An extract from The Public Competition Enforcement Review, Edition 13

Merger review

In 2020, the FCA issued 196 merger review decisions under Articles L 430-1 to L 430-10 of the French Code of Commerce, which shows a significant decrease of transactional activity compared to previous years, probably caused by the covid-19 health crisis (269 decisions in 2019, 235 decisions in 2018, 236 in 2017). One hundred and ninety-two were Phase 1 clearance decisions, of which 10 were granted subject to commitments and none subject to injunctions.

i Significant cases

In 2020, for the first time ever, the FCA blocked a merger.27 In its decision issued in August, the FCA blocked the acquisition of joint control of a Géant Casino hypermarket located in a French municipality by Soditroy and Association des Centres Distributeurs E Leclerc. The merger would have created a duopoly between the hypermarket retailers Carrefour and E Leclerc in the conurbation of Troyes city, which would have facilitated tacit coordination in this area. The merger would also have led to an increase in prices due to the disappearance of any competition between the hypermarket subject to the takeover and the E Leclerc hypermarket already present in this area. In the absence of suitable remedies, the FCA decided to block the notified merger.

In May, Fnac-Darty notified the FCA of its plan to deploy sales spaces dedicated to retail distribution of household appliance products, operated under the Darty brand ('shop-in-shop' model), in 30 Carrefour stores. Following its analysis, in July, the FCA sent a decision on non-controllability to Fnac-Darty, indicating that this transaction did not constitute a merger as defined by Article L 430-1 of the French Code of Commerce. As a result, the planned transaction was not subject to the notification obligation provided for by the French Code of Commerce.

In November, the FCA cleared the acquisition of Leader Price by Aldi, two hard discount food retail chains, subject to conditions.28 Given the Community scope of this transaction, it should in principle have been examined by the European Commission. However, as allowed under European Regulation No. 139/2004, the parties to the transaction requested the transaction examination be referred to the FCA considering that the latter was better placed to examine it. Given the impact of the transaction in France, and in light of the FCA's experience in reviewing mergers in this sector, the Commission referred the case to it by decision of 4 June 2020. On 5 October 2020, Aldi notified the FCA its plans to acquire assets owned by the Casino Group. These assets included 554 Leader Price stores and two Casino stores. As a result of its analysis, the FCA raised a risk to competition in nine French municipalities. In these areas, the transaction could lead to price increases or reduce the diversity of products available to the consumer, given the parties' combined market share (more than 40 per cent), or to the establishment of a duopoly in these areas. To remedy these competition concerns, Aldi committed to sell nine Aldi or Leader Price stores in these areas to one or more of its competitors. The potential buyers will have to be approved by the FCA, which will make sure that they are in a position to provide a credible alternative offer to the consumer.

In December, the FCA cleared the acquisition of 511 Camaïeu stores by Financière Immobilière Bordelaise.29 In this case, the Financière Immobilière Bordelaise (FIB) group notified the FCA of its intended acquisition of 511 Camaïeu stores. The transaction came within the framework of an insolvency procedure initiated by the Lille Commercial Court on 26 May 2020 with regard to the Camaïeu group. By means of its decision of 22 July 2020, the FCA had, on an exceptional basis, granted a derogation allowing FIB to proceed with the transaction without waiting for the final decision, because of constraints related to insolvency procedure rules.

ii Trends, developments and strategiesCatching killer acquisitions

The FCA has been campaigning for several years to have what it considered a loophole in national and European merger control be remedied. It was indeed possible for acquisitions potentially having a strong impact on competitive dynamics to escape all control, when the target's turnover did not reach the mandatory notification thresholds, and this included when the target was redeemed for a considerable amount, as in the Facebook/WhatsApp transaction. The European Commission responded favourably to this call, announcing in 2020 that it would henceforth accept, going back to its past doctrine, referrals by national competition authorities of mergers 'below the thresholds', within the framework set by Article 22 of the 2004 European regulation.

New merger control guidelines

In July, the FCA published its new merger control guidelines, which replaced the previous guidelines dated 4 July 2013. The new guidelines are a clearer guide, enabling companies to anticipate the aspects taken into account by the FCA when examining a transaction. They aim to further alleviate the burden on companies, most notably by extending the scope of the simplified procedure. The main substantial inputs are a new section dedicated to gun jumping, as well as developments on the control of remedy implementation.

iii OutlookUpcoming decisions

As regards next year's prospects, 25 operations were under review at the time of writing, five of which pertain to the food retail sector, two to automobile retail sector and three to the agriculture sector. Two in-depth (also known as Phase II) investigations are currently ongoing.

Contemporary music sector

In the first months of 2021, the FCA will issue the opinion requested by the National Assembly's Commission for Cultural Affairs on the subject of concentration in the contemporary music sector. It conducted a vast consultation in 2020 and heard several stakeholders in the sector in January 2021. This will be the first time that the FCA will look, in an overall opinion, at this sector to examine the competitive developments that are occurring in it, notably the effect of the development of digital media and consumption patterns.

Mergers during covid-19 health crisis

In 2021, when examining mergers, the FCA will pay attention to the context of the economic crisis. In 2020, the FCA examined a large number of transactions involving retail brands in economic difficulty. In 2021, we should see this trend continue. The FCA will make sure that certain transactions do not artificially escape its control due to the low turnover achieved in 2020 by the companies in question, but it will also endeavour to take into account the context in which these transactions will take place.