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 market share controlled by the undertakings party to the concentration continues to play a vital role, but other criteria are also taken into consideration today. In its Guidelines relating to the control of concentrations , the Authority thus takes into account the degree of concentration of the market on which the transaction takes place, which, together with the market share, enables it to  …

From structure-based to effects-based analysis

The market share controlled by the undertakings party to the concentration continues to play a vital role, but other criteria are also taken into consideration today. In its Guidelines relating to the control of concentrations , the Authority thus takes into account the degree of concentration of the market on which the transaction takes place, which, together with the market share, enables it to carry out a preliminary analysis. Like the European Commission, it considers that it is unlikely that a horizontal concentration will raise competition concerns on a market whose HHI  is less than 1000 or between 1000 or 2000 with a delta  lower than 250, or higher than 2000 with a delta lower than 150 . The same is true in the case of vertical or conglomerate concentrations, when the post-merger HHI is less than 2000. To assess the market power of the new entity, irrespective of the horizontal, vertical or conglomerate nature of the transaction under review, the Authority also refers in its new Guidelines to the characteristics of the undertakings 5 , the products or services concerned , the customers or suppliers of the parties , the market and its modus operandi , the sources of potential competition , before carrying out an analysis by type of anti-competitive effects . 

The effects-based analysis allows for an assessment of the non-coordinated effects independently of the creation or strengthening of a dominant position, which is now no more than a means of producing those effects. A concentration is likely to harm competition due to unilateral effects   by the mere fact that competition between the parties is eliminated, insofar as the merged entity can increase its prices or reduce the volume or the quality of its production and make a profit . The anti-competitive effect of a horizontal merger will also depend on the overall structure of the market.

Similarly, vertical or conglomerate mergers can produce non-coordinated effects in the event of market foreclosure, which increases the market power of the new entity thus allowing it to raise prices or reduce quantities offered .

Restrictive vertical effects are also likely to result from a horizontal concentration, especially where the concentration strengthens the purchasing power of the new undertakings and places the supplier in a situation of dependence . The absence of any alternative offer, the inelasticity of supply and the risk of creation of a buying power may in this case make transfer commitments necessary . Even if economic dependence does not in itself characterize an infringement of the rules of competition , it may reduce the financial capacity or the capacity for innovation and for research of certain players and force them to withdraw from the market . Economic dependence can likewise encourage the firms in question to merge and reduce potential competition. However, the assessment of a situation of economic dependence is carried out in concreto and must not restrict the access of small undertakings to the market, in particular through sub-contracting .

Revised Guidelines, pts 573, 627, 679 and 720.

Herfindhal-Hirschman Index defined as the sum of the squares of the market shares of all the firms on the market and can range from 0 (atomistic market) to 10,000 (pure monopoly).

Competition Authority decision No. 21-DCC-79 of 12 May 2021, LawLex202100004675JBJ (upheld by Cons. d'Et., 15 February 2024, LawLex202400001378JBJ) prohibiting the concentration notably on the grounds that even if the Government Commissioner and the Minister for Energy currently exercise control over the target company that owns the Méditerranée-Rhône pipeline, this does not appear to be sufficient to rule out the risk that the target's majority shareholder could, after the transaction, use the latter's market power in the market for the transportation of refined petroleum products by pipeline in the south of France, which could result in a strategy of price increases for its customers, likely to be passed on to the end consumer.

Revised guidelines, pt 617; Competition Authority decision No 19-DCC-205 of 30 October 2019, LawLex202000000033JBJ, holding that although the rates for care services provided by public and private establishments are regulated and set annually at the national level, within the framework of the activity-based pricing system, those flat-rate rates do not apply to the ancillary “hotel” services that are the private room supplement, accommodation and meals for accompanying persons, television, telephone and exceptional services, so that an excessive concentration of health establishments in a relevant geographical area is likely to lead to an increase in the cost of these services, to the detriment of patients; No 21-DCC-79 of 12 May 2021, LawLex202100004675JBJ, identifying risks of harm to competition through unilateral effects, since post-merger, the majority shareholder of the target entity, the owner and operator of Pipeline Méditerranée-Rhône (PMR), will be able to make decisions relating to its commercial and investment policy alone with the aim of maximizing its profit insofar as it does not carry out any activity upstream or downstream of the transportation of petroleum products by pipeline and that this maximization could result in an increase in PMR tariffs, but also by a deterioration in the quality of services, given the lack of incentive to invest in order to improve it, since these investments do not have the effect of increasing the profitability of the PMR.

 Revised guidelines, pt 670. See Competition Authority decision No. 22-DCC-78 of 22 April 2022, LawLex202300003378JBJ, noting that the merger, which presents a risk of creating or strengthening purchasing power that places bedding product suppliers in a situation of economic dependence while leading to the disappearance of a major franchisor group in the French overseas departments and regions and overlapping activities in various downstream markets for the retail distribution of furnishing products, poses a risk of harming competition.

Minister of the Economy, letter of 5 May 1999, LawLex200300002012JBJ.

Minister of the Economy decision No 2008-100 of 17 February 2009.

Revised Guidelines, pt 734: the strengthening of buyer power tends, as a general rule, to be to the benefit of consumers as long as it does not affect the structures of the upstream and downstream markets. A situation of economic dependence only constitutes an impediment to competition if it has an effect on competition in a market and, eventually, on consumer surplus, and not simply on a supplier, insofar as the aim of the competition authorities is not to protect an undertaking as such, whether a competitor, customer or supplier, Competition Authority decision No 17-DCC-11 of 30 January 2017, LawLex201700000618JBJ.

The delta (HHI variation) is a useful indicator of the modification of the degree of concentration which will directly result from the operation.

For an application, see Competition Authority decision No 23-DCC-32, LawLex202300004837JBJ, for market shares of the new entity of between 25% and 45%. However, the Competition Authority, like the Commission, does however accord special circumstances in which competition may be harmed such as where one or more of the following factors are present: a) a merger involves a potential entrant or a recent entrant; (b) one or more merging parties are important innovators; (c) there are significant cross-shareholdings among the market participants; (d) one of the merging firms is a maverick firm; (e) indications of past or ongoing coordination; (f) one of the merging parties has a market share of 50% or more. 

Guidelines, pts 574-583. In the presence of significant market shares, the Authority will examine the main characteristics of the undertakings active on the market under review and the constraints likely to affect their competitive behavior in order to assess the intensity of the competitive pressure likely to be exerted on the new entity, i.e. the size of the undertakings and the extent of their activities on the market concerned, their activities on related markets, their cost structure and level of margins, their production capacities; their competitive behavior; their possible links with other undertakings on the market under review; their capacity for expansion/risk of decline.

Guidelines, pts 584-588. The Authority takes the view that depending on the place occupied by the products or services concerned in the production chain, the effects of the concentration must be assessed differently: in the case of an essential input for the production of a finished product, the concentration is likely to have effects on markets other than the one on which the parties are active. Similarly, elements of the products or services concerned that are capable of restricting trade, or the degree of differentiation between them, which may indicate the competitive proximity between the parties and their competitors, must also be taken into account.

Guidelines, pts 589-592. The Authority looks at the structure of supply and the functioning of the markets on which the new entity's customers or suppliers are active in order to assess their ability to influence its behavior. The number and degree of concentration of customers or suppliers and their ability to discipline the new entity are among these elements. The price sensitivity of demand is also taken into account, since the less price sensitive the demand, the less likely customers are to punish the competitive behavior of the merged entity.

Guidelines, pts 593-600. In the light of the economic and legal characteristics of the market and the way in which it operates, the Authority will assess the stability of the market or its degree of transparency or innovation, the nature of the relations between suppliers and customers - and in particular the frequency of contract renewals or the exclusive or selective nature of the networks - or the existence of current or past coordination.

Guidelines, pts 601-613. In order to identify sources of potential competition, the Authority investigates whether there are barriers to entry related to regulation, the protection of intellectual property, access to certain data, the significance of the costs of entering the market or changing suppliers, the existence of network effects, the signing of long-term supply or distribution contracts. In the Authority's view, the temporal dimension of market entry depends on the characteristics of the sector concerned and the speed of developments in that sector.

Horizontal effects (Revised Guidelines, pts 614 to 667); vertical effects (pts 668 to 710); conglomerate effects (pts 711 to 730); creation or strengthening of buyer power (pts 731 to 736); coordinated effects in general (pts 737 to 751), and more specifically in the context of vertical and conglomerate mergers (pts 752 to 754) or in connection with the creation of full-function joint ventures (pts 755 with 766).

French Competition Law

546. From structure-based to effects-based analysis

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

546. From structure-based to effects-based analysis

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise