Use the Lexology Navigator tool to compare the answers in the article with those from 20+ other jurisdictions.

Trends and climate

Trends

How would you describe the current merger control climate, including any trends in particular industry sectors?

With its resounding decision in Altice (2016), the French Competition Authority (FCA) has made clear that it will crack down on violations of merger procedural rules (in particular, violations of the suspensory effect of pre-merger notification).

Other notable developments to come out of 2016 relate to the FCA’s approach to market definitions in the retail sector for consumer goods and services. In particular, the FCA was, for the first time, able to take a view on the market definitions for online music and banking services. It also amended its past decisional practice by delineating a retail market for brown and grey products encompassing both bricks-and-mortar and online shops.

Another interesting development in the retail sector pertains to the recourse to the scoring method used by the FCA in substantive assessments. This method has been used to measure, by way of a score, the competitive intensity in each catchment area where the combined market share of the parties to a concentration is significant. To attribute a score, the FCA considers:

  • the number of local players;
  • the closeness of competition; and
  • the geographic distance from the parties’ shops to the concentration.

Above a certain score and despite a high combined market share, the FCA considers that a concentration will not raise competition issues.

Reform

Are there are any proposals to reform or amend the existing merger control regime?

There is no existing proposal to reform the legislation governing the French merger control regime.

Legislation, triggers and thresholds

Legislation and authority

What legislation applies to the control of mergers?

The applicable merger control legislation is enshrined in the Commercial Code (Articles L430-1 to L430-10 and R430-2 to R430-10).

In addition, on July 10 2013 the French Competition Authority (FCA) published revised merger guidelines, replacing those of December 2009, which are available at www.autoritedelaconcurrence.fr/doc/ld_concentrations_juill13.pdf.

What is the relevant authority?

The FCA is in charge of merger control enforcement. It is an independent administrative body, with exclusive jurisdiction over merger control cases in France.   

Nonetheless, the minister of economy is vested with powers to intervene in the merger control process. The minister may request that the FCA open an in-depth review (Phase II) at the end of the first phase, even if the FCA has already cleared the concentration. Within 25 working days from the issuance of a Phase II decision, the minister may decide on the case on grounds of public interest (other than the protection of competition). To date, the minister of economy has not used these powers.

Transactions caught and thresholds

Under what circumstances is a transaction caught by the legislation?

Pursuant to Articles L430-1 to L430-3 of the Commercial Code, all transactions that are deemed concentrations and exceed the relevant thresholds must be notified to the FCA. Transactions which may qualify as concentrations are:

  • transactions whereby two or more formerly independent undertakings merge;
  • transactions whereby one or several individuals (who already control at least one undertaking) or one or several undertakings acquire directly or indirectly – by way of purchasing securities or assets or a contract or other means – control of all or part of one or several other undertakings; and
  • the creation of a joint venture performing on a lasting basis all of the functions of an autonomous economic entity.

Do thresholds apply to determine when a transaction is caught by the legislation?

Three alternative sets of turnover-based thresholds apply under Article L430-2 of the Commercial Code.

First, pursuant to Article L430-2 I of the Commercial Code, the French merger control regime applies where the following cumulative thresholds are met:

  • the combined worldwide pre-tax turnover of the undertakings concerned for the past financial year exceeds €150 million;
  • the French pre-tax turnover of each of at least two undertakings concerned for the past financial year exceeds €50 million; and
  • the proposed transaction does not fall within the scope of the EU Merger Regulation (139/2004/EC).

Second, pursuant to Article L430-2 II of the Commercial Code, specific thresholds apply to concentrations where at least two of the undertakings concerned operate in the retail sector. The French merger control regime is thus applicable where the following cumulative thresholds are met:

  • the combined worldwide pre-tax turnover (complete turnover, not only in retail) of the undertakings concerned for the past financial year exceeds €75 million;
  • the French pre-tax turnover in the retail sector of each of at least two undertakings concerned for the past financial year exceeds €15 million; and
  • the proposed transaction does not fall within the scope of the EU Merger Regulation.

Third, pursuant to Article L430-2 III of the Commercial Code, specific thresholds apply to concentrations where at least one undertaking operates in a French overseas department or community – namely, Mayotte, Wallis and Futuna, Saint Pierre and Miquelon, Saint Martin or Saint Barthelemy (this provision excludes New Caledonia and French Polynesia, which have autonomous merger control regimes). The French merger control regime is thus applicable where the following cumulative thresholds are met:

  • the combined worldwide pre-tax turnover of all undertakings concerned for the past financial year exceeds €75 million;
  • the French pre-tax turnover of each of at least two undertakings concerned for the past financial year exceeds €15 million (reduced to €5 million in the retail trade sector) in at least one French overseas department or community (but not necessarily within the same overseas department or community); and
  • the proposed transaction does not fall within the scope of the EU Merger Regulation.

Informed guidance

Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?

Yes.

Foreign-to-foreign

Are foreign-to-foreign mergers caught by the regime? Is a ‘local impact’ test applicable under the legislation?

No specific rules apply to foreign-to-foreign transactions. However, the turnover-based thresholds imply that at least two parties to a concentration must achieve an individual turnover in France. 

Joint ventures

What types of joint venture are caught by the legislation?

Only joint ventures performing all of the functions of an autonomous economic entity on a lasting basis are caught by the legislation.

Notification

Process and timing

Is the notification process voluntary or mandatory?

The notification process is mandatory.

What timing requirements apply when filing a notification?

No timing requirements apply when filing a notification. However, filing must occur and merger clearance must be obtained before closing. Therefore, the proposed transaction should be notified sufficiently early to allow closing to occur on or before the date agreed by the parties to the concentration.

What form should the notification take? What content is required?

A standard form is available at www.autoritedelaconcurrence.fr/doc/formulaire_notification_concentration.pdf.

Detailed information will be provided regarding:

  • the parties;
  • the transaction;
  • the relevant and affected markets; and
  • the parties’ shares in the relevant and affected markets.

In particular circumstances, a transaction can be eligible for a simplified procedure. In this context, a simplified form can be completed. The guidelines stipulate the eligibility conditions for a simplified procedure.

Is there a pre-notification process before formal notification, and if so, what does this involve?

Yes, a pre-notification process is available to parties to a concentration. Pre-notifying prevents the risk of the FCA declaring a filing incomplete and the party having to restart the process.

Pre-clearance implementation

Can a merger be implemented before clearance is obtained?

A proposed transaction should not be implemented before merger clearance. 

Guidance from authorities

What guidance is available from the authorities?

On July 10 2013 the French Competition Authority (FCA) published revised merger guidelines, replacing those of December 2009, which are available at: www.autoritedelaconcurrence.fr/doc/ld_concentrations_juill13.pdf.

For case-specific guidance, parties may pre-notify a proposed transaction in order to initiate informal discussions with the FCA.

Fees

What fees are payable to the authority for filing a notification?

No filing fees apply.

Publicity and confidentiality

What provisions apply regarding publicity and confidentiality?

Information that contains business secrets and is provided by the parties in the course of the notification process is kept confidential.

After the notification of a proposed transaction, the FCA publishes a brief summary of the case on its website (www.autoritedelaconcurrence.fr/user/dccencours.php). This brief summary contains limited information, including:

  • the identity of the parties concerned;
  • the nature of the operation; and
  • the sectors of activity concerned.

Non-confidential versions of FCA decisions are publicly available on its website (www.autoritedelaconcurrence.fr/user/tableaudcc.php). 

Penalties

Are there any penalties for failing to notify a merger?

Several types of penalty may be imposed on parties that fail to file a reportable transaction. The parties may be ordered, subject to a periodic penalty, either to file the concentration or demerge. Further, the FCA can fine:

  • undertakings up to 5% of their pre-tax turnover in France (as reported for the past financial year); and
  • individuals up to €1.5 million.

However, no criminal penalties apply for failure to notify. 

Procedure and test

Procedure and timetable

What procedures are followed by the authority? What is the timetable for the merger investigation?

The French Competition Authority (FCA) follows two main types of merger review procedure:

  • a standard procedure, which may comprise two phases depending on the complexity of the case; and
  • a simplified procedure for cases which are unlikely to raise competition concerns.

Phase I review period The FCA can approve the concentration within 25 working days. However, this review period may be extended by an additional 15 working days if the notifying parties submit commitments. Parties can also request that the FCA ‘stop the clock’ for up to 15 working days in case of particular necessity. The FCA can also stop the clock on its own initiative if:

  • the parties fail to inform it of the occurrence of a new event or submit information within requested deadlines; or
  • third parties fail to submit requested information because of the parties’ conduct (in which case, the clock restarts once the cause of delay has disappeared).

Phase II review period When a concentration raises serious competition concerns, the FCA will open an in-depth review process (on the expiry of the Phase I period), which may last 65 working days. The notifying parties may also submit commitments. If parties submit commitments less than 20 working days before the expiry of the 65 working days, this period will be extended for up to a total of 85 working days from the opening of Phase II. The parties can request that the FCA stop the clock for up to 20 working days. The FCA can also stop the clock on its own initiative if:

  • the parties fail to inform it of the occurrence of a new event or submit information within requested deadlines; or
  • third parties fail to submit requested information because of the parties’ conduct (in which case, the clock restarts once the cause of delay has disappeared).

Where the simplified procedure applies, the parties can obtain clearance within a shorter period (approximately 15 working days on average).

A derogation to the ‘standstill’ obligation (ie, the duty to refrain from implementing a transaction before merger clearance is issued) can also be requested under specific circumstances.

What obligations are imposed on the parties during the process?

Parties must not implement a merger until it has been cleared by the FCA (the standstill obligation). In this regard, the acquirer must refrain from adopting conduct which could be regarded as evidencing the exercise of decisive influence over the target. The notifying parties must also submit comprehensive and correct information and respond to formal information requests properly and in due time. 

What role can third parties play in the process?

Third parties can take part in the market test that the FCA conducts during the review process. Under certain circumstances, they may also have legal standing to appeal decisions.

Substantive test

What is the substantive test applied by the authority?

Pursuant to Article L430-6 of the Commercial Code, the FCA will examine whether a concentration may affect competition – in particular, by creating or strengthening either a dominant position or buyer power leading suppliers to a situation of economic dependency. The FCA also considers efficiency gains. 

Carve-outs

Does the legislation allow carve-out agreements in order to avoid delaying the global closing?

No, the Commercial Code is silent on such possibility.

Test for joint ventures

Is a special substantive test applied for joint ventures?

 The above substantive test may also apply to joint ventures. The FCA specifically analyses the proposed transaction’s coordinated effects on the joint venture and the parent undertakings.

Remedies

Potential outcomes

What are the potential outcomes of the merger investigation? Please include reference to potential remedies, conditions and undertakings.

The potential outcomes of a merger investigation are:

  • a decision that the transaction falls outside the scope of the French merger control regime;
  • a referral of the case to the European Commission;
  • a formal clearance decision at the end of Phase I;
  • a formal clearance decision with commitments at the end of Phase I;
  • a tacit clearance decision at the end of Phase I;
  • a formal clearance decision at the end of Phase II;
  • a formal clearance decision with commitments at the end of Phase II;
  • a tacit clearance decision at the end of Phase II;
  • a prohibition decision issued by the FCA at the end of Phase II;
  • a prohibition decision issued by the minister of economy at the end of Phase II; or
  • a withdrawal of the notification by the parties before any decision is issued.

Parties can propose commitments at any time during the procedure. Most remedies proposed are of a structural nature, but they can also be of a behavioural nature. 

Appeals

Right of appeal

Is there a right of appeal?

Yes, parties to a concentration or third parties with legal standing may lodge an appeal against a decision of the minister of economy or the French Competition Authority before the Administrative Supreme Court.

Do third parties have a right of appeal?

Yes, please see above.

Time limit

What is the time limit for any appeal?

The time limit for lodging an appeal is two months from the notification or date of publication of the disputed decision.