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 regulatory part of the Commercial Code specifies the actual content of the notification application . Since the adoption of Decree No 2019-339 of 18 April 2019, which removes the obligation to file notification files in quadruple (and three copies for files referred to the Competition Authority by the European Commission), and of Decree 2021-715 of 2 June 2021 on the platform for the secure ex …

Notification file

When they are subject to merger control, concentrations must be notified to the Competition Authority before completion (Article L. 430-3, Commercial Code). Notification is mandatory, and should be made once the parties can submit a sufficiently developed proposal  to allow the notification to be handled . The provision sets out a non-exhaustive list of examples: signature of a standby agreement or letter of intent, publication of takeover or exchange bid. Referral by the European Commission is considered as equivalent to notification. The onus of notifying the authorities is on the acquiring party, or on both in the case of a merger or creation of a joint venture. The receipt of the notification is published in an official “communiqué” issued by the Competition Authority, and a copy of the file is given to the Minister of the Economy.

Systematic notification had been already effectively introduced prior to the NRE law, as the DGCCRF had instituted an informal pre-notification form in France, along with the United Kingdom and Germany. Pre-notification can be useful for getting an initial opinion on a project or making sure notification is necessary. This whole phase is completely confidential. The Authority's aim is to promote prior notification insofar as making contact before notification can minimize the risk of an incomplete file when the operation is formally notified and accelerates the review of the operation by the Authority “in particular when there are uncertainties about the controllability of a transaction or in order to anticipate discussions on market definitions or complex competitive analysis” .  Pre-notification may also be made where the notifying party is considering a referral to the Commission. With a view to anticipating the upcoming notification of a concentration, the Authority's 2020 revised guidelines now provide for the possibility to contact the mergers division, even before the pre-notification phase, with a view to filing a request by e-mail for the (optional) appointment of a case handler (rapporteur) who will be in charge of reviewing the file. Following such a request, the name of the deputy head of department in charge of the examination of the file is provided to the notifying party within five working days. To initiate the informal pre-notification phase, the parties send a presentation of the proposed concentration to the Authority, which will provide the name of the case handler(s) in charge of examining the notification within five working days, or within a shorter period if they have made use of the mechanism for appointing a case handler. The revised guidelines provide that pre-notification involves the parties submitting a presentation of the proposed merger to the Authority which will, within five working days, provide the name of the case handler . 

The five-year statute of limitation in Article L. 462-7 of the Commercial Code applies to facts falling within Article L. 430-8, I. According to the Competition Authority, carrying out a concentration without prior notification is a permanent infringement subject to the rules applying to continuous infringements: the statute of limitation starts from the day the change of control is materialized . Where the transaction has been carried out without prior notification, the Competition Authority has, pursuant to Article L. 430-8, the power to enjoin the parties to notify under periodic penalty payment, unless they revert to the previous state. In accordance with Article L. 464-2, the periodic penalty payment cannot exceed 5% of the average daily turnover per day of delay from that date set. The review procedure is then resumed under the conditions set in Articles L. 430-5 through L. 430-7. 

Failure to notify may result in penalties under Article L. 430-8 of the Commercial Code of up to 5% of the pre-tax turnover realized by the undertaking in France during the last financial year. This may be increased, if need be, to include the turnover of the acquired undertaking  (natural persons may be fined up to a maximum of EUR 1.5 million) . The fine is imposed on the undertaking that bears the obligation to notify . Failure to fulfill the notification obligation constitutes, according to the Conseil d’État, as such, and regardless of the importance of the anticompetitive effects of the merger on the market or markets concerned, a serious breach as it is an obstacle to the control by the Competition Authority . The Authority also takes account of the circumstances specific to the case, whether they are aggravating or mitigating circumstances and notably the degree of complexity in reviewing the operation, the size of the company and the means, including legal, it has, the possible deliberate desire of its directors to circumvent the legal obligation to notify, in particular when the merger is likely to substantially impede competition, and of the cooperation of the undertaking throughout the procedure  . 

If information is omitted or misrepresented, the monetary penalties are the same. The decision to authorize may also be withdrawn when the omission or inaccuracy is discovered subsequent to the decision authorizing the implementation of the concentration, in which case the parties must lodge a new notification within one month or otherwise return to their original state. Parties who proceed with a concentration without waiting for the Authority's decision may also face financial penalties .

The assessment of whether a merger plan is sufficiently concrete is carried out on a case by case basis. A plan can be submitted if the notifying parties assure the Authority of their intention to sign an undertaking agreement and provide proof of this: Revised guidelines, pt 113. If the parties make significant changes to the project notified and authorized before its execution, a new notification is necessary as a decision of the Authority, which is not limited in time, applies only within unchanged legal and factual circumstances: Revised guidelines, pt 114.

The law does not specify a time-limit for notification, nor any sanction for late notification. 

Competition Authority decision No 12-D-12 of 11 May 2012, LawLex201200000787JBJ.

Competition Authority decision No 13-D-01 of 31 January 2013, LawLex201300000111JBJ.

See Minister of the Economy, letter of 6 October 2003, LawLex200300004115JBJ; 8 December 2006, LawLex200700000130JBJ, sanctioning the failure to notify taking into account both the extenuating circumstances (good faith, cooperation in investigations, recognition of the offense) and aggravating circumstances (undertakings frequently carrying out mergers and acquisitions, awareness of national merger control rules). The fine may be moderated to take account, for example, of the absence of deliberate intention to evade the obligation of prior notification: Minister of the Economy, letter of 28 January 2008, LawLex200800000260JBJ. 

Failure to notify a concentration must be attributed to the natural or legal person(s) bound by the notification obligation, i.e. the person ultimately acquiring control of the target, and not only the legal signatory of the acquisition agreement, insofar as this or that party has, "directly or indirectly the possibility to exercise a decisive influence on the activity" of the target. The freedom left to a group to choose which undertaking will in practice notify the operation does not therefore in any way alter the legal situation of the person(s) bound by the obligation to notify within the meaning of paragraph 2 of Article L. 430-3 of the Commercial Code, so that when a subsidiary of a group notifies a concentration, it is deemed to do so for the person who holds ultimate control, see Competition Authority decision No 12-D-12 of 11 May 2012, LawLex201200000787JBJ. In the case of a merger between two joint groups of protection schemes, the persons to whom the burden of the notification falls are the head associations which provide the governance of the groups in question, see Competition Authority decision No 13-D-01 of 31 January 2013, LawLex201300000111JBJ. Failure to notify must be attributed to the parent company which has 100% control of the transferee of the shares of the target corporation insofar as it has acquired, post-merger, a decisive influence on the activity of the target: Competition Authority decision No 13-D-22 of 20 December 2013, LawLex201300001897JBJ, upheld by Cons. d'Ét., 15 April 2016, LawLex201600001444JBJ.

Cons. d'Ét., 24 June 2013, LawLex201300001019JBJ; Competition Authority decision No 13-D-01 of 31 January 2013, LawLex201300000111JBJ, having considered that non-compliance with the obligation laid down in Article L. 430-3 of the Commercial Code, is, by its nature, a serious infringement of the public economic order insofar as this failure deprives the Competition Authority of any possibility to review, as provided for in the Commercial Code, a merger project prior to its realization regardless of any possible effects of the proposed operation on competition; No 13-D-22 of 20 December 2013, LawLex201300001897JBJ, finding a serious breach by its nature the failure to notify especially as it is due to the desire of transferee to realize the operation speedily by deliberately refusing to verify whether the operation was subject to control, whereas that obligation had been recalled at various times during the course of the acquisition.

Competition Authority decision No 12-D-12 of 11 May 2012, LawLex201200000787JBJ. Revised Guidelines pt 172.

Obligation to notify

The regulatory part of the Commercial Code specifies the actual content of the notification application . Since the adoption of Decree No 2019-339 of 18 April 2019, which removes the obligation to file notification files in quadruple (and three copies for files referred to the Competition Authority by the European Commission), and of Decree 2021-715 of 2 June 2021 on the platform for the secure exchange of electronic documents in proceedings before the Competition Authority , the file is submitted either by filing it at the headquarters of the Competition Authority in one copy, or through a platform for the secure exchange of electronic documents .

The notification may be only electronic or “dematerialized” for a concentration in the retail sector provided that it does not lead to a change of name  or for any transaction that does not result in an overlap of activities, regardless of its horizontal, vertical or conglomerate nature , bearing in mind that for each type of transaction, there is a pre-notification form allowing exchanges between the notifying party and the rapporteur in charge of the case, and a notification form.

Following EU law, the notification should contain: a description of the operation ; a presentation of the undertakings concerned and the groups to which they belong; a brief description of each relevant market (definition and market share  of parties) ; a detailed description of each market affected  and a declaration regarding the accuracy and completeness of the information provided.

The Authority may request that the file be completed if incomplete or that certain elements do not comply with the stated definitions . Once received, the authorities issue a receipt to the notifying parties. Where the European Union authorities have referred all or part of a notified concentration to the French authorities for appraisal, Article R. 430-3 of the Commercial Code provides that the parties should send the French authorities the notifying document previously sent to the Commission.

In practice, it has proved difficult to describe a merger transaction in the order prescribed by the Code. Undertakings have therefore tended to supply a general outline summarizing the parties, affected markets, and expected effect on competition, in particular in the context of informal interviews with the authorities. In addition, the amount of information to be provided is too vast and not structured enough; the notifying undertaking is always in danger of submitting a file that will be considered as incomplete, thereby postponing the Authority's deadline for taking a decision on the transaction. The revised  2020 guidelines now provide for a response on the completeness (or incompleteness) of the notification dossier within 10 working days after notification . The content of the notification file can be reduced for the simplest transactions when no markets are affected: in this case, a detailed presentation of markets does not have to be provided .

A simplified file may be submitted for “undertakings that make a large number of notifications per year, such as investment funds or major players in the retail sector” which, after the closing of the annual financial statements, will be able to provide the merger division with “a common core in electronic format containing the general information likely to be repeated in all notifications for the coming year"” . Also subject to the simplified procedure which allows undertakings to submit a reduced file and the Authority to issue a decision within a shorter time frame (approximately three weeks instead of five), are transactions that are not a priori likely to harm competition . 

In all cases, the merger department verifies that the operation is eligible for the simplified procedure and informs the notifying party at the same time as sending the acknowledgement of receipt of completeness, i.e. within 10 working days after notification .

However, even if an operation falls prima facie under the simplified procedure, the Authority reserves the possibility to request a complete dossier if the specificities of the case so warrant.   

Article R. 430-2 annex 4-3 to 4-5 of Book IV of the Commercial Code.Since the adoption of Decree No 2019-339 of 18 April 2019, which removes the obligation to file four copies of the notification files (and three copies for files referred to the Competition Authority by the European Commission), one copy of the file is submitted. This copy may be in electronic form according to the new online notification procedure provided for in the merger control guidelines of the French Competition Authority. The government may request that the file be completed if it considers it incomplete or that certain elements do not conform to the definitions adopted.

The 2020 revised guidelines, pt 230, now identify them: 

"The content of the notification file may also be reduced for the following transactions(...) :

- when the combined market share of the companies concerned is less than 25% in markets consistently defined by decision-making practice ;

- in the event of an overlap of activity between the parties, when the combined market share of the undertakings concerned is less than 50% and the addition of market shares resulting from the transaction is less than 2 points on markets defined in a constant manner by the decision-making practice;

- in the case of presence in vertically related markets, when the combined market share of the companies concerned in these markets is less than 30% in markets defined consistently by decision-making practice ;

- in the case of presence on related markets, when the market shares of the undertakings concerned on the related markets are less than 30% in markets consistently defined by decision-making practice;

- in the event of an acquisition of sole control of undertakings, when the acquirer exercised joint control of the target prior to the transaction;

- when the transaction involves the creation of a full-function joint venture exclusively active outside the national territory;

- when the transaction concerns the acquisition of joint control of a real estate asset for sales before completion transactions ("vente en l'état futur d'achèvement" or VEFA)".

“Hermès”, which has been operational since 8 June 2021.

According to the revised guidelines, at pt 235, although the first condition in essence covers the numerous transactions carried out by the network heads of large food-based distribution groups for the management of those networks, operations relating to the acquisition of car dealerships can also benefit from this dematerialized procedure, as the brands of vehicles of car dealerships can be considered as commercial brands. 

According to the revised guidelines, at pt 236, the second condition applies to most transactions conducted by investment funds or by undertakings that do not manage investment funds, provided they are not simultaneously present in the same or related or vertically linked markets. On the other hand, transactions involving investment funds holding controlling interests in undertakings located in the same markets or in markets that are related or vertically linked to those of the target assets are not eligible for the dematerialized procedure.

As part of the description of the transaction, the notifying party must also specify the list of States in which the transaction has been or will be notified and the dates of the those notifications.

Revised Guidelines, pt 224: for each market concerned and affected, an estimate of the market shares of the undertakings concerned and the groups to which they belong, as well as their main competitors, must be provided. In general, a firm's market share is calculated, in value terms, by dividing its pre-tax turnover by the pre-tax turnover of all operators on the market concerned. However, volume or capacity data may sometimes provide an alternative measure of a company's position. In particular, it is customary, for the retail distribution markets (in physical stores), to analyze market shares calculated on the basis of sales areas, in addition to or instead of market shares in value. 

The relevant market is the product market and the geographical market on which the merger has an impact, from the horizontal, vertical and related point of view. The file must contain the reasoning of such delineation of this market: Revised guidelines, pts 336 et seq. 

See Revised guidelines, pts 182 et seq. The relevant market is affected if i) two or more undertakings concerned or groups to which they belong are active in this market and their aggregate market shares amount to 25% or more; or ii) at least one undertaking concerned is active in this market and another one of these undertakings or groups is active in a market that is upstream, downstream or related, whether or not there are supplier to client relations between these undertakings, from the moment that, in either one of these markets, all of these undertakings or groups have market shares amounting to 25% or more; or iii) the operation leads to the exit of a potential competitor in one of the markets in which the parties are active. The Decree of 18 April 2019 has amended Annex 4-3 of Book IV of the Commercial Code, which essentially reproduced the Authority's guidelines, increasing the threshold at which a market is considered to be affected to 30% (instead of 25%) for the analysis of the vertical effects of a merger transaction.

Revised guidelines on requests for internal documents that the Authority may need to formulate in the pre-notification/notification phase as well as in phase I or II, Annex p. 244. 

Henceforth notification corresponds to the transparency principle (openness and clarity of administrative decision-making) with respect to the Minister of the Economy, third parties, and employees of involved undertakings.

1) Transparency and the Minister of the Economy 

Under Article L. 420-3(4), the Authority sends a copy of the notification file to the Minister as soon as it is submitted. This rule ensures better information sharing.

Sub-paragraph 3 of that same article provides that notification to the Competition Authority be the subject of a press release to be published within five working days of its receipt . Inspired by EU law, the provision is intended to allow any affected third parties to convey their observations to control authorities. The Competition Authority and the Minister may hear third parties before deciding on the transaction pursuant to Article L. 430-10, in which the decision is said to take into account the legitimate interest of the notifying parties or persons cited in not having their business secrets disclosed.

Pursuant to Article L. 2312-41 of the Labor Code - any concentration giving rise to EU or French merger control must be brought to the awareness of the company's works council in order to fully inform employees of their fate . 

This obligation pertains to undertakings that are the subject of the takeover as well as the purchasers as the law applies to all aspects of a merger transaction. In the course of the meeting of the works council or, where appropriate of the Social and Economic Commission (comité social et économique) which is mandatory as of 100 employees, the council gives its decision on the recourse to an expert, the costs of which are supported by the company. If designated, the expert will present his findings at a second meeting. However, the possibility of the assistance of an accountant applies only to economic entities directly or indirectly affected by the takeover .

Revised guidelines, pt. 241, publication on the Competition Authority's website (http://www.autoritedelaconcurrence.fr/user/dccencours.php), on receipt of notification of file of a note giving the date of filing, the name of the undertakings the type of transaction and the sectors concerned.

The grounds of the draft law, according to which major financial operations "should no longer leave the employees behind. It is not acceptable that those who create the wealth of the business learn from the newspapers what has been decided for the future of the company. A merger never succeeds without the participation of the staff".

Cass. soc., 2 July 2014, LawLex201400001040JBJ, holding that an undertaking cannot be qualified as a party to a concentration within the meaning of Article L. 2323-20 of the Labor Code, insofar as neither the existence of a situation of competition between that undertaking company and the target group, nor the existence of certain and forseeable current or future consequences of the transaction on its activity and, consequently, on the situation of its employees, have been established. 

French Competition Law

581. Notification file

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Les notions juridiques connexes

581. Notification file

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Les notions juridiques connexes

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