by Jonathan J. Rusch 

Despite its clearcut illegality in numerous countries around the world[1], and its inherently corrupt nature[2], bid rigging remains a perennial temptation for some companies that prefer predictability to the rigors of competition.  A recent decision by the French Autorité de la concurrence (French Competition Authority/FCA) shows the extent to which some companies will go in establishing and maintaining bid-rigging schemes.

On September 7, the FCA issued a decision that fined six companies in the engineering, maintenance, decommissioning, and nuclear waste treatment services sector – OTND, Nuvia Process (a subsidiary of the Vinci Group), Endel, Bouygues Construction Expertises Nucléaires (BCEN), SNEF, and SPIE — a total of €31.2 million for engaging in anticompetitive agreements during calls for tender for decommissioning of a nuclear power plant.[3]  This post will address the actions of the fined companies, summarize the FCA’s decision, and offer some observations about its significance.

Actions of Fined Companies

According to the FCA, in 2015 the Commissariat à l’Energie Atomique et aux Energies Alternatives (French Alternative Energies and Atomic Energy Commission/CEA) initiated a call for tender, with the aim of concluding a framework agreement with several companies for an initial period of three years. The aim of this framework agreement was to organize and simplify the use of certain services relating to the decommissioning of the Marcoule nuclear site in southern France. Before the submission of tenders for the awarding of the framework agreement, however, three of the companies awarded the framework agreement (i.e., OTND, ENDEL and NUVIA) had taken part in meetings, and exchanged information, particularly concerning the price lists to be submitted in response to the CEA call for tender.[4]

Thereafter, during the implementation of the framework agreement, BCEN, which was also awarded the framework agreement, took part in the anticompetitive practices that OTND, ENDEL and NUVIA had implemented. Each of those four winning companies talked to its competitors before bidding for the various subsequent contracts covered by the framework agreement. In particular, the companies had broken down the different contracts between them, with a precise monitoring of allocations. Whichever company wanted to win a specific contract provided its competitors with its price breakdown table, which enabled those other companies to draw up cover bids.

The companies that participated in the anticompetitive agreement exchanged information on a very regular basis.  They used different communication channels such as email (in some cases, individuals’ using personal email addresses or addresses of other family members), texts, and physical meetings to review the status of the writing specifications allocated.

In addition, exchanges between decommissioning service providers also took place for nine other ad hoc calls for tender that did not fall within the scope of the framework agreement. Depending on the calls for tender, these exchanges involved several of the service providers present on site, which, in addition to the four companies that were awarded the framework agreement, included other service providers such as SNEF and SPIE Nucléaire.  Here too, the parties colluded and artificially allocated the different contracts to each other by means of cover bids.[5]

What led to the discovery and investigation by the FCA was a decision by another company participating in the cartel, ONET Group, to take advantage of the leniency process provided in French law to disclose the existence of, and its participation in, a cartel in exchange for exemption from financial penalty.  ONET provided the FCA with information and documents concerning the cartel, which led to a number of so-called “dawn raids” (i.e., inspections) by the FCA’s Investigative Services.  As reflected in Article 20 of European Union Council Regulation No 1/2003, “dawn raids” may include (a) entry into company premises, land, and means of transport; (b) examination of books and other records related to the business; (c) taking or obtaining in any form copies of or extracts from such books or records; (d) sealing of business premises and books or records during the inspection; and (e) questioning any representative or member of staff of the business for explanations of facts or documents relating to the subject-matter and purpose of the inspection, and recording the answers.[6]

The FCA Response

Based on various documents that the dawn raids produced (e.g., handwritten notes, emails, telephone records, and summary documents), and several hearings to analyze the documents, the FCA granted the ONET a full exemption from financial penalties and charged the other six companies under Law 420-1 of the French Commercial Code.  Law 420-1 prohibits all “concerted actions, conventions, express or tacit agreements or coalitions when their purpose or may have the effect of preventing, restricting or distorting competition on a market”, particularly when they tend to:

1. 1. “Limit access to the market or the free exercise of competition by other companies;”
   2. “Obstruct the fixing of prices through the free play of the market by artificially promoting their rise or fall;
   3. “Limit or control production, outlets, investments or technical progress;” or
   4. “Distribute markets or sources of supply.” [7]

The FCA charged that the six companies’ practices “are among the most serious breaches of competition rules, and noted “that the identified practices were structured in their modus operandi, and kept secret.” [8]

Accordingly, the FCA imposed specific fines as follows: Nuvia €13.9 million, Endel €11 million, BCEN €6.2 million; SNEF €20,000; and SPIE Nucléaire €10,000.  Its decision made clear that it applied increased penalties to Nuvia, Endel, and BCEN because they are all part of conglomerates, and took into account the “repeated nature” of the offences committed by the Vinci and Bouygues groups.[9]

Observations

Law firms and consulting firms that handle competition law issues, whether in Europe or the United States, should peruse this decision by the FCA and provide guidance on it to their clients doing business in France.  In contrast to the practice of the U.S. Department of Justice’s Antitrust Division, which routinely announces its enforcement actions (including the essential facts underlying those actions) in one-page press releases [10], the FCA’s published decision in this case extends to 121 pages, with detailed discussion of the firms’ anticompetitive conduct and techniques as well as the legal basis for the decision.  The decision therefore provides numerous points on which lawyers, consultants, and antitrust compliance officers should draw in their guidance to clients.

It should be noted that in contrast to the “Sapin II Law”, which requires companies above a certain size to establish an anti-corruption compliance program, no French law requires companies to set up an antitrust compliance program.[11]  Nonetheless, companies doing business in France, even though not established or headquartered there would be well advised to include French competition law in the remit of their antitrust compliance programs..  Law 420-1 explicitly states that it applies “even through the direct or indirect intermediary of a group company established outside France.”[12] Moreover, French companies should establish antitrust compliance programs even without a legal directive to do so.

Regardless of where companies are located, guidance on the FCA decision should make clear that the kinds of anticompetitive conduct discussed therein are classic mainstream cartel violations that companies need to avoid wherever they do business.

Footnotes

[1]   See, e.g., Organisation for Economic Co-operation and Development, Guidelines for Fighting Bid Rigging in Public Procurement 1 (2009), https://www.oecd.org/daf/competition/42851044.pdf.

[2]   See, e.g., Robert Clark, Decio Coviello, Jean-François Gauthier, and Art Shneyerov, Bid Rigging and Entry Deterrence in Public Procurement: Evidence from an Investigation into Collusion and Corruption in Quebec, 34 J. of Law, Econ., and Org’n 301 (2018), https://academic.oup.com/jleo/article/34/3/301/5056964; Yvan Lengwiler and Elmar G. Wolfstetter, Bid Rigging – an Analysis of Corruption in Auctions, CESifo Working Paper No. 1488 (June 2005), https://deliverypdf.ssrn.com/delivery.php?ID=523068119001021117009105066081090024031014039074069003068000067098006069064113098024025103012043047102119068073110099093096043016013038018120065017029011073122062050077065090016071121014101079006103068121092030122112096127082097023021087068021092&EXT=pdf&INDEX=TRUE.

[3]   See L’Autorité de la concurrence, Décision n° 23-D-08 du 7 septembre 2023 relative à des pratiques mises en œuvre dans le secteur des prestations de services d’ingénierie, de maintenance, de démantèlement et de traitement des déchets pour des sites nucléaires, https://www.autoritedelaconcurrence.fr/sites/default/files/integral_texts/2023-09/23d08_0.pdf.

[4]   See Autorité de la concurrence, Decommissioning operations at the Marcoule nuclear site (Gard): the Autorité fines six companies for anticompetitive agreements in calls for tender organised by the CEA, September 7, 2023,

[5]   Id.

[6]   See Article 20(2), Council Regulation (EC) No 1/2003 of 16 December 2002, https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32003R0001; European Commission, Explanatory note on Commission inspections pursuant to Article 20(4) of Council Regulation No 1/2003, at 1 ¶4, https://competition-policy.ec.europa.eu/system/files/2021-03/inspections_explanatory_note_en.pdf.

[7]   République Française, Code de commerce, Article L420-1 (informal translation), https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000006231970.

[8]   Autorité de la concurrence, supra note 4.

[9]   See Neil Gerrard, Vinci and Bouygues among six firms fined €31m for bid rigging in nuclear work, Construction Europe, September 8, 2023, https://www.construction-europe.com/news/vinci-and-bouygues-among-six-firms-fined-31m-for-bid-rigging-in-nuclear-work/8031517.article.

[10]   See Antitrust Division, U.S. Department of Justice, Press Releases, https://www.justice.gov/atr/press-releases.

[11]   See The Antitrust Compliance Programme: A Tool for Business Competitiveness, Rödl & Partner, February 22, 2023, https://www.roedl.com/insights/antitrust-law/antitrust-compliance-programme-business-competitiveness#:~:text=In%20France%2C%20antitrust%20programmes%20are,up%20an%20anti%2Dcorruption%20programme.

[12]   See République Française, Code de commerce, Article L420-1, supra note 7.

Jonathan J. Rusch is Director of the U.S. and International Anti-Corruption Law Program and Adjunct Professor at American University Washington College of Law, Adjunct Professor at Georgetown University Law Center, a Senior Fellow at New York University School of Law’s Program on Corporate Compliance and Enforcement; and Principal of DTG Risk & Compliance LLC. He is a former Deputy Chief in the U.S. Department of Justice’s Fraud Section, and former Senior Vice President and Head of Anti-Bribery & Corruption Governance at Wells Fargo.

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