Originally published August 22, 2008
Keywords: Law on the Modernisation of the Economy, L.M.E., French competition, merger regulations, Competition Authority, Autorité de la concurrence,
The Law on the Modernisation of the Economy (L.M.E.) took
partial effect on 6 August 2008 and will take full effect by,
at the latest, 1 January 2009 depending on the adoption of the
governmental ordinances. This law affects French competition
regulation by implementing among others a new competition
authority and some changes of the merger regulations.
The main changes of the competition regulation brought by the
L.M.E. are:
- The establishment of a single competition authority: the
Competition Authority (Autorité de la
concurrence) which will have full jurisdiction to review
mergers;
- The Minister for the Economy retains some important
powers in merger control: the right to order a Phase II and
the right to reexamine a case and make an alternative
decision;
- The calculation of the delay of notification in working
days and the introduction of a "stop the clock"
mechanism during the merger control procedure;
- Some new rules of notification affecting the retail
sector and French overseas territories; and
- An increase in the protection of enterprises within the
retail sector from an abuse of economic dependence or of
dominant position.
A new single competition entity: the Competition
Authority :
A new competition enforcement agency, the Competition
Authority, is established instead of the Council on Competition
(Conseil de la concurrence). The new entity, which is
an independent administrative agency, is an institutional
transformation of the Competition Council and has increased
powers, which empower the President to bring a case in front of
the courts against relevant parties.
Full jurisdiction over merger control :
The dual French system of merger control is actually based
both on the Ministry for the Economy through the General
Directorate for Competition, Consumer Protection and Frauds
(D.G.C.C.R.F.) for Phase I and the Council on
Competition for Phase II. Within the L.M.E., the Competition
Authority has full jurisdiction concerning the merger control
from Phase I to Phase II.
The remaining powers of the Minister for the Economy
:
The Minister for the Economy holds within the L.M.E. some
important powers.
Firstly, he may request that an in-depth investigation be
opened (i.e. a Phase II) without giving any
justification.
Secondly, he may reexamine a case cleared in Phase I and make
eventually an alternative decision on the grounds of general
interest such as, most notably, industrial development, the
competitiveness of the enterprises or the maintaining of
employment.
By using such important powers, the Minister is therefore able
either to require a Phase II or reexamine a case and make an
alternative decision.
The merger control timetable and the introduction of a
"stop the clock" mechanism
The L.M.E. has changed the current timetable. Now the time for
the Competition Authority to clear or not a merger during Phase
I is 25 working days instead of 5 weeks previously. And the
Competition Authority has 65 working days to rule after the
opening of a Phase II.
The timetable can be suspended following the request of the
parties to the Competition Authority within the limit of 20
working days from notification in case of particular necessity
as the finalization of the commitments.
New rules of notification affecting the retail sector
and French overseas territories
Where two or more companies exploit two or more retail shops
or where one of the parties operates in a French overseas
territory, the concentration has to be notified when the
following criteria are met :
i) the combined aggregate worldwide turnover exclusive of tax
of all of the companies or of all of the natural persons or
legal entities involved in the merger is greater than 75
million euros;
ii) the combined aggregate turnover exclusive of tax achieved
in France by at least two of the companies or groups of natural
persons or legal entities concerned is greater than 15 million
euros; and
iii) the operation does not come within the scope of the E.C.
merger regulation.
Some specific provisions in order to protect the
retailing sector from an abuse of economic dependence or an
abuse of dominant position
The L.M.E. has given an important power to mayors. A mayor
may, in the event of the abuse of a dominant position or a
state of economic dependence of companies exploiting one or
more retail shops, call on the competition agency to stop the
alleged anticompetitive practices.
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