Times are changing again in France: new guidelines on the French Deferred Prosecution Agreement process

Five years ago, France enacted its anti-corruption legislation, Sapin II.¹ The law introduced a number of important innovations, including the ability for companies to be offered and to negotiate a French-style deferred prosecution agreement (“DPA”) called a Convention judiciaire d’intérêt public (“CJIP”).  On 26 June 2019, the Parquet national financier (“PNF”) and the Agence française anti-corruption (“AFA”) issued a first set of guidelines (“First Guidelines”) setting forth the conditions companies must meet to be eligible to enter into a CJIP.

The PNF has gained substantial experience since the First Guidelines were issued, as 12 CJIPs have been offered to companies and validated by the courts in the time since. On 16 January 2023, the PNF issued new guidelines (“New Guidelines”) whose objective is to ensure “transparency and predictability.”² The good news for corporates is that the New Guidelines offer more protections for companies and their advisers who engage in discussions with the PNF. The bad news is that they also impose tougher penalty calculations. However, the New Guidelines outline the penalty discounts companies can receive from being proactive in cooperating with investigations, self-reporting wrongdoing, sharing findings of internal investigations, and having robust compliance programmes in place. It is evident that the New Guidelines are inspired by US the Department of Justice³  and UK Serious Fraud Office practices.

To help readers understand the New Guidelines, we provide an overview of key points and the impact of the New Guidelines on companies.

Engaging with the PNF

The New Guidelines encourage companies and their legal advisers to “get in touch with the PNF,” to have “informal discussions” with them, and to let them know “if they wish to benefit from a CJIP.”

The PNF has gone a step further than the First Guidelines by giving assurances that settlement discussions will be confidential even if no agreement is ultimately reached. The PNF is sending a clear message encouraging companies and their legal advisers to self-report wrongdoing.

The additional assurances provided suggest that sensitive information disclosed during the settlement discussions is less likely to be used against companies as the discussions will remain confidential. The New Guidelines make it clear that documents provided by the company to the PNF during settlement negotiations such as emails, accounting documents, presentations and notes taken by the company’s lawyers will not be added to the case file unless the company agrees.⁴

The Director of the PNF has made it clear that he wants there to be “reciprocal trust during the negotiation process.”⁵

Principle of “good faith”

The New Guidelines explain that “companies must demonstrate good faith” in order to benefit from a CJIP.⁶ Companies will demonstrate good faith if they:

• Self-report information to the PNF within a “reasonable timeframe.” This will be assessed by taking into account the time that has elapsed between the company becoming aware of the wrongdoing and disclosing it to the PNF;
• Disclose information that the PNF was previously not aware of;
• Carry out an internal investigation which “reveals the truth,” identifies the persons involved in the alleged wrongdoing, and audit the compliance system that facilitated the offences to identify and remedy any malfunctions;
• Preserve evidence;
• Coordinate with the authorities before interviews take place with individuals potentially involved in the wrongdoing;
• Provide the PNF with a copy of any investigation report prepared or communicate in detail the findings from the internal investigation;
• Spontaneously implement changes to the compliance programme to ensure failings are remedied and adequate mechanisms are in place to address risks identified;
• Consider replacing top management;
• Take steps to compensates victims.

Calculation of financial penalties

Under the First Guidelines, the fine that could be imposed on a company was capped at 30 percent of a company’s annual revenue over the last three years. The PNF calculated fines as a multiple of the benefit to the company from criminal conduct and the multiple was determined by a number of aggravating and mitigating factors. The First Guidelines, however, remained silent on the impact of each aggravating and mitigating factor.

The New Guidelines aim to increase transparency by providing additional information on the methodology used by the PNF when assessing financial penalties. The New Guidelines go further than the First Guidelines in two respects:

• The PNF has said it will seek to apply the 30 percent cap to the turnover of the business’s ultimate parent company.⁷ In practice, this would expose subsidiaries of large multinational companies to substantial fines. It remains to be seen whether French courts will accept the PNF’s new interpretation of the law.
• The PNF provides additional information on the specific impact of aggravating and mitigating factors on the actual fine imposed.
  • The following seven factors will be mitigating factors:
    • Self-reporting the wrongdoing: could lead to a 50 percent reduction in the fine;
    • The indemnification of the victims: could lead to a 40 percent reduction of the fine;
    • The active cooperation of the company: could lead to a 30 percent reduction of the fine;
    • An internal investigation carried out by the company; remedial actions taken by the company; the company’s unequivocal admission of the allegations: could each lead to a 20 percent reduction of the fine;
    • Having an effective internal whistleblowing system in place: could lead to a 10 percent reduction of the fine.
  • The following nine factors will be aggravating factors:
    • Repeated wrongdoing; the serious disturbance of public order: could each lead to an increase in 50 percent of the fine;
    • Acts that obstructed the investigation; tools created by the company to hide the wrongdoing; the involvement of government officials involved: could each lead to an increase in 30 percent of the fine;
    • If the company is a large company; failings in the company’s compliance programme; the company’s historical involvement in judicial, regulatory or fiscal proceedings; the company using resources to hide the wrongdoing: could each lead to an increase in 20 percent of the fine.