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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.

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