All questions

Merger review

In 2018, the FCA issued 235 merger review decisions under Articles L.430-1 to L.430-10 of the French Commercial Code, which shows steady transactional activity in line with 2017 (236 decisions) and 2016 (230 decisions). All were clearances, among which four were granted subject to commitments and one subject to injunctions, only the second case of injunctions since the Authority was entrusted with merger control powers. The main sectors affected by transactional activity were the food retail sector, automotive retail, property development and real estate, and insurance services.

i Significant cases

The standout case of 2018 was the first Phase III decision, as the Minister for the Economy decided to use his power to re-examine an operation for the first time since that procedure was created in 2008. Cofigeo had notified the acquisition of certain assets of the Agripole group. The FCA conditionally cleared the transaction in July 2018. The Authority had identified multiple competition concerns, yet Cofigeo did not offer adequate remedies; as a result, the FCA used its power of injunctions to order divestments. This injunction power allows it, under exceptional circumstances, to impose remedies and clear the transaction rather than block it, and had only been used once until now. The Minister for the Economy then chose to reassess the deal pursuant to Article L.430-7-1 of the French Commercial Code, which grants him power to evoke a case on grounds of public interest other than competition concerns. The Minister required employment and industrial policy commitments but no divestments, and adopted an authorisation decision that overruled that of the Authority, rendering the initial injunctions void.

This year also brought new developments regarding the Fnac/Darty merger. The FCA had cleared the acquisition in 2016 provided that Fnac Darty divest several stores. The purchaser presented for some of these stores was not approved, and no other buyer was found before the deadline. As a result, the Authority imposed a €20 million fine for failure to meet part of the commitments. Meanwhile, Fnac Darty challenged the constitutionality of the law which allows the President of the Authority to approve or reject a purchaser alone, without referring to the College; the Council ruled that this power was conform with the Constitution.

In April, the FCA cleared the acquisition of Sarenza by Monoprix and of André by Spartoo. The two deals were independent, however the Authority examined them jointly since they raised similar questions. Both of them involved the merger of two operators of the retail sector, with each time one being a physical distribution group and the other an online selling platform. The Authority saw those transactions as the sign of a trend of omnichannel group development. Building on that assessment, the FCA announced that it planned to open a market study into 'phygital' distribution, since its development is 'one of the biggest changes to the economy in recent years'.

Finally, the FCA cleared the merger of two property advertising websites. It was the first time it had reviewed an operation between two online platforms, and most of its analysis focused on the importance of data and potential network cross-effects.

ii OutlookUpcoming decisions

As regards next year's prospects, 24 operations were under review at the time of writing. Among other notable projects, the Authority is examining a joint venture between RATP, the state-owned public transport operator, and Keolis, a Franco-Quebecois private operator, which would run the new express line between Paris and CDG Airport. No less than seven of the 24 operations being reviewed pertain to the food retail sector.

Purchasing agreements in the food retail sector

Joint purchasing agreements, although not analysed as mergers, are still subject to mandatory notification to the FCA if they exceed certain turnovers, under a specific procedure created in 2015 and set out by Article L.462-10 of the French Commercial Code. Accordingly, two sets of purchasing agreements were notified, for information, in May and June 2018. The Authority decided to open an in-depth investigation and extended the scope of inquiry to a third agreement.

Modernisation and simplification of the French merger procedure

The FCA is currently in the process of modernising and simplifying merger review proceedings. This year, it published the results of a consultation launched in 2017. It confirmed the existing thresholds were still appropriate, including the specific threshold applicable to the retail sector. Although the possibility of a new transaction value threshold was entertained at some point, this option was ruled out. The Authority is now looking into introducing ex post control, and launched a new consultation on the issue. As for simplification, it suggested reducing the amount of information required for notification, extending the scope of the simplified procedure, and creating an 'ultra-simplified, dematerialised' procedure. New merger guidelines are expected for spring 2019.