Gaches Chimie v Univar: mixed endings to a French competition saga

On 17 May 2023, Gaches Chimie, a French petrochemical company, was awarded compensation from Univar, a chemical distribution company, ending a 20-year saga. Gaches was found to be a victim of a cartel operating within the French chemical commodities sector between 1997 and 2005[1] . After 20 years of proceedings, the Paris Court of Appeal took the unusual step of awarding Gaches €200,000 in compensation for “moral harm” the company had suffered.

Mistargeted complaint to the Autorité

In 2003, Gaches lodged a complaint against Brenntag, alleging Brenntag had abused its dominance in the distribution of chemical commodities, a sector where Gaches is a competitor. The French competition authority (the “Autorité”) initially dismissed this complaint in 2006 and found that Brenntag did not exert dominance over this market[2].

Three months after the Autorité’s decision to reject Gaches’ complaint, several other companies competing in the same market applied for leniency before the Autorité and acknowledged they were members of a cartel [3]. This misconduct would eventually result in a fine being imposed on Brenntag and its co-cartelists on 28 May 2013 [4], 10 years after Gaches first reported suspicions of anticompetitive practices to the Autorité [5].

Filing before ‘Armageddon’

This time lapse of ten years would not have been an issue for Gaches if the French civil courts had applied the current case law whereby limitation periods are deemed to run from the date of the publication of the summary decision. But in this case, the Paris Court of Appeal ruled otherwise.

Under French limitation rules the main trigger for limitation periods, despite the many reforms over the years, has more or less always been that the victim must have had sufficient knowledge of the harm and of the identity of the tortfeasor.

In the case of Gaches, the company had misunderstood both the infringement (which was a cartel rather than an abuse of dominance) and the infringers (which it turned out were Brenntag's competitors rather than Brenntag), as later determined on appeal. Consequently, the Paris Court of Appeal held that limitation could not start to run before the date the infringement ceased, which was June 2005. This decision did not, therefore, apply the most recent ruling of the French Supreme Court, which has held that limitation periods in cartel damages claims can start to run from the date of the decision of the Autorité [6].

Under the laws applicable in 2005, Gaches’ claims would have been time-barred in 2015 [7]. But the limitation period was shortened to 5 years and renewed in 2008 due to a major overhaul of limitation periods in France in 2008 [8]. As a result, all claims in tort whose limitation period was still running in 2008 (such as Gaches’) automatically had their limitation periods reset to 19 June 2013. This therefore became a ‘limitation Armageddon’ of sorts, with a myriad of claims expiring on that date.

After the cartelists’ leniency applications in 2006, Gaches was left waiting for a decision from the Autorité in order to draft pleadings and file its claims prior to the 19 June 2013 deadline. This decision came on 28 May 2013, giving Gaches just under a month to file prior to the limitation guillotine falling.

In the event, Gaches managed to lodge claims against:

• Brenntag in Bordeaux, which is currently stayed because the Autorité never resumed its investigation into the company after it was ruled that it had exerted dominance on the chemical commodities market, but was not part of the relevant cartel [9], and
• Univar on 13 June 2013 in Paris, which would then take another 10 years to be resolved by the Paris Court of Appeal.

A symbolic indemnification

The Paris Commercial Court denied Gaches any access to relevant documents in February 2015 and many years were then lost due to the appeals against the Autorité’s 2013 decision [10]. A first-instance judgment eventually awarded Gaches €460,000 in damages and €100,000 in costs [11] in December 2020.

That decision was then further appealed, resulting in another 2 and a half years of delay, ending on 17 May 2023. In a surprising turn of events, Gaches was only awarded €200,000 in damages for indemnification of “moral harm” that it had suffered due to the cartel in place of the €460,000 in normal damages which it had received at first instance. To add insult to injury, not only did Gaches lose the costs it had won at first instance but it was ordered to pay the Defendant, Univar, €30,000 in costs instead.

So why the big reversal on appeal? Unusually, Gaches had filed claims for economic harm both as a:

• Competitor: Gaches claimed that because the cartelists were able to generate more profits, they could invest more, which eventually gave them more market share, to Gaches’ detriment,
• Customer: Gaches also asserted that purchases from Univar were inflated by 25%, a commonly pleaded overcharge rate, but critically, with no further substantiation of the harm Gaches had specifically suffered in this case.

The unsatisfactory judgement for Gaches was the result of seemingly avoidable shortcomings in the economic substantiation of the claims, and the conceptual barriers of suffering harm as a customer whilst also competing with cartelists.

Comment

Not only did it require ten years for the Autorité to publish its decision after Gaches first reported suspicions of anticompetitive wrongdoings but this timeline only left just under a month to Gaches to file its claims following the reform to French limitation periods. Indeed, due to limited disclosure, claimants such as Gaches in French competition claims are often left with little if any evidence to rely on regarding the anticompetitive practices they fall foul of and therefore rely heavily on those regulatory decisions to substantiate their claims. Whilst Gaches’ situation was extreme, the case serves as a warning to regulators of the drastic consequences that can ensue for the victims of anticompetitive conduct when investigations are so drawn out.

With thanks to Elina Wagenaar for their invaluable assistance in drafting this article.

Footnotes

1 Paris Court of Appeal, Gaches Chimies v. Univar Solutions, 17 June 2023, n°21/01033.
2 Decision 06-D-12 of 6 June 2006 on practices implemented in the sector of the distribution of chemicals.
3 Solvadis France and Quaron SA leniency application, 20 September 2006, n°06/0064 AC, n°06/0065 AC; BC Partners leniency application, 26 October 2006, n°06/0075 AC; Univar SAS leniency application, 5 December 2006, n°06/0092 AC.
4 Decision 13-D-12 of 28 May 2013 on practices implemented in the commodity chemicals marketing sector ; Press release published on 29 May 2013.
5 Letter n°03/0047 F addressed by Gaches Chimies to the Autorité, 21 July 2003.
6 French Supreme Court, 27 January 2021, n°18-16.279; French Supreme Court, 31 March 2021, n°19-14.877; Paris Court of Appeal, 14 April 2021, n° 19/19448; Paris Court of Appeal, 5 January 2022, n°19/22293
7 Article 2270-1 (ancient version).
8 Law reforming the Limitation Statutes, 17 June 2008, Article 26; French Civil Code,; French Civil Code, Article 2224.
9 Bordeaux Commercial Court, 9 January 2015.
10 Paris Court of Appeal, 2 February 2017, n°2013/13058; French Supreme Court, 10 July 2018, n°17-13.973, 17-14.140.
11 French Civil Procedure Code, Article 700.