On September 6, 2023, the French Supreme Court (“Cour de cassation”) upheld the Paris Court of Appeal’s judgment which had dismissed Carrefour’s damage claim against Vania Expansion (“Vania”) [1] following Vania’s participation in the home and personal care cartel.[2]  The French Cour de cassation noted that it is up to the alleged victim to demonstrate that it has not passed on the overcharge to consumers.

Background

On December 18, 2014, the French Competition Authority imposed a €951 million fine on eight hygiene product manufacturers, including Vania, for participating in two cartels in the home and personal care sectors between 2003 and 2006. 

On January 23, 2017, Carrefour sued Vania for damages before the Paris Commercial Court, and was awarded €2 million by a judgment dated November 4, 2019.[3]  Vania appealed this judgment on the grounds that the plaintiff must prove a direct, actual and certain prejudice, and that Carrefour therefore bears the burden of proving that the overcharge was not passed on.  On January 5, 2022, the Paris Court of Appeal annulled the judgment considering that Carrefour had failed to prove that it had not passed on the overcharge resulting from the anticompetitive practice to consumers.[4]  Carrefour then lodged an appeal with the French Cour de cassation.

The French Cour de cassation’s ruling

The French Cour de cassation confirmed that to establish the existence of a damage, the alleged victim of the anticompetitive practices must establish and produce evidence that it has not, in whole or in part, passed on to consumers the overcharge, i.e., the price increase resulting from the cartel, so that the award of damages does not result in an undue enrichment.[5]  In the case at stake, the French Cour de cassation considered that Carrefour had not evidenced that the loss of back margins generated with Vania’s products did not impact the price level of Vania’s products sold by Carrefour to end-consumers.

The French Cour de cassation noted that Carrefour had produced an economic study which compared the back margins generated with Vania’s products during the cartel period with an estimate of the back margins Carrefour would have achieved on these products absent the cartel, basing its counterfactual analysis on data from 2007, the year after the cartel ended.  According to the economic study, the amount of back margins that Carrefour would have achieved on Vania’s products absent the cartel was correlated to the total turnover of Carrefour, all products included.  Thus, the economic experts estimated the back margins that Carrefour would have achieved in 2004, 2005 and 2006 absent the cartel based on the growth rate of Carrefour’s total sales between 2004 and 2007.  The Cour de cassation found this correlation to be “questionable” and added that Carrefour had failed to produce any other evidence – accounting or other type of evidence – showing that no losses were passed on to consumers.   

In addition, the French Cour de cassation held that the Paris Court of Appeal was not required to carry out any research on its own and rightly concluded that Carrefour had failed to prove the alleged damage to the requisite standard.

As a result, the French Cour de cassation upheld the Paris Court of Appeal’s judgment dismissing Carrefour’s damage claim.

Takeaway

The French Cour de cassation confirmed that, under French law, the alleged victim of an anticompetitive practice must demonstrate that it has not passed on the overcharge to consumers – which can prove especially difficult when the company has a time-limited data retention policy.  However, the French Cour de cassation noted, as did the Paris Court of Appeal, that the company could also produce non-accounting evidence to make its case. 

The French Cour de cassation had come to a similar conclusion in a previous damage claim relating to the home and care cartel, dismissing Carrefour’s claim against Johnson & Johnson Santé Beauté France about a year ago.[6]

[1]              Commercial Chamber of the French Cour de cassation, September 6, 2023 (No. 22-13.753). 

[2]              See FCA decision No. 14-D-19 of December 18, 2014, relating to practices implemented in the cleaning products, insecticides and hygiene and personal care sectors.  This decision was confirmed by a Paris Court of Appeal ruling of October 27, 2016 (no. 2015/01673), which reduced the fines for Procter & Gamble and Henkel, but was later partially overruled in the French Cour de cassation ruling of March 27, 2019 (No. 16-26.472). 

[3]              Paris Commercial Court ruling of November 4, 2019 (No. 2017013952). 

[4]              Paris Court of Appeal ruling of January 5, 2022 (No. 19/22293).  See also our January 2022 French Competition Law Newsletter.

[5]              In French, “enrichissement sans cause”.

[6]              Commercial Chamber of the French Cour de cassation, October 19, 2022, No. 21-19.197.  See also our November 2022 French Competition Law Newsletter.