1. Jurisdictional thresholds
French merger control applies if the turnovers of the parties to a transaction (usually the acquirer(s) including its (their) group(s) of companies, and the target) exceeded, in the last financial year, certain (cumulative) thresholds provided in Article L. 430-2, I of the French Commercial Code (the “Code”):
- Combined worldwide pre-tax turnover of all concerned parties > €150 million; and
- French turnover achieved by at least two parties individually > €50 million euros; and
- The transaction is not caught by the EU Merger Regulation.
Specific (and lower) thresholds exist for mergers in the retail sector or in French overseas departments or communities.
In the situation of an acquisition of joint control, a transaction can be notifiable where each of the acquirers meets the thresholds even if the target has no presence or turnover in France.
There is no exception applicable to foreign-to-foreign transactions.
Acquisitions of ‘non-controlling’ minority shareholdings are not notifiable.
2. Filing is mandatory and failure to file or early implementation can be sanctioned
Under Article L. 430-3 of the Code, a notifiable merger cannot be finalized before its clearance by the French Competition Authority (the “FCA”) but the Code does not provide any specific deadline for the notification. There is no filing fee.
Failure to notify a reportable transaction can be sanctioned by the FCA as follows:
- A daily penalty can be imposed on the notifying party(ies) until they notify the operation or demerge, as the case may be; and
- A fine can be imposed on the notifying party(ies) up to:
- For corporate entities: 5% of their pre-tax turnover in France during the last financial year;
- For individuals: €1.5 million.
Due to the suspensive effect of the filing, these sanctions also apply when the parties start to implement a notified transaction before receiving clearance (so-called ‘gun jumping’) from the FCA.
Nevertheless, individual exemptions may be granted by the FCA to allow undertakings to close before receiving clearance; in practical terms, exemptions are exceptional and limited to circumstances where insolvency proceedings have been opened, or are about to be opened, in relation to the target.
3. Timeline of merger control procedure
The majority of notified transactions are cleared in Phase I, which lasts 25 business days as from the receipt by the FCA of a complete notification.
A simplified procedure, which lasts for about 15 business days, is available for non-problematic acquisitions, which is often the case for transactions involving private equity funds. Simplified procedures accounted for about 50% of the notified transactions between May 2016 and May 2017.
Phase II is reserved for problematic acquisitions requiring a deeper examination and takes at least an additional 65 business days.
In addition, parties can pre-notify a transaction with the FCA. The pre-notification procedure can prove to be very useful in order to confirm the notifiability of a transaction, the nature and amount of information that will be required by the FCA in the actual filing, and/or obtain a first impression of the FCA’s preliminary analysis of potential competition issues that may be raised by a transaction.