Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
The obligation to notify is not framed within any particular time limits. Filing may be made at any time once the project is sufficiently well advanced, and in particular is normally possible when the parties have entered into a gentlemen’s agreement or signed a letter of intent, or after the publication of the purchase or exchange offer.
Sanctions for not filing fall on the notifying parties (acquirers) and are as follows:
- the parties may be directed, subject to a periodic penalty, either to file the concentration or to demerge;
- in addition, the Authority may fine the concerned party as follows (maximum fines):
- corporate entities: 5 per cent of pre-tax turnover in France from the previous financial year (plus, where applicable, the turnover in France of the acquired party over the same period); and
- individuals: €1.5 million.
Failures to notify reportable mergers have been fined repeatedly (eg, a €57,700 fine imposed in 2006 on Pan Fish for failure to notify the acquisition of Fjord Seafood, a €250,000 fine imposed in 2008 on SNCF for failure to notify the acquisition of Novatrans, a €392,000 fine imposed in 2012 on Colruyt France for failure to notify the acquisition of UGCA Unifrais, and a €400,000 fine imposed in 2013 on the Reunica group for failure to notify the merger with the Arpège group). A €4 million fine was imposed in 2013 on Groupe Castel for deliberate failure to notify the acquisition of six companies of the group Patriarche so as to accelerate completion of the operation. The highest administrative court ultimately reduced the fine to €3 million in 2016, considering that the Groupe Castel did not intentionally omit to notify and that it was cooperative with the Authority when notifying the relevant operations.
In the Colruyt France case, which was confirmed by the highest administrative court in 2013, the Authority clarified that such infringements are subject to a five-year limitation period from the date when the change of control materialises.
Finally, to comply with French labour law, the labour or employees’ organisation (works council) of a French company involved in a merger has to be informed and consulted before signing of the transaction and a meeting of the works council is compulsory following the publication of the notification release on the Authority’s website.
Which parties are responsible for filing and are filing fees required?
Those subject to an obligation to notify are entities that acquire control of all or part of an undertaking. In the case of the creation of a joint venture, the parent companies are under an obligation of joint notification.
There is no filing fee.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
Filing has a suspensive effect: a concentration that requires notification must not be completed before approval has been obtained from the Authority. In addition, the powers of the Minister for the Economy to intervene within a certain period (see question 18) may extend the suspension period. If the Authority clears the transaction expressly in the first phase, it should a priori be possible to complete the transaction without waiting for the end of the five-day period granted to the Minister to request the opening of a second phase in-depth review. If the time period for the Authority to authorise the transaction in the first phase has expired (tacit authorisation), the transaction remains suspended until the end of the Minister’s five-day period. Should the Authority authorise the transaction in the second phase, whether the Minister intervenes or not, the transaction should not be completed before the end of the Minister’s 25-day period. Should the Minister for the Economy ultimately intervene, transactions must not be completed before the Minister has issued its decision.
Derogations may be granted to make it possible to proceed with the completion of all or part of the concentration without awaiting the decision of the Authority, or of the Minister as the case may be, provided that these derogations are necessary and duly justified. Derogations, which remain exceptional, are generally granted in cases where the target is subject to insolvency proceedings. The law dated 6 August 2015 provides that exemption from the standstill obligation may be granted subject to conditions and that the exemption will cease to be valid if the Authority does not receive complete notification of the transaction within three months of its implementation. In 2017-2018, the Authority granted derogations in several cases. It is noteworthy that, in the GPG/Tati Group case, the Authority granted the derogation and subsequently required structural and behavioural remedies to approve the concentration and that, in the Financière Cofigeo/groupe Agripole case, the Authority granted the derogation and then imposed divestment injunctions after a Phase II investigation.Pre-clearance closing
What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?
Closing before clearance (gun jumping) is considered as equivalent to an absence of filing and triggers the same sanctions as set out in question 9.
On 8 November 2016, the Authority jointly fined Altice Luxembourg and SFR Group €80 million for having prematurely implemented two mergers that had each been notified and cleared in 2014 (ie, the acquisition of SFR by Numericable (an Altice subsidiary) and that of OTL Group by Numericable).
This decision, which followed complaints from competitors and dawn raids, is the first decision of the Authority dealing with gun jumping (ie, completion of merger before clearance) practices and was then unprecedented internationally in terms of the scale of the practices concerned and of the amount of the fine imposed (which is, however, the result of a settlement).
This heavy fine in particular reflected: the accumulation of various gun jumping practices, the fact that the practices involved all the targets’ activities and that they started before the notification and occurred throughout the merger control proceedings, the fact that certain practices related to competition law risks identified by the Authority in one clearance decision, the scale of the transactions concerned by the infringements (two large mergers were affected), and the fact the Authority found that the behaviour was deliberate.
The gun jumping practices sanctioned by the Authority in the Altice case notably consisted of:
- the intervention by Altice in SFR and OTL’s operational management before clearance:
- in the SFR transaction, the contract provided for an ‘ordinary course of business’ limitation, but the latter was applied in the sense that ‘over the threshold’ decisions were nevertheless permitted with the acquirer’s prior authorisation; therefore, the actual implementation of the contract amounted to gun jumping; and
- in the OTL transaction, the ‘ordinary course of business’ limitation had very low financial thresholds and the contracts provided that ‘over the threshold’ decisions were only possible with the acquirer’s prior authorisation;
- exchange of confidential information: Altice and SFR exchanged large quantities of strategic information in readiness for their integration. Such information was confidential and concerned individualised data, SFR’s recent commercial performance and forecasts for the coming months. In the OTL merger, Altice set up an economic performance reporting mechanism allowing it to access weekly OTL’s commercially sensitive information (monitoring comparable to that exercised by a controlling shareholder);
- far-reaching closing preparation and premature anticipation of commercial opportunities: Altice asked and SFR agreed to suspend a promotion during the standstill period and also replaced Vivendi (SFR’s owner before the transaction) in the acquisition of a third-party operator (OTL). The Authority accordingly held that SFR ceased to behave as an economic entity independent from Altice. Moreover, the two undertakings have jointly and systematically studied new commercial opportunities or the extension of existing contracts. The decision reports examples of two new projects that started with the announcement of the transaction (for instance, Altice and SFR took advantage of the suspensive period to negotiate and operationally prepare the launch of new offers under the SFR brand and using Numericable’s network); and
- anticipated assignment of managers: OTL’s managing director began to carry out his duties within the SFR-Numericable group before clearance and was involved in SFR’s new commercial projects and also received commercially sensitive information.
The Authority, however, indicated after the decision was released that each of the above practices would not necessarily constitute a standalone gun-jumping infringement and that there had been an accumulation effect. In particular, pre-closing covenants should not be regarded as automatic gun jumping, and an assessment of the threshold is always necessary.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
The fact that the transaction is foreign-to-foreign is irrelevant and sanctions would apply in cases of closing before clearance.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
No specific solutions permitting closing before clearance are provided for under French law in foreign-to-foreign transactions, other than the general possibility available in any transaction to seek from the Authority a derogation from the suspension requirement (see question 11 and, for the sanctions, question 12).Public takeovers
Are there any special merger control rules applicable to public takeover bids?
Public bids may fall within the scope of French merger control if they involve stocks or shares that confer sole or joint control over an undertaking listed on the French Stock Exchange and otherwise meet the applicable jurisdictional thresholds. As a derogation to the suspensive effect of the merger control process, the stocks or shares in question may be purchased and transferred, so long as the acquirer does not exercise the voting rights attached to them before the Authority clears the transaction. Where a transaction is realised in stages, namely, an acquisition of a first block of shares triggers an obligation to launch a public bid to purchase the rest of the share capital, the derogation applies to both stages; therefore, both the shares acquired privately and those acquired through the public bid can be transferred but are subject to the obligation not to exercise the voting rights.
Therefore, under merger control rules, a public bid may be approved by the French Stock Exchange regulatory authority and the stocks or shares transferred before the Authority’s authorisation is granted. Theoretically, therefore, a public bid could be cancelled, or substantially modified, on competition law grounds after having been implemented, possibly obliging the acquirer to divest the stocks or shares purchased.
However, a provision making the offer conditional upon clearance of the transaction by the competition authorities (the European Commission, the competition authorities of EEA member states, US competition authorities and any other foreign competition authority provided that its merger control procedure is compatible with a maximum time frame of 10 weeks) at the end of the first phase of the review process can be inserted into the offer documents. In such case, the offer lapses and becomes void if any of the relevant competition authorities opens a second phase review. For these purposes, the offer period is extended until the end of the first phase.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
Filings have notably to include:
- a copy of the merger agreement or draft agreement and a memorandum giving details of the legal and financial aspects of the transaction and its likely impact, in particular on competition;
- the identity of the parties concerned (including the entities economically linked to them);
- a definition of the relevant product and geographic markets, as well as the criteria used to identify any substitutable products or services; and
- a description of the position in the relevant market of the parties involved in the transaction.
Filing most often involves the provision of detailed information about the parties and their business. The time necessary to prepare a non-complex filing will, in general, range from 15 days to a month, depending on the size of the transaction, the markets concerned and the willingness of the parties to the transaction to cooperate. Filings also have to include a declaration certifying that the data provided is complete and accurate.
A distinction must be drawn between the markets ‘concerned’ by the concentration and those that are ‘affected’ by the transaction.
Markets ‘concerned’ are relevant markets on which the concentration will have an influence, either directly or indirectly. ‘Affected’ markets are those markets on which the notifying parties (or entities economically linked to them and that operate on a downstream or upstream market) together have a market share of 30 per cent or more (this threshold was raised from 25 to 30 per cent by the Decree of 18 April 2019 simplifying the notification of a merger to the Authority). The information required for the notification is much more detailed if the concentration involves ‘affected’ markets.
The Guidelines provide that transactions that should not, prima facie, raise anticompetitive issues may be eligible for a simplified procedure with less onerous information requirements.
In the Guidelines, the Authority emphasises the benefits of the simplified procedure and lists its conditions, allowing the concerned parties to obtain the transaction’s clearance within a shorter time period (of 15 to 20 working days on average) where no competition issues are anticipated (ie, where there is no horizontal or vertical overlap and where the parties are not active in neighbouring markets). Each year, approximately half of the filings reviewed by the Authority are dealt with under the simplified procedure.
An online notification form is currently in its testing phase and should be operational shortly. It will only concern mergers that benefit from the simplified procedure in its current form.
The notifying party should indicate in the notification which information constitutes business secrets so that this information be treated as confidential.
Since the entry into force of the Decree of 18 April 2019, the parties only have to submit one copy of the filing (annexes enclosed) to the Authority. This decree also simplifies the financial data of the parties to be provided to the Authority.
Providing inaccurate information or omitting information may result in fines up to 5 per cent of the undertaking’s turnover (taking into account the circumstances leading to the omission or misrepresentation, as well as the conduct of the undertakings with regard to the Authority). In addition, the clearance decision may be withdrawn, meaning that the parties must notify the transaction again within one month of the withdrawal (otherwise a fine may be imposed for gun jumping).Investigation phases and timetable
What are the typical steps and different phases of the investigation?
The Mergers Unit of the Authority examines concentrations notified to the Authority.
Informal pre-notification contacts are often necessary and highly recommended in the Guidelines to identify (and possibly resolve) potential issues. The Authority invites the parties to get in touch with its services at the earliest opportunity to anticipate any possible competition concerns (see question 35). Although not compulsory under the Code, pre-notification has now become systematic in practice.
Formal notification triggers the first phase review. The Authority may request information not only from the parties, but also from other market players, including the parties’ suppliers, customers and competitors. This is done notably through ‘market tests’ performed by the Authority. There is also a notice posted on the Authority’s website to allow for spontaneous comments by third parties. In addition, the Authority has the power to conduct onsite investigations, although the use of such powers remains exceptional. In cases raising competition concerns, the parties may propose remedies to avoid a second phase.
Should the Authority consider that a case raises major competition difficulties or should the Minister decide to request a second phase review of a case despite the clearance granted by the Authority at the end of the first phase (and should the Authority accept such request), an in-depth investigation is conducted by the Authority’s case handlers, who generally request additional information from the parties, in writing and, possibly, during hearings. The case handlers may also submit questions to the parties’ suppliers, customers or competitors and, where necessary, conduct onsite investigations. The case team issues a report to which the parties may reply in writing, and a formal hearing is then organised at the end of the second phase, during which third parties (customers, experts, etc) may be heard in the absence of the notifying parties. In its final decision, the Authority can authorise the concentration with or without commitments proposed by the parties. It can otherwise prohibit the transaction. It may also, if need be, take injunctions that impose conditions that were not proposed by the notifying parties (in the 2018 Financière Cofigeo/groupe Agripole case, the Authority used, for the second time ever, its injunction power: in the absence of suitable commitments from the parties, it granted clearance subject to appropriate remedies it imposed to protect competition).
Finally, the Minister for the Economy has the power, after a second phase decision of the Authority, to review the case and to take the final decision on public interest grounds, which it did for the first time in 2018 in the Financière Cofigeo/groupe Agripole case (see question 22).
What is the statutory timetable for clearance? Can it be speeded up?
The Authority’s formal examination of a concentration takes place in up to two phases and the clearance timetable is as follows.First phase (maximum 60 working days, unless clock is stopped by the Authority)
- This phase is common to all concentrations. The Authority may authorise the concentration within 25 working days of the date at which the notification is considered complete.
- This review period may be extended for an additional 15 working days if the notifying parties submit commitments.
- Two ‘stop-the-clock’ procedures exist:
- the parties may ask for suspension of the review for a period of up to 15 working days if necessary for, inter alia, the finalisation of commitments. In this case, the first phase can last up to 60 working days (including the five working days granted to the Minister for the Economy under its intervention powers); and
- the Authority may suspend the review period where the notifying parties fail to promptly inform the Authority of a new relevant fact or fail to provide requested information within the allocated deadline, or where third parties fail to do so for reasons pertaining to the notifying parties. Such a suspension lasts as long as its cause exists.
As explained in question 16, where no competition issues are anticipated, the simplified procedure allows the parties to obtain clearance within a shorter time period (ie, on average after 15 working days following the filing of a complete notification).
The Authority may also shorten its first phase review when one of the undertakings is facing financial difficulties or is subject to legal proceedings.
At the end of the first phase, the parties must still comply with the waiting period granted to the Minister (five working days, see below) if the Authority does not adopt a decision in writing but instead does not issue any decision by the end of first phase (ie, grants tacit approval).Second phase (maximum 130 working days from the opening of the second phase, unless clock is stopped by the Authority)
- Where, after a first-phase review, the concentration raises serious doubts as to its compatibility with competition on the relevant markets in France, the Authority will initiate an in-depth examination of the concentration. This will be the case where the concentration may lead to the creation or strengthening of a dominant position or the creation or strengthening of purchasing power that may lead to a situation of economic dependence for suppliers. The factoring of efficiencies into the competitive assessment may be also considered.
- The Authority will issue its decision within 65 working days of the opening of the second phase. The parties may submit commitments. The period of 65 working days is maintained if the commitments are submitted within 45 working days following the beginning of the review period. If the commitments are submitted less than 20 working days from the expiry of the 65-working-day deadline, the review period is extended by 20 working days from the receipt of such commitments. This extension is also applicable in case of a modification of already submitted commitments proposed less than 20 working days from the expiry of the 65-working-day deadline. In any case, the review cannot extend further than 85 working days.
- Two ‘stop-the-clock’ procedures exist:
- the parties may ask for suspension of the review for a period of up to 20 working days if necessary for, inter alia, the finalisation of commitments; and
- without any time limit, the Authority may also suspend the review if the parties fail to inform it of a new fact as soon as it occurs or fail in their duty to provide information or if third parties, as a result of the parties’ negligence, fail to provide the requested information. The review period starts to run again as soon as the issue giving rise to the suspension is resolved.
At the end of the second phase, the parties must still comply with the waiting period granted to the Minister (25 working days, see below).Powers of the Minister for the Economy
The Minister for the Economy no longer has jurisdiction over merger control. However:
- after the first phase, within five working days after the notification of the Authority’s clearance decision to the Minister, the latter can ask the Authority for an in-depth examination of the case. However, the Authority has a discretion as to whether to allow this request or not and has indicated that it would decide on the fate of such request within five working days from receiving it; and
- after the second phase, within 25 working days from the notification of the decision of the Authority to the Minister, the latter has, at his or her initiative, the power to review the case and take the final decision on the concentration on public interest grounds. These may include industrial and technological progress, companies’ competitiveness in an international context and social welfare, but not competition grounds. The law dated 6 August 2015 provides that, where the parties have failed to comply with the commitments provided for in the Minister’s decision in a timely fashion, the latter may withdraw his or her decision (thus obliging the parties to re-notify the transaction within one month), or enjoin the parties to comply with the relevant commitments subject to periodic penalty, or enjoin the parties to comply with new injunctions (replacing the initial commitments that were not complied with) subject to periodic penalties.
Since these powers were introduced in 2008, the Minister has used its power to review a merger on public interest grounds only once (see question 22).