The French Competition Authority severely punishes meal voucher issuers for unlawful agreement

On December 18, 2019, the French Competition Authority fined the four main meal voucher issuers €415 million for unlawfully agreeing to limit competition between them and foreclosing the market by limiting the access of new players. The issuers contest these allegations and have all lodged an appeal before the Paris Court of Appeal against these very heavy sanctions, which they consider unfounded and disproportionate. Several of them consider that the Authority made an erroneous assessment of the meal voucher market.

The meal voucher sector is structured around four companies which alone represent over 98% of this market (Edenred France, Up, Sodexo Pass France and Natixis Intertitres). These specialized companies (the "issuers") sell meal vouchers to employers in consideration for the payment of an amount corresponding to the face value of these vouchers. Companies bear part of the value of the vouchers and hand them over to their employees. The traders that then receive the meal vouchers as payment for meals or food products are reimbursed by the issuers.

The four market leaders were sanctioned for two main types of practices:

In the first place, for having, between 2010 and 2015, exchanged confidential information on their market shares in the form of monthly "dashboards". The Authority considers that, thanks to this disaggregated information, each issuer was aware of the prices and volume of meal vouchers reimbursed by its competitors during the previous month, which discouraged the implementation of an aggressive price strategy. These exchanges were set up within the Meal Voucher Payment Central (CRT), which is an association created by the issuers in order to mutualize and facilitate the traders/restaurants' formalities for the reimbursement of the meal vouchers collected.

Secondly, the issuers were sanctioned for having concluded agreements between 2002 to 2018 intended to foreclose the meal voucher market according to the Authority. This foreclosure took the form of a discretionary control by the issuers of the entry of new players in the CRT. Given this organization's essential role in the market, the issuers controlled the emergence of new competitors. The foreclosure practices also consisted in a prohibition, on penalty of exclusion for the CRT members, to issue dematerialized vouchers (in the form of a card or mobile app) outside the CRT. 

For the Authority, these practices resulted in restricting innovation in this market by significantly delaying the dematerialization of meal vouchers. This case was referred to the French Competition Authority by restaurant trade unions and also by Resto-Flash (Octoplus), a company offering a meal voucher dematerialization system.  

The total fine is the highest of 2019 and the third most important since the creation of the Authority in 2009. This can notably be explained by the 20% and 30% increases applied for the repetition of anticompetitive practices.

This decision illustrates once again the Authority's increased interest in organizations regrouping competitors, in this case in a joint structure, and enjoins competing companies wishing to mutualize services to be extremely careful. 

New deal for consumers?

The so-called "omnibus" directive modernizing consumer rights entered into force on January 7. It is, together with the directive creating a collective European action in consumer matters, one of the landmark texts of the "New Deal for Consumers", a set of measures intended to ensure unified protection for consumers in the European Union.

The Member States will have two years to transpose this directive, whose provisions will be, in any event, directly applicable in May 2022. This directive amends no less than four existing directives: the 2011 directive on consumer rights, the 2005 directive on unfair business practices, the 1998 directive on price indications and the 1993 directive on unfair contract terms.

Under this directive, professionals will have to ensure a certain degree of transparency vis-à-vis consumers, notably by mentioning the reference price in the case of announcements of price reductions. Moreover, the directive provides for a series of obligations incumbent upon marketplaces to guarantee that consumers have a sufficient level of information to make informed choices (criteria for the ranking of offers, quality of the co-contracting party, party in charge of the legal guarantees, verification of the authenticity of the comments, etc.). A right of withdrawal will have to be provided when "free" digital content is provided in exchange for personal data. Furthermore, the practice of double standard products presented as identical by professionals, whereas their level of quality is not similar, will be deemed misleading and sanctioned. Finally, consumers' individual remedies will be harmonized and levels of dissuasive sanctions will be guaranteed (a maximum of at least 4% of the turnover realized by the company in issue) to make the consumer legislation effective throughout the single market.

For its part, the draft directive on collective actions in consumer matters is still under discussion in the EU Council. This text should not significantly modify the appeal procedure that already exists in France since the 2014 "Hamon" law. Nevertheless, the European directive could allow the commencement of actions on grounds related to consumer affairs such as public health or the environment.

Therefore not so much a new deal for French consumers since some of the rights introduced already exist under French law but surely more so  for some of their European neighbors. Note will still be taken of the reintroduction of the mention of the reference price despite this having caused considerable discussion.

Online advertising market: Google Ads sanctioned once again

The French Competition Authority has fined Google €150 million for abuse of a dominant position on the market of advertising linked to searches due to the opacity and absence of objectivity of the rules of the Google Ads platform. It also ordered Google to clarify the rules on the operation and suspension of accounts on this platform. This decision follows a complaint from Gibmédia, site editor whose Goggle Ads account was suspended by Google.

In this decision, the Authority notably highlighted the lack of precision and consistency in the application of the rules for using Google Ads as well as the absence of notification to companies when these rules are modified. According to the Authority, these practices have discouraged the emergence of innovative sites.

This decision echoes the 2010 Navxcase and emphasizes the fact that Google did not honor the commitments then made beyond the three years made mandatory by the decision. So same pattern as before. It should be noted that the Authority has announced the creation of a digital economy department to fight more effectively and rapidly against the abusive practices of the digital market leaders. The GAFAs better watch out!

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