Two-stage controls in French Polynesia: new Competition Authority set to review the purchase of hotel properties by Chinese group

One of the first missions of the French Polynesian Competition Authority ("PCA"), which was created in February 2015 but which officially started its activity a year later, will be to rule on the proposed purchase by HNA Tourism Company Ltd of the entire share capital of two hotels belonging to prominent French Polynesian businessman Mr. Louis Wane: the SA Moorea Lagoon Resort (owner of the Hilton Moorea Lagoon Resort & SPA in Moorea) and the SARL Société Hôtelière Motu Ome'e (owner of the hotel St. Régis in Bora Bora). 

HNA Tourism Group Company Ltd is a subsidiary of the large private Chinese group, Hainan Airlines, founded in 2000. It is involved in a range of activities across multiple tourism-related sectors including air transport through Hainan Airlines (ranked fourth in the Chinese aviation industry).

Pursuant to the so-called Organic Law of 2004, which sets out the various fields of law which are reserved to France and those which fall within the ambit of the French Polynesia semi-autonomous regime, any foreign (i.e., non French-controlled) investment in French Polynesia relating to the acquisition of real estate rights, fishing, aquaculture, pearl and mother-of-pearl, or the audiovisual or telecommunications sectors requires prior authorization from the French Polynesian government. In the present case, HNA Tourism received such authorization, published on 21 April 2016.

However, pursuant to the French Polynesian Law of 23 February 2015, the proposed purchase is considered a potential concentration subject to review by the PCA, since the total net turnover of both groups involved is greater than 2 billion XPF (approximately 16.8 million euros) and the total net turnover of each individual party group is greater than 500,000,000 XPF (approximately 4 million euros). Thus, with its foreign investment authorization in hand, HNA Tourism Company Ltd, in accordance with the law, notified the proposed purchase to the PCA on 7 June 2016. Assuming that such notification file is complete, the PCA has 25 days to render a decision.

This case is amongst the first "merger control" cases to be reviewed by the newly created PCA, which has the power to refuse or authorize the purchase or subject it to additional conditions in order that competition not be distorted.