France: Changes to French Competition Rules

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.

Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Copyright 2008. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved.

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