French Competition Law provides a comprehensive review of the French rules relating to competition: restrictive agreements, commercial negotiation, abuses of a dominant position, procedure and merger control.

French Competition Law

The establishment of direct supervision of merger transactions within competition law is only the latest stage in a general trend. Before they were made subject to specific rules, mergers were generally controlled through traditional competition law rules on restrictive agreements and abuses of dominant position. These rules could apply either to the merger process, i.e. the transaction, or to the …

Position of merger control within competition law

The establishment of direct supervision of merger transactions within competition law is only the latest stage in a general trend. Before they were made subject to specific rules, mergers were generally controlled through traditional competition law rules on restrictive agreements and abuses of dominant position. These rules could apply either to the merger process, i.e. the transaction, or to the result, i.e. the degree of market concentration. The reluctance to regulate mergers is basically explained by the widespread prejudice in their favor. Economists traditionally think large companies are better able than small ones to put technological advances to good use and cut their costs. They generally admit, however, that a high rate of concentration encourages conscious parallel conduct in pricing and production objectives, and that therefore significant levels of concentration may lead to less competition. All this explains why it was not until 1977 in France, and 1989 in the European Union, that regulatory institutions specific to mergers were created.

The 19 July 1977 law was the first attempt by French authorities to introduce merger control into French law. The circumstances surrounding the adoption of the legislation seemed to imply that its passage was largely tactical, aimed at hindering or blocking the progress of the European proposal for merger control that was being discussed at that time. The system introduced under the law was based on quantitative thresholds, and had only a limited effect, as borne out by the fact that between 1977 and 1987, only nine cases were referred to the “Commission de la concurrence” (predecessor of today's Competition Authority), giving rise to eight opinions. During that same period, only one ministerial order prevented a merger . As a result, the law was amended by another dated 30 September 1985 extending its scope. 

However, almost immediately thereafter, French competition law was completely overhauled by the 1st December 1986 Ordinance on freedom in pricing and competition (Title V of the Ordinance). Although the Ordinance replaced previous merger control rules, it did not represent a complete break with that earlier system. To better deal with the recent growth of buying power which had reversed the balance of power between distributors and manufacturers , the drafters of the Ordinance chose not to introduce any substantial reform, settling instead for broadening the scope of oversight by adapting it to the specific features of mass retailing. Their caution was also evident in the institutional framework the law established. Despite requests by several members of the group of experts responsible for drafting the Ordinance, the Competition Council, which replaced the earlier “Commission de la concurrence”, was given no genuine decision-making power in the area of merger control. By contrast with the institutional developments in the treatment of restrictive agreements and abuse of dominance, the Minister of the Economy's merger control powers were actually increased at the expense of the Competition Council, on the grounds that economic and social policy considerations were more compelling in the area of merger control.

The NRE law (New Economic Regulations) of 15 May 2001 modified the provisions of the 1986 Ordinance, which are now incorporated in the Commercial Code (Article L. 430-1 et seq. applicable to transactions irrevocably entered into subsequent to the date of publication of the decree of application of Title III relating to concentrations). The main purpose of this modification was to bring French law on concentrations in line with European Union law. Notification became a necessary preliminary step, a two-stage control procedure was put in place, and French law used the EU definition of a joint venture. Yet French specificity remained: control was largely of an administrative nature - the Minister was in charge, the Authority had only a consultative role. Under French merger law there are no criminal penalties. The very specific nature of French merger control explains why it excludes any other possibility of antitrust control, and vice versa .

The LME law of 4 August 2008  amended the merger control provisions of the Commercial Code in two ways. In terms of substance, new Article L. 430-2 laid down specific rules for mergers in the supermarket distribution sector. The new provisions also revised the conditions under which overseas operations are controlled; previously limited to the distribution sector, the scope of application is extended to all operations reaching the appreciability thresholds, irrespective of the sector involved. 

In terms of form, all merger control proceedings fall under the jurisdiction of the Competition Authority, which has replaced the Competition Council. The Minister of the Economy does however retain one important power; after being informed of the Authority's decision, the Minister has 5 days in which to request an in-depth review of the transaction if one has not already been carried out, and 25 days to “evoke” the case on public interest grounds other than those relating to maintenance of competition, e.g. industrial development, the competitiveness of the undertakings in question or the creation or protection of jobs.

Finally, if the Competition Authority carries out an in-depth examination of an operation in the banking, insurance sector or the audiovisual media sectors, it must, for the first two cases, obtain an opinion from the French Prudential Supervisory and Resolution Authority (Autorité de contrôle prudentiel et de résolution (ACPR)) and for the latter, from the Audiovisal Supervisory Authority (Conseil supérieur de l'audiovisuel (CSA)).  

Order of 19 June 1984, Ashland Chemical France SA-Cabot Corp.

Opinion of 14 March 1985 on purchasing pools, Competition Commission Report for 1985, 19.

In this sense, CA Paris, 28 June 1994, LawLex200200002039JBJ.

The provisions relating to merger control entered into force on 1 January 2009 by way of the ordinance setting out the jurisdiction, the operational and procedural rules and investigative means of the Competition Authority.

Origins and specific nature of French merger control

National control is only relevant for mergers that do not come within EU jurisdiction. The exclusive jurisdiction of the Commission does not however preclude possible referrals to national authorities as provided in Article 9 of Regulation No 139/2004 (20 January 2004), or simultaneous control on the basis of jurisdiction other than competition law (Art. 21(4), Regulation No 139/2004). Referrals take place where the national authority has shown that the merger transaction either (1) threatens to significantly affect, or (2) does affect competition within that Member State, which must have the characteristics of a separate market. In the second case, it is not necessary that the market in question represent a substantial part of the internal market . The referral to the national authorities can also be requested by pre-notification to the Commission by the undertakings in application of Article 4(4) of the Merger Regulation. Conversely, a referral to the European Commission can be made either at the request of the Member States pursuant to Article 22 of the regulation, where the concentration affects trade between Member States and threatens to significantly affect competition in the national territory , or at the request of the undertakings in application of Article 4(5) for concentrations which do not have an EU dimension but which are capable of being reviewed under the national competition laws of at least three Member States.

The review of the situation by the Commission on the occasion of the referral is a prima facie assessment which is intended only to determine whether the referral is justified: Case T-119/02 Royal Philips Electronics NV, Judgment of 3 April 2003, LawLex200400003306JBJ.

 Note that the Competition Authority considers that Article 22 of the Merger Regulation No 139/2004 allows it to refer to EU control concentrations not exceeding the French control thresholds where it considers that the operation in question threatens to significantly affect competition on the French territory and affect competition between Member States. See revised Merger control guidelines of 23 July 2020 from point 340. See Competition Authority decision No 20-D-01 of 16 January 2020, LawLex202000000074JBJ, clarifying that a non-notifiable concentration that exceeds neither the European thresholds defined in Article 1 of Regulation No 139/2004 nor the French thresholds under Article L. 430-2 of the Commercial Code and which, furthermore, cannot in itself constitute an abuse of dominant position pursuant to Articles 102 of the TFEU and L. 420-2 of the Commercial Code, due to the conflict of those provisions with those governing merger control cannot be the subject of a prior control except in the case of a referral of the examination of the operation by the Authority to the Commission on the basis of Article 22 of the regulation. See Cons. d'Ét., 1 April. 2021, LawLex20210000982JBJ: the administrative court does not have jurisdiction to hear a challenge to the request made by the Competition Authority to the Commission, pursuant to Article 22 of Regulation No 139/2004, since said request is not severable from the procedure for examining the transaction, which is carried out by the Commission under the oversight of the Court of Justice.

French Competition Law

524. Position of merger control within competition law

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Les notions juridiques connexes

524. Position of merger control within competition law

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Les notions juridiques connexes

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