The imposition of a fine on the merging company for violations of the commercial code by the merged entity, based on the principle of business and financial continuity, did not violate the principle that the penalty should be imposed on the offender and not on others.

JUDGMENT

Carrefour France v. France 24.10.2019 (no. 37858/14)

see here

SUMMARY

The case concerned a judgment against the company Carrefour France finding it liable and ordering
it to pay a fine for acts committed by the company Carrefour hypermarchés France in breach of the
Commercial Code.

Further to an inspection by the Departmental Directorate for Competition, Consumer Affairs and
Fraud Prevention and an application to the Commercial Court, Carrefour hypermarchés France, after
its dissolution, was absorbed by Carrefour France, its sole shareholder.

The Court observed that after this merger operation, the company Carrefour hypermarchés France,
which had ceased to exist for legal purposes, had nevertheless continued the activities of the
enterprise of which it had formed the legal structure, through the intermediary of the applicant
company.

The Court considered that in ordering the applicant company Carrefour France to pay the fine
prescribed by the Commercial Code for facts attributable to Carrefour hypermarchés France, based
on the principle of the enterprise’s economic and operational continuity, the domestic courts had
not breached the rule that a punishment should be applied to the offender only and not to other
persons.

PROVISION

Article 6

PRINCIPAL FACTS

The applicant company, Carrefour France, trades as a simplified limited company (SAS) under French
law, with its registered office at Mondeville (France).

Carrefour France was the sole shareholder of Carrefour hypermarchés France, against which
proceedings had been brought before the Bourges Commercial Court, in 2006, by the Ministry of
Economic Affairs, Finance and Industry, for contravening Article L. 442-6 of the Commercial Code on
competition. The company was suspected of obtaining advantages from twenty-two of its suppliers
that were manifestly disproportionate in relation to the services rendered.

In 2009, while the proceedings were still pending, the applicant company proceeded with the
dissolution without liquidation of Carrefour hypermarchés France. The minutes of the decisions
indicated in particular that the dissolution resulted in the transfer of the business of Carrefour
hypermarchés France, with all assets and corresponding debts, to the applicant company.

In a judgment of 12 April 2012, the Orléans Court of Appeal ordered Carrefour France to pay a
civil-law fine of 60,000 euros. Carrefour France appealed on points of law, arguing that in imposing
the sanction of a civil-law fine for acts attributable to Carrefour hypermarchés France, the Court of
Appeal had breached the rule that punishment should be applied to the offender only and not to
other persons. The Court of Cassation dismissed the appeal.

THE DECISION OF THE COURT…

Article 6

The Court observed that Carrefour France had been found against on the basis of Article L. 442-6 of
the Commercial Code and find on account of restrictive practices regarding prices.

On 21 January 2009 Carrefour hypermarchés France, after its dissolution, had been absorbed by
Carrefour France, accompanied by the transfer of the business of Carrefour hypermarchés France,
with all assets and corresponding debts, to the applicant company. The decision to carry out this
merger operation had been taken by the applicant company Carrefour France itself. It had at the
time been the sole shareholder of Carrefour hypermarchés France. That decision had been taken
just after an inspection carried out by the Departmental Directorate for Competition, Consumer

Affairs and Fraud Prevention (DDCCRF) and the application to the court.
The Court observed that following the merger operation, Carrefour hypermarchés France had
ceased to exist for legal purposes but the activities of the company of which it had formed the legal
structure had nevertheless continued through the intermediary of the applicant company. Carrefour
France had been subrogated to all the ongoing contracts of Carrefour hypermarchés France, and had
become the employer of the latter’s personnel. It was, precisely, because of restrictive trade
practices conducted in the framework of the said activities, which had continued after the merger
operation, that proceedings had been taken against Carrefour hypermarchés France in the first
place.

The Court held that in ordering the applicant company Carrefour France to pay the fine laid down in
the Commercial Code, based on the principle of the enterprise’s economic and operational
continuity, the domestic courts had not breached the rule that punishment should be applied to the
offender only and not to other persons.

Accordingly, the application had to be rejected as ill-founded.


ECHRCaseLaw

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