The French Constitutional Council has declared constitutional
the French Competition Authority's power to (i) withdraw its
decision authorizing a merger, for failure by the parties to comply
with their commitments and (ii) has required that the parties
re-notify their transaction. This is an important decision
upholding the French Competition Authority's merger control
powers.
The French Competition Authority's Canal Plus decision
In August 2006, the Minister for Economy, then responsible for
mergers, cleared the acquisition of sole control by Vivendi
Universal and Canal Plus over TPS and CanalSatellite. This decision
imposed 59 commitments on the merging parties.
In September 2011, having determined that some of these
commitments had not been complied with, the French Competition
Authority (Autorité de la concurrence), which in
the meantime had become competent to rule on mergers, withdrew the
authorization and required that the operation be re-notified by the
original parties to the merger, the Canal Plus group and the
Vivendi Universal group (the "Parties").
While complying with such requests, the Parties challenged the
legality of the Competition Authority's decision before the
French Administrative Supreme Court (the Conseil
d'Etat or "Council of State"). Before
delivering its ruling, upon request of the Parties, the Council of
State referred a question to the French Conseil
Constitutionnel ("Constitutional Council"), asking
that the Constitutional Council assess whether the applicable
provisions of the French Commercial Code are
constitutional.
The Parties argued that the provisions of the Commercial Code that
allowed the Competition Authority to withdraw, of its own motion, a
merger authorization without defining the specifics of its analysis
of the competitive situation and without indicating the date that
the withdrawal decision became effective, (i) amounted to a
disproportionate violation of the constitutional principle of free
enterprise and (ii) were contrary to the constitutional objective
of clarity and accessibility of the law.
Free enterprise
The Parties plead that article L. 430-8§IV C. Com is
contrary to the principle of free enterprise.
The Constitutional Council decided that the right entrusted to the
Competition Authority to (i) withdraw an authorization in case of
non-implementation of commitments imposed by the initial
authorization decision and (ii) sanction those who were in charge
of implementing said commitments does not violate the principle of
free enterprise, as the restrictions to that principle are in the
general interest and are justified.
The Constitutional Council reasoned as follows:
- as a principle, the Legislator is entitled to restrict the principle of free enterprise, provided that such restrictions are justified by the general interest and that they are not disproportionate,
- when entrusting the Competition Authority with the right to issue injunctions, commitments or sanctions, the Legislator has meant to ensure that whatever commitments are associated with a merger authorization, they will be complied with,
- the sanctions that may be imposed (a) aim at guaranteeing that the Parties comply with commitments which in turn aim at ensuring an appropriate degree of competition or at compensating restrictions of competition, (b) are subject to a five-year statute of limitations, and (c) can be appealed before a regular Court.
Thus, this provision of the Commercial Code was declared
compatible with the French Constitution and the constitutional
principles.
Independence and impartiality
The Parties plead that that Commercial Code articles L.
461-1§II, L. 461-3, and L. 462-5§II violate the
constitutional principles of independence and impartiality because
of (i) a confusion between the Competition Authority department
that authorizes the mergers and the department that imposes
sanctions for violation of the merger regulation and (ii) an
absence of separation between the department that prosecutes cases
and the department that imposes sanctions.
In a nutshell, the Parties objected to a violation of the
principle of separation of powers between the Executive and the
Judiciary.
The justifications given by the Constitutional Council to reject
the Parties' allegations are in essence that:
- the principle of separation of powers does not prevent an independent authority from imposing sanctions as long as this power is limited by the principles of independence and impartialit
- the relevant articles of the Commercial Code prohibit any conflict of interests on the part of Competition Authority agents: no member of the Authority can deliberate on a case in which he has an interest. Moreover the department of the Authority in charge of instructing a case and the one in charge of imposing sanctions are totally independent from one another,
- the department in charge of imposing sanctions may intervene of its own motion only once the head of the department in charge of the case ("Rapporteur Général") has proposed that the sanctions department take the case. At any rate, the head of the instruction department cannot attend deliberations of the sanctions department.
Thus, the abovementioned provisions of the Commercial Code were
declared compatible with the French Constitution. The result
is that the French Competition Authority may withdraw its approval
of mergers, on the ground that the merging parties had failed to
comply with the conditions that had been imposed as part of the
merger approval. This ruling confirms that the Authority has
this significant power with which to enforce its merger
decisions.
Ref:
decision n° 2012-280 QPC of October 12, 2012
(Société Groupe Canal plus et autre).
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