1, Article L. 461-3 and paragraph III of Article L. 462-5 of the Commercial Code, which do not violate any other right or freedom guaranteed under the Constitution, must be upheld as constitutional,
     
    HELD:
     
    Article 1.- The following provisions are constitutional:

• paragraph IV of Article L. 430-8, as in force prior to the enactment of Law no. 2008-776 of 4 August 2008 on the modernisation of the economy,
• paragraph II of Article L. 461-1, as in force prior to the enactment of Law no. 2010-838 of 23 July 2010 on the application of the fifth subparagraph of Article 13 of the Constitution,
• Article L. 461-3, as in force prior to the enactment of Law no. 2009-526 of 12 May 2009 on the simplification and clarification of the law and the streamlining of procedures,
• paragraph III of Article L. 462-5 of the Commercial Code, as in force prior to the issue of Ordinance no. 2008-1161 of 13 November 2008 on the modernisation of trade regulation.
   
  Article 2.- This decision shall be published in the Journal Officiel of the French Republic and notified in the conditions provided for under Article 23-11 of the Ordinance of 7 November 1958 referred to hereinabove.
   
  Deliberated by the Constitutional Council in its session of 11 October 2012, sat on by: Mr Jean-Louis DEBRÉ, President, Mr Jacques BARROT, Mrs Claire BAZY MALAURIE, Mr Guy CANIVET, Mr Michel CHARASSE, Mr Renaud DENOIX de SAINT MARC, Mrs Jacqueline de GUILLENCHMIDT, Mr Hubert HAENEL and Mr Pierre STEINMETZ.
   
  Announced on 12 October 2012.