In 2022, the French Competition Authority (the "FCA") maintained a high level of activity, focusing notably on digital markets, which remain one of its key priorities. Last year also brought the first successful failing firm defence, as well as strict enforcement by the FCA of pre-merger filing and gun-jumping penalties, and a substantial injunction fine.
Under the leadership of newly appointed president Benoît Cœuré, the FCA issued 257 clearance decisions in 2022, only five of which were subject to remedies.1
In contrast to 2021, where the FCA prohibited a merger for the second time in its history, the FCA did not issue any merger prohibition decisions in 2022. The FCA, however, opened two Phase II investigations in 2022: (1) one for the Mobilux group's acquisition of Conforama, which was unconditionally cleared on 28 April 2022 by applying the failing firm exception; and (2) one for the TF1-M6 merger, which the notifying parties ultimately withdrew on 16 September 2022, following completion concerns identified by the FCA. In addition, the FCA imposed a €75 million fine on Altice for non-compliance with the injunction decision regarding Altice's acquisition of the SFR group and showed tough enforcement against gun-jumping infringements in the Cofepp case.
As a result, in 2022, only seven transactions raised significant competitive concerns (five of them were conditionally cleared and two transactions led to Phase II investigations), corresponding to a three per cent intervention rate by the FCA.
With respect to the sectors concerned, as they often do, most of the FCA's decisions related to the retail/distribution sector (49 per cent in 2022) and the majority to the food retailing and automotive distribution sectors. The other decisions were mainly distributed between the business services sector (22 per cent in 2022), the agricultural and industry sectors (10 per cent in 2022), the energy/environmental sector (six per cent in 2022), the healthcare/pharmaceutical sector (five per cent in 2022) and the telecom/digital sector (four per cent in 2022).
Notable merger control cases and recent developments in the French Competition Authority's decisional practice
The FCA for the first time accepted a failing firm defence when unconditionally clearing a transaction
A notable recent transaction in the past year was the takeover of Conforama by the Mobilux group in April 2022, where the FCA accepted, for the first time since the FCA gained merger control powers in 2009, a failing firm defence and cleared the deal despite relatively significant competitive risks linked, among others, to the new entity's purchasing power.
The transaction initially was notified to the European Commission (the "EC"), which referred the case to the FCA because of the transaction's exclusive impact on the French market and the specific expertise of the FCA in examining mergers in the procurement and retail supply of furniture and furnishings.
In the case at hand, the FCA first confirmed that, absent the transaction, Conforama would quickly have been forced out of the market financially. Conforama was not able to pay its suppliers in 2020, which prevented it from re-opening its stores after the first lockdown in France, and could not obtain bank financing. The FCA then concluded that there was no less anticompetitive alternative purchaser than Mobilux for at least a substantial part of Conforama's activity. Finally, the FCA assessed whether the exit of the company would be no less damaging for consumers than the notified merger, especially in the catchment areas for which anticompetitive risks had been identified. The Mobilux/Conforama transaction was also exceptional for the length of the review period (almost two years), which resulted in the FCA granting a derogation from the standstill obligation in light of Conforama's financial difficulties.
For the first time, the FCA fined an undertaking for both (1) failure to notify a merger and (2) completion of the merger prior to the FCA's approval
In 2022, the FCA continued to show tough enforcement against gun-jumping infringements.
In April 2022, the FCA imposed a fine of €7 million on Cofepp for both (1) failing to notify its merger with Marie Brizard Wine & Spirits ("MBWS") and (2) completing the merger prior to the FCA's approval. The FCA launched a gun-jumping procedure shortly after clearing the merger (approximately one month after clearance) and concluded that Cofepp had exercised a progressive takeover and de facto control over MBWS prior to the merger control proceedings.
This case is interesting in several respects, as it is a useful reminder that a company that progressively acquires an important shareholding in another company must be wary of not exercising decisive influence or de facto control prior to obtaining clearance from competition authorities. Moreover, it is the first time that the FCA has sanctioned two gun-jumping breaches (i.e. failure to notify and completion prior to clearance) in line with the EC's decisional practice and EU case law.
The FCA imposed a €75 million fine on Altice for non-compliance with the injunction decision regarding Altice's acquisition of the SFR group
Another significant decision issued by the FCA is the €75 million fine imposed on Altice in September 2022 for non-compliance with the injunction decision regarding Altice’s acquisition of the SFR group.
This case started in 2014, when the FCA cleared the takeover of SFR by Altice subject to several behavioural remedies, including the execution of a co-investment contract with the French telecoms company Bouygues pertaining to the deployment of optical fibre in densely populated territories in France.
In 2017, the FCA found that Altice had not respected those commitments and imposed a €40 million fine, along with adopting an injunction decision imposing on Altice a new implementation schedule for the commitments, subject to progres¬sive penalties. However, in its 29 September 2022 decision, the FCA ultimately found that Altice had not complied with the injunctions within the time limits and imposed an overall penalty of €75 million (in a settlement with Altice). This case is significant because this is the first time the penalty payment provisions provided by the French Commercial Code have been applied.
Digital markets remain a key priority in the French Competition Authority’s roadmap for 2022 – 2023
The FCA recently indicated in its roadmap for 2022 – 2023 that digital markets are a key focus of the FCA in terms of both anticompetitive practices and merger control in the upcoming years.
In a speech in April 2022, the FCA's president, Benoît Coeuré, indicated that the FCA intends to take increasingly into account competitive pressure from tech companies on traditional players, notably when assessing market definitions and market shares, as well as the notion of potential competitors.
FCA Sector Inquiry: Cloud. In terms of sector inquiries, in January 2022, the FCA launched an inquiry into the competitive functioning of the cloud sector. Coeuré indicated that the focus would be the emergence of new critical infrastructures such as the cloud, and announced that the FCA would undertake in-depth work on the impact of the cloud in all sectors. The purpose of this study is to examine the competitive dynamics of the sector and the presence of players in the various segments of the value chain, as well as the potential relevant markets and segments in relation to the cloud. Against that background, the FCA opened a public consultation in July 2022 to gather comments from stakeholders on the definition of 'relevant markets' and the practices implemented in the sector.
The FCA also contributed to the work of the G7 group concerning digital markets and to the publication of a compendium of the decision-making and advisory practice in the digital economy of the competition authorities of the G7 countries, the EC and the competition authorities of four invited countries (Australia, India, South Africa and South Korea).
Digital Markets Act. In that context, one important aspect to look out for is the implementation of the Digital Markets Act (the "DMA") at the European level. With regard to merger control, the DMA imposes on designated gatekeepers (digital platforms considered to be gatekeepers on the markets in which they operate) an obligation to inform the EC of any proposed acquisition in which the target provides core platform services or any other services in the digital sector or enables the collection of data. The EC will then be transmitting this information to the competent national authorities, which may use it for merger control purposes, using the referral possibilities provided for in article 22 EUMR.
The FCA has already announced that it will work very closely with the EC to identify problematic transactions, and it will be interesting to see how this new tool, which will enter into force in mid-2023, will play out.
1 White & Case tracks merger filing activity in more than 70 jurisdictions in its WAMS database.
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