The French Competition Authority has launched an investigation into certification and standardisation processes in order to identify any adverse effects on competition.
On 21 January 2014, the French Competition Authority (FCA) launched, on its own initiative, an investigation into certification and standardisation processes. It is an interesting step justified, according to the FCA, by the growth of these processes in recent years. The FCA already has a relatively established practice regarding the drafting and implementation of professional and technical standards and their assessment under competition law.
In the mid-90s, the FCA established that products or services not benefiting from a specific professional qualification may be at competitive disadvantage. The acquisition of a recognized qualification or label was, and still is, considered to facilitate entry onto the market for certain undertakings.
However, specified requirements for certification are deemed anti-competitive when they are not based on “objective criteria which may allow the verification of technical skills and financial and commercial stability of candidates” (Decision 95-D-50 dated 5 July 1995). These criteria must be implemented in a non-discriminatory manner (Decision 05-D-22 dated 18 May 2005).
Specified requirements have been considered anti-competitive when the clauses are not indispensable in view of the safety and quality objectives targeted by a qualification. For instance, an agreement comprising clauses that imposed on the candidate for certification a requirement to implement and maintain at least 20 installations of more than 1000 fire extinguishers over a period of two years was held to be anticompetitive (Decision 01-D-30 dated 22 May 2001).
Despite these decisions, the FCA did not in fact scrutinise competition law issues deriving from most standardisation activity. Indeed, under French law this activity was, until 2009, considered to be a service of general interest. This service included both the approval of standards and certification that a product or a service complied with a given standard. The French Association of Standards (AFNOR) had a monopoly over certifying the NF quality mark, which was under the exclusive jurisdiction of the Administrative courts (Decision 03-D-13 dated 11 March 2003).
Only collective approaches to improving quality (including a voluntary quality label, the creation of a professional identification system leading to the selection of undertakings based, for example, on their ability to perform certain types of repairs or on certain quality criteria etc) fell within the jurisdiction of the FCA.
However, a French Decree adopted on 16 June 2009 established that standardisation (drafting of a reference standard) must be distinguished from certification (attesting conformity with the standard in light of the reference framework). The latter could no longer be considered to be an act of public authority. Therefore, AFNOR no longer had a monopoly over certifying NF standards. From that point, the FCA obtained jurisdiction over the frames of reference used to verify conformity with approved standards and to authorize the certification of an NF standard.
With these new powers, the FCA has been able to examine certification practices more widely. This prerogative was illustrated in a recent decision in which the FCA found that a non-profit organisation in charge of the standard concerned with risk prevention had participated in an agreement intended to bar access to the French market for fire extinguishers offered by foreign companies by requiring that they comply with NF standards which were not objectively justified (Decision 12-D-26 dated 20 December 2012).
Certification and standardisation processes at national level may have an impact on the single market in the EU and qualify as a breach of the free movement of goods or services. In 2002, the European Commission queried the French NF regime because it limited the imports of non NF-marked hand held fire extinguishers that complied with equivalent EU standards.
Certification and standardisation are thus also a concern for the EU Commission and courts. At European level, standardisation is enhanced and approved providing that the certification system is open, independent, and transparent and takes into account equivalent guarantees provided by other systems (EU Commission Decision 95/551 of 29 November 1995 Stichting Certificatie Kraanverhuurbedrijf and the Federatie van Nederlandse Kraanverhuurbedrijven). The Council of the European Union has long been of the opinion that standardisation plays a central role in the functioning of the internal market as long as it improves technological innovation and competition - which should be the case, especially when standards are based on scientific research, updated regularly, and/or are performance-based (Council Resolution, 28 October 1999 on mutual recognition).
The Commission considers standardisation agreements to be a type of horizontal co-operation agreement which may produce effects on different markets, such as the markets on which the standards apply, the relevant technology market, the market for standard setting, or the market for testing and certification (Report from the Commission to the Council and the European Parliament on actions taken following the resolutions on European standardisation adopted by the Council and the European Parliament in 1999). These agreements may restrict competition if they “grant the parties joint control over production or/and innovation” (Report from the Commission in 1999). Such a situation can entail a reduction in price competition, foreclosure of innovative technologies and exclusion of, or discrimination against, certain companies through preventing effective access to the standard.
However, standards will not restrict competition if they are adopted on the basis of objective criteria. They will usually also be deemed to produce a significant positive economic effect. Certifications procedures can be justified by considerations such as protection of the health and safety of European consumers, environmental protection or the development of technologies (new Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, 2010).
A similar analysis recently led to an investigation into the standardisation process for e-payments. The Commission examined whether the standardisation process limits market entry or innovation, for example through the exclusion of new entrants and payment providers who are not controlled by a bank. The case was closed in June 2013 further to the European Payment Council’s decision to stop the development of e-Payments Frameworks and any other standardisation initiatives having the same object or effect (E-Payment case against the European Payments Council (EPC) 2011).
By launching the investigation into certification and standardisation processes, the FCA is indicating its willingness to examine the development process closely and to investigate how AFNOR and its delegated Standardisation Bureaux develop standards, the degree of transparency necessary for this process, and how (and whether) such processes could be used with anti-competitive intent or in an anti-competitive manner.
The Opinion which will be published following this investigation is certain to provide useful guidance to businesses involved in certification and standardisation activities.
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