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

According to the Competition Authority , the premature implementation of a concentration can be sanctioned where it occurs during the suspensive period, i.e. from the date of the operation is notified to the date it is cleared, and this prohibition is applicable even if the merger is not notified. The implementation of a concentration without prior notification constitutes a permanent infringement …

Gun jumping

To ensure efficiency the transaction is suspended for 25 days beginning upon complete notification, and may not become effective until the Competition Authority and Minister of the Economy - where he has evoked the matter under the conditions pursuant to Article 430-4 of the Commercial Code - have granted approval. The deadline may be extended if the parties make commitments to remedy the anticompetitive effects of the transaction - it then expires 15 days after receipt of such commitments. An exemption may however be granted in case of a particular need that has been duly justified  in order to put into effect all or part of the concentration without waiting for the decision . The exemption may be subject to conditions. If within three months of the effective realization of the operation, the Authority has not received the full notification, the exemption ceases to be valid .

The Article R. 430-5 of the Commercial Code specifically states that where a merger is achieved through the purchase or exchange of securities on a regulated market, the lack of a decision by the Authority does not preclude the securities transfer. However, the transaction is considered effectively completed once the attached rights are exercised. As in EU law, the use of voting rights is suspended pending the Authority's decision. The parties have the ability to make their offer subject to the condition precedent of authorization. In such a case, a copy of the notification letter must be included in the offer file submitted to the AMF (Financial Market Authority) . If there is no authorization at the end of Phase I, the offer becomes void. A new, unconditional offer may then be filed. A new offer can also be filed during the procedure in the event of a higher bid.

The guidelines regulate the specific situation of transfer of the controlling interest where merger control is triggered by two non-separable events: the conclusion of a private agreement and the filing of a takeover bid. Such transactions can be notified when the private agreement is concluded if the concentration project is sufficiently advanced or after the launching of the takeover bid, when the concentration is irrevocably undertaken. The suspension applies both to the exercising of the rights attached to the securities acquired off the market and to that of the rights attached to the securities which are the subject of the public offer . By contrast, similar transactions whose second stage would only consist of a so-called “private” offer for the purchase of securities on an unlisted market become subject to the notification obligation on the acquisition of control and are not automatically exempted from the suspension obligation .  

For examples prior to the LME Law see: Minister of the Economy, letter of 15 November 2002, LawLex200300000709JBJ; Minister of the Economy, letter of 11 March 2003, LawLex200300003215JBJ, for the case of a concentration realized outside France concerning subsidiaries identifiable in each country and not affecting competition on other markets.

This exemption mainly concerns the takeover of undertakings in receivership of compulsory liquidation or in the case of a risk of imminent disappearance of the target company: Revised guidelines, pt. 147 et seq.

Provision introduced by the Macron Law of 6 August 2015.

Revised Guidelines pt. 160. For an example of application, see Minister of the Economy, letter of 18 November 2002, LawLex200300001322JBJ.

Principle and exemptions

According to the Competition Authority , the premature implementation of a concentration can be sanctioned where it occurs during the suspensive period, i.e. from the date of the operation is notified to the date it is cleared, and this prohibition is applicable even if the merger is not notified. The implementation of a concentration without prior notification constitutes a permanent infringement - the material act of which is carried out in a short period of time, but the effects of which are prolonged over time without any further intervention by the perpetrator - insofar as the offense as laid down in Article L. 430-8, I of the Commercial Code concerns the failure to notify, which must occur at a specific time, or at the latest within a suffcient timeframe to allow the Authority to carry out its control within the time-limits provided for by law, and where the completion of a concentration occurs in a single moment, even if its effects will continue .

The prohibition of the early implementation of a concentration aims to ensure that the transaction does not produce its effects on the relevant market - and that the parties do not cease to behave as competitors - before the Competition Authority has been able to carry out its competitive analysis, and if necessary demand remedial measures. It therefore guarantees not only the effective exercise of the Authority's power in terms of merger clearance but also ensures that no structural change or exchange of information takes place while the parties to the concentration are still in a position to withdraw, either due to the merger control procedure or for reasons of their own, while encouraging businesses to cooperate with the Authority throughout the procedure. The Altice case  described by the Authority as a textbook case, is the first decision in France to sanction gun-jumping where the parties had complied with the duty to notify but had implemented the merger prior to clearance. In that decision, the Authority specified that the premature realization of a concentration is effective either when the ownership of all or part of the assets of the target and the rights attached to them are actually transferred to the purchaser before authorization by the Competition Authority, in which case the factual situation (the control) and the legal situation (ownership) are confused, or where, without ownership of the assets being transferred (or even prior to transfer), the purchaser nevertheless acquires a decisive influence over all or part of the target's activities of the target. In the Altice case, the ownership of the assets was not transferred during the suspensive period but the parties had ceased to behave as competitors and were to acting as a single entity: the acquirer thus prematurely exercised a decisive influence over the target companies interfering in their operational management, exchanging strategic information and imposing the early appointment of managerial staff. The Authority held that in order to assess whether the parties can be regarded as having actually implemented the concentration before its authorization, an analysis must be carried out with regard to factors relating to the exercise of control by the acquirer on the decisions of the target, the nature of their economic relations and the information exchanged between the parties during the suspensive period. Interference by the controlling undertaking in the day-to-day management of the controlled undertaking, its commercial policy or its internal structure, may be considered as manifestations of the exercise of decisive influence insofar as they directly or indirectly affect the behavior of the controlled undertaking on markets .

Non-observance of this suspension may be penalized by a fine of up to 5% of the pre-tax turnover realized in France in the previous financial year, potentially increased by the same amount of the acquired undertaking's turnover. For natural persons, the maximum is again EUR 1.5 million. The premature implementation of a concentration may be prosecuted without having to show that the offense would have had effects on competition but the Authority may take this circumstance into account when setting the fine, for example when the merger that gave rise to the breach of the standstill obligation was authorized only subject to commitments . The offense of gun jumping can also result in the sanctioning of the undertakings in question under the prohibition of anticompetitive practices . In addition, the infringement must be attributed to the undertaking ultimately acquiring control of the target, and not only the legal signatory of the notification, insofar as that undertaking has, “directly or indirectly”, “the possibility of exercising  a decisive influence on the activity” of the target. In the  Altice decision, which also constitutes a first worldwide with regard to the amount of the fine and the scope of the practices at issue, the Authority considered that the offense of gun jumping had been committed deliberately and accordingly handed down a record fine of EUR 80 million . 

Competition Authority Decision No 16-D-24 of 8 November 2016, LawLex201600002126JBJ.

Competition Authority Decision No 22-D-10 of 12 April 2022, LawLex202200002092JBJ.

Competition Authority Decision No 22-D-10 of 12 April 2022, LawLex202200002092JBJ, considering that the acquisition of sole control in question was carried out before its notification, and therefore without prior notification, since it was notified on 3 January 2019, but that the notifying party's decisive influence was in fact revealed as early as 13 April 2018, from its choice of the target's new CEO, while it was the largest shareholder, it had confidential information on the target's commercial and budgetary policy, the two undertakings had close financial and commercial ties, and during the period following the actual completion of the merger, this decisive influence extended to various areas of the target's business, with the notifying party being involved in commercial negotiations between the target and its main supplier, as well as in the preparation of the target's three-year strategic plan.  

Competition Authority decision No 22-D-10 of 12 April 2022, LawLex202200002092JBJ.

The revised 2020 guidelines enshrine the offense of gun jumping at point 183.

Competition Authority Decision No 16-D-24 of 8 November 2016, LawLex201600002126JBJ; Decision No 22-D-10 of 12 April 2022, lawLex202200002092JBJ, recalling that the manifest nature of the infringement, as well as the deliberate character of the breach of Article L. 430-8, may constitute an aggravating factor in respect of the amount of the fine.

French Competition Law

584. Gun jumping

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584. Gun jumping

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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