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- Merger Control Regime
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1.1 Membership of Supranational Organization
1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?
France is a member of the European Union.
1.1.2 Is the jurisdiction itself a supranational jurisdiction?
1.1.3 If the answer to Section 1.1.1 and/or 1.1.2 above is in the affirmative, what are the implications hereof?
Transactions falling under the jurisdiction of the European Commission pursuant to the EU Merger Regulation are exempt from notification in France. In such cases, the French competition authority is as a general rule precluded from applying the French merger control rules to the transaction.
This is known as the "one-stop-shop" principle.
2. Nature of merger control regime
2.1 Mandatory or voluntary
2.1.1 Is filing mandatory or voluntary?
Filing is mandatory.
2.2 Suspensory effect
2.2.1 Must completion of the transaction await clearance by the relevant authorities?
Completion of the transaction must await clearance by the French Competition Authority.
1. What type of transactions are caught by the merger control regime?
1.1.1 Type of transactions that are caught by the merger control rules?
A transaction is caught by the merger control rules if it brings a change of control on a lasting basis resulting from:
- the merger of two or more previously independent undertakings or parts of undertakings; or
- the acquisition, by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings.
1.2 Joint ventures
1.2.1 What types of joint ventures are caught by the merger control rules?
The creation of joint ventures performing on a lasting basis all the functions of an autonomous economic entity resulting in permanent structural market change, i.e. a so-called "full-function" joint venture.
1.3 Definition of "control"
1.3.1 How are the concepts of "control" and "change of control" defined?
"Control" over an undertaking is defined as the possibility of exercising decisive influence on an undertaking by rights, contracts or any other means, either separately or in combination, having regard to the considerations of facts and law involved.
The assessment of whether there is a possibility of exercising decisive influence over an undertaking has to be decided on the facts in each case. Control can be established on either a de jure or de facto basis. De jure control is normally acquired on a legal basis by the acquisition of a majority of the voting rights or through special rights, while de facto control may be acquired by any other means, such as for example based on the size of the shareholding, the historic voting pattern at previous shareholders’ meetings and the position of other shareholders.
Only transactions that bring a lasting "change of control" to the undertakings concerned and in the structure of the market are covered by the French merger control rules. Thus, transactions resulting only in a temporary change of control, such as for instance a transitory transaction, are not covered.
1.4 Minority shareholdings
1.4.1 Are minority and other interests less than control caught by the merger control rules?
Acquisition of a minority or other interest that does not lead to an acquisition of control is not caught by the merger rules.
However, a minority interest giving the capability of exercising control, through contractual rights for instance, over the undertaking concerned is caught by the merger control rules regardless of whether control is actually being exercised.
An examples hereof would be a minority interest that confers joint control over the acquired undertaking if, by virtue of the provisions of a shareholders’ agreement or through other contractual or de facto mechanisms, the holder of the minority interest can exercise veto powers over certain “strategic” decisions of the acquired company.
2. Establishing jurisdiction for notification of mergers
2.1 Merging parties/undertakings concerned
2.1.1 Which undertakings are considered parties to the merger ("undertakings concerned") in the various types of transactions identified under Section 1.1.1 and 1.2.1.
In a merger, the undertakings concerned are each of the merging entities.
In an acquisition of control, the undertakings concerned may vary depending on the characteristics of the transaction:
- In case of acquisition of sole control, the undertakings concerned are the acquiring undertaking consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.) and the target undertaking (i.e. not including the seller)
- In case of acquisition of joint control of a newly created joint venture, the undertakings concerned are each of the undertakings jointly acquiring control. The same applies where one undertaking contributes a pre-existing subsidiary or a business (over which it exercises sole control) to a newly created joint venture.
- In case of acquisition of joint control over a pre-existing undertaking or business, the undertakings concerned are each of the undertakings acquiring joint control and the target (the joint venture).
- In case where a pre-existing, full-function joint venture acquires control over another undertaking, the undertakings concerned are the joint venture (i.e. not including the parent companies, although their turnover should be included in the turnover calculation) and the target undertaking. Where a joint venture is mere acquisition vehicle, the undertakings concerned are in such situation the parent companies to the joint venture and the target undertaking.
- In case of change from joint control to sole control, the undertakings concerned are the undertaking acquiring the sole control and the target. The "existing" shareholder(s) (i.e. the seller(s)) is not considered an undertaking concerned.
2.3 General thresholds
If either of the two alternative sets of thresholds is met, the transaction will have to be notified:
The first alternative threshold:
a) all the undertakings concerned achieved a global combined turnover of over EUR 150,000,000; and
b) at least two of the undertakings concerned each achieved a turnover in France exceeding EUR 50,000,000.
The second alternative threshold:
Lower thresholds apply to concentrations involving undertakings operating in French overseas departments and French overseas communities (i.e. where at least one undertaking concerned is active in one or more French overseas departments).
2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)
Merger control filing is required for concentrations in the retail sector if:
- all the undertakings concerned achieved a global combined turnover of over EUR 75,000,000; and
- at least two of the undertakings concerned each achieved a turnover in the retail trade sector in France exceeding EUR 15,000,000.
Please be aware that foreign investments in certain sectors require prior authorization. Namely, the defense, security, cryptology, information security, gambling, private security, research against bio-terrorism, and technology intercepting communication systems sectors. Foreign investment in the energy, water, transportation, electronic communications, vital construction works, and public health sectors also require prior authorization. All such investments must be formally approved by the Minister for the Economy prior to implementation.
There are additional sectors in which specific merger rules apply, e.g.:
- A foreign legal entity may not hold more than 20% ownership or of the voting rights of an undertaking active in the audiovisual sector in French. There are also specific rules on cross-media ownership.
- An undertaking may not control daily publications that represent more than 30% of the total circulation on the national market of similar publications. For publications in French, a foreign legal entity may not hold more than 20% ownership or of the voting rights of said undertaking.
2.5 Foreign-to-foreign mergers
2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?
Foreign-to-foreign mergers are notifiable in France if the jurisdictional thresholds are triggered.
3. Calculation and allocation of turnover, asset value, transaction value etc.
3.1 Relevant turnover
3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?
The relevant turnover to be taken into account is the net turnover derived from the sale of products and the provision of services falling within the undertakings' ordinary activities after deduction of value added tax and other taxes directly related to the sales. Group internal turnover shall not be included.
3.7 Special rules
3.7.1 Do any special rules or principles apply to the calculation, allocation etc. of turnover, assets etc. for specific undertakings (e.g. State-owned undertakings, investment funds, credit and financial institutions, insurance companies, financial holding companies, others)?
Specific rules apply to the calculation of turnover for investment funds; state-owned undertakings; financial institutions and insurance undertakings.
1. Practical information
1.2 Deadlines for filing
1.2.3 What are the sanctions for not filing a notifiable transaction?
Failure to notify a transaction which requires notification is sanctionable by
(i) a daily fine of up to 5% of the parties’ daily turnover until the transaction is rolled back,
a) for legal persons, a fine of up to 5% of the parties’ turnover in France during the last financial year, including the turnover of the target, but exclusive of tax;
b) or natural persons, a fine of maximum EUR 1,500,000.
The same applies in the case of implementation of a prohibited combination.
and last updated 11-01-2021 by
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