Non-notifiable mergers can be examined under the ban on cartels

In a decision dated 2 May 2024 (24-D-05), the French Competition Authority (FCA) examined for the first time, from an antitrust perspective, mergers that fell below the control thresholds and which had therefore not been notified prior to their implementation.

Companies must then be very vigilant about the possible competition law issues raised by their operations, even if they are not notifiable.

Context

1. The FCA has taken up the issue of its own motion of the lawfulness of behaviour on the part of players in the rendering sector. The three main French renderers (Akiolis, Saria and Verdannet) were accused of having drawn up and implemented a global plan with a view to dividing up the market geographically.

2. This plan consisted of concluding twenty-one business transfer agreements, or five separate mergers. These transactions were not notifiable because they did not meet the French or European control thresholds.

3. However, the FCA considered that these concentrative agreements could not be assimilated to an anti-competitive geographic market sharing agreement by object. Moreover, in the absence of any information in the file enabling the anti-competitive effects of these agreements to be analysed, the FCA finally dismissed the case in favour of the three accused renderers.

In reality, the main contribution of this decision lies above all in the unprecedented reasoning followed by the FCA.

Ex post application of antitrust law to a merger that was not required to be notified

This case provides an opportunity for the FCA to change its practice regarding the possibility of challenging non-notifiable mergers on the basis of anti-competitive practices (cartels and abuses of dominant position).

1. In its decision 20-D-01 of 16 January 2020, the FCA considered that a merger which did not meet the national thresholds for mandatory notification could not in itself constitute an abuse of a dominant position. This solution was conducive to legal certainty and the interests of companies. It was based on an analysis that the procedures applicable to mergers and to the repression of anti-competitive practices cannot be applied cumulatively.

2. However, the FCA's position was overturned by the Towercast ruling of the Court of Justice of the European Union on 16 March 2023. The Court ruled that a merger for which the EU and national thresholds had not been crossed could be analysed by a Member State's competition authority as an abuse of a dominant position. Thus, the Court opened up a Pandora's box, making it possible for a non-notifiable merger to be subject to ex post review at national level.

3. Today, the FCA has gone further and extended the Court's solution, which was based solely on the prohibition of abuse of a dominant position. The FCA now considers that mergers below the notification thresholds may also be examined and sanctioned under antitrust law.

The responding companies tried to argue that the Towercast ruling only concerned the application of Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits abuses of a dominant position, and therefore did not apply to Article 101 of the TFEU, which prohibits anti-competitive agreements.

The FCA's response to this is that Article 101 of the TFEU is a provision of EU primary law with direct effect, which cannot be overridden by the rules of secondary law governing merger control.

Practical perspectives

1. Any transaction which does not meet the control thresholds laid down in national law is therefore liable to be subject to an ex post control and to be challenged on the basis of antitrust law.

2. This new approach is in line with the recent change in the European Commission's doctrine on Article 22 of the European Merger Regulation (see here), which gave the Commission the possibility of analysing a merger that did not meet the national thresholds. This further increases the uncertainty surrounding M&A transactions that fall below the thresholds. These transactions could now be subject to review by these authorities both before and after completion.

3. As this decision is a dismissal, an appeal is unlikely. This rules out the possibility of the FCA's new doctrine being confirmed or invalidated by the competent French courts at this stage.

As a result, the FCA is now free to apply it to new cases.