Merger Control thresholds in France
Catherine Robin
The Competition, Merger Control Department of Alerion regularly works with the Corporate law, Mergers & Acquisitions and Private equity practice teams for merger control operations. In order to identify the most essential aspects of the merger control procedure in France, our team summarizes the first information needed in such transactions.
Type of mergers reviewed by the French Competition Authority: “Autorité de la concurrence” Art. L. 430-1 and sq. of the French commercial code :
A merger shall be deemed to have occurred where:
- Two or more previously independent undertakings merge;
- One or more persons already having control of at least one undertaking or when one or more undertakings acquire control of all or part of one or more other undertakings, directly or indirectly, whether by the acquisition of a holding in the capital or by purchasing assets, a contract or any other means.
The creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity shall constitute a merger.
The control results from rights, agreements or any other means which, either separately or jointly and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on the activity of an undertaking, in particular by:
- rights of ownership or enjoyment of all or parts of the assets of an undertaking;
- rights or agreements which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
Thresholds applicable to all transactions Art. L. 430-2, I. of the French commercial code :
Mandatory notification if the three following cumulative conditions are met:
- The combined worldwide turnover exclusive of tax of all of the undertakings or of all of the individuals or legal entities involved in the merger is greater than €150 million, and
- The combined aggregate turnover exclusive of tax earned in France by at least two of the undertakings or groups of individuals or legal entities concerned is greater than €50 million; and;
- The transaction does not fall within the jurisdiction of the European Commission.
Specific thresholds applicable in retail trade Art. L. 430-2, II. of the French commercial code :
When at least two of the parties to the concentration operate one or more retail outlets notification is mandatory if the three following cumulative conditions are met:
- Aggregate turnover exclusive of tax earned worldwide by all of the undertakings or of all of the individuals or legal entities involved in the merger is greater than €75 million;
- The total turnover exclusive of tax generated in France, in the retail business sector, by at least two of the undertakings or groups of individuals or legal entities concerned is greater than €15 million;
- The transaction does not fall within the jurisdiction of the European Commission.
Mergers concerning certain French overseas territories Art. L. 430-2, II. of the French commercial code :
When at least one of the parties to the concentration exercises all or part of its business in one or more French overseas departments, in the department of Mayotte, the Wallis and Futuna Islands or the overseas territories of Saint-Pierre-et-Miquelon, Saint-Martin and Saint-Barthélemy, notification is mandatory if the three following cumulative conditions are met:
- The combined aggregate turnover exclusive of tax earned worldwide by all of the undertakings or of all the individuals or legal entities involved in the merger is greater than €75 million;
- The total worldwide turnover exclusive of tax generated separately in at least one of the French overseas territories concerned by at least two of the undertakings or groups of individuals or legal entities concerned is greater than €15 million, or €5 million in the retail sector without this threshold having to be reached by all the undertakings concerned in the same French overseas territory;
- The transaction does not fall within the jurisdiction of the European Commission.
Date by which the transaction must be notified to the Competition Authority Art. L. 430-3 and Art. L430-4 of the French commercial code :
The transaction must be notified prior to its completion, when the project is sufficiently advanced to enable the processing of the file.
The transaction can be effectively completed only after the Autorité de la concurrence has given its consent.
The notification procedure has a suspensive effect (except in the exceptional cases provided for by law).
Pre-notification :
The parties to the operation may initiate a contact with the French Competition Authority before the formal notification, in order to have a first formal evaluation of the questions raised by such operation.
At this stage, the procedure remains confidential, and the French Competition Authority cannot disclose it to third parties.
The confidential pre-notification is strongly recommended.
Fines Failure to notify Art. L. 430-8, I of the French Commercial Code :
Persons responsible for the notification, legal entity: Financial penalty of 5% of their pre-tax turnover made in France during the last closed fiscal year, plus, if applicable, the turnover that the acquired party made in France during the same period.
Persons responsible for the notification, individuals, €1.5 million.
Fines Early implementation of a merger, or gun jumping Art. L. 430-8, II of the French Commercial Code :
Notifying person, legal entity: financial penalty of 5% of the turnover excluding taxes made in France during the last financial year ended, increased, where applicable, by the turnover made in France during the same period by the acquired party.
Notifying person, individuals: financial penalty of €1.5 million.
Fines Omission or inaccurate statement Art. L. 430-8, III of the French Commercial Code :
Financial penalty of 5% of turnover for legal entity withdrawal of the decision of the Competition Authority.
Catherine Robin, Partner