New merger control guidelines of the French Competition Authority

On 23 July 2020 the French Competition Authority (FCA) published a new version of the Merger Control Guidelines¹. The previous ones were issued in July 2013.

The main purpose of the update is to consolidate and integrate developments in practice and case law since 2013, in particular on:

• Simplification of the procedure with the stated objective of reducing delays and improving the transparency of the notification procedure steps:

  • The addition of a new, optional stage prior to the pre-notification phase: the request for the appointment of a rapporteur², allowing companies to anticipate and speed up the notification of an operation by providing limited information;

  • The revision of the eligibility criteria for the communication of a simplified file³, increasing the number of operations that may fall within the scope of this accelerated procedure⁴. For example, all operations where the combined market share of the undertakings concerned is less than 25% on the relevant markets are now admissible, as operations concerning the creation of a full-function joint venture operating exclusively outside of the national territory. However, the content of the simplified file has been strengthened by removing the possibility of providing a simple list of the parties' activities (companies benefiting from this procedure shall now therefore delimit the relevant markets concerned);

  • The inclusion of the dematerialised procedure already initiated since 18 October 2019 for (i) notifiable transactions that do not result in a re-branding of the retail stores concerned⁵ and (ii) transactions where the acquirers are not present in the same markets as those in which the target is active nor in upstream, downstream or related markets⁶;

  • The introduction of an indicative deadline of 10 days for the examination of the completeness of a notification file: according to the wording adopted, this deadline is not binding and the FCA therefore reserves itself a certain leeway⁷, but it is nonetheless a step forward that is to be welcomed because, in recent years, an acknowledgement of completeness was only sent a few days before the authorisation decision was taken to allow the FCA to remain in full control of the examination deadlines, to the detriment of predictability for companies;

  • The transmission of a provisional timetable to the parties for cases moving to the in-depth examination phase (phase 2)⁸.

• Clarification of the behaviour of undertakings involved in a merger during the notification procedure with the addition of details on the "gun jumping" infringement (i.e. the early implementation of a merger⁹) following the penalty imposed on Altice in 2016¹⁰:

  • The FCA's message is clear: in return for simplified and shortened procedures, undertakings shall necessarily comply with the obligation to not implement the merger prior to its clearance. The FCA also points out that this type of behaviour may also be penalised on the basis of anticompetitive practices (cartels or abuse of a dominant position);

  • The FCA clarifies that while it is legitimate for the memoranda of understanding to provide for mechanisms allowing the acquirer to ensure that the “product delivered" at the closing is consistent with the “product” acquired when signing, these mechanisms shall not exceed the protection of the legitimate interests of the acquirer;

  • In order to assess whether the "red line" has been crossed, the FCA relies on the acquisition of a decisive influence through the acquisition of control, de jure or de facto, over the target. However, a latitude is left to the companies since the decisive influence is assessed by reference to a body of evidence.

• Modernisation of its substantive analysis, in particular through the inclusion of online sales in the analysis of mergers effects¹¹. On the basis of its case-law handed down since the FNAC/DARTY¹² case in 2016, the FCA therefore lists the clues that may lead to assess the substitutability between online sales and sales in physical stores.

¹ Guidelines of the French Competition Authority on Merger Control 2020.
² § 188 to 190 of the Guidelines.
³ The simplified procedure allows the Authority to issue a decision within a shorter period of time (approximatively 3 weeks instead of 5 weeks).
⁴ § 230 to 233 of the Guidelines.
⁵ The competition authority specifies that while this provision is mainly applicable to food distribution, motor vehicle distribution may also be concerned.
⁶ § 234 et seq. of the Guidelines.
⁷ § 207of the Guidelines.
⁸ § 300 of the Guidelines.
⁹ Infringement defined in Article L.430-8, II° of the French Commercial Code.
¹⁰ § 173 to 183 of the Guidelines.
¹¹ § 838 à 841 of the Guidelines.
¹² Decision n°16-DCC-111 of 27 July 2016 relating to the acquisition of exclusive control of Darty by Fnac.