Monopoly abuses and excessive pricing

12/10/2021

Chamber of Commerce 7 July 2021, D, n° 19-25.586 and n° 19-25.602

The Commercial Chamber of the French Cour de cassation confirms, in its decision of 7 July [1], the analysis of the Paris Court of Appeal regarding the practices of the company Sanicorse in the sector of treatment of infectious risk healthcare waste (“DASRI“).

It will be recalled that the French Competition Authority (the “Authority“) had noted that Sanicorse had a de facto monopoly on the market for the disposal of medical waste, notably because it had collected almost 90% of the medical waste produced in Corsica [2]. The Authority then accused the company in question of having implemented a practice of sudden, significant, persistent and unjustified price increase of its services for the elimination of DASRI from health care establishments, thus constituting an abuse of a dominant operating position on the basis of Article L. 420-2 of the French Commercial Code. In doing so, Sanicorse was imposed a fine of EUR 199,000.

While the Paris Court of Appeal confirmed the Authority’s analysis of the geographical dimension of the market, thus allowing the existence of a de facto monopoly, it nevertheless questioned the Authority’s position on the classification of the abuse of a dominant position [3]. In this respect, the Court of Appeal recalled that the qualification of transaction conditions as an abuse of exploitation required, on the one hand, that the dominant position had allowed the abusive company to obtain the “advantages of the transaction examined“, and on the other hand, that these advantages were not fair. On this last criterion, the Court of Appeal held that the Authority had not sought to demonstrate why the prices resulting from the increases were unreasonably high in relation to the economic value of the service provided, since the application of a tariff increase was nothing more than the setting of a price.

Rejecting the appeal formed by the Authority, the French Court of Cassation confirmed the analysis of the Court of Appeal by stating that the assessment of the fairness or otherwise of a price increase is confused with the examination of the fairness of the resulting price. In other words, it was up to the Authority to demonstrate that the prices resulting from the price increases applied by Sanicorse were unreasonably high in relation to the economic value of the service provided.

By Corinne Khayat and Arthur El Aoufir for the Competition Department.

[1] French Court of Cassation, 7 July 2021, No. D 19-25586, No. 19-25602.

[2] Decision No. 18-D-17 of 20 September 2018 on practices implemented in the sector of disposal of waste from infectious risk care activities in Corsica.

[3] Paris Court of Appeal, 14 November 2019, RG no. 18/23992

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