On 7 June 2018, the French Competition Authority (FCA) released a statement regarding changes and measures to simplify and modernise its merger control rules. Based on a review of recent cases and a public consultation launched in October 2017, this statement paves the way for changes that may be made before the end of 2018.
No changes in applicable thresholds and rejection of a transaction value threshold
The FCA considered that current thresholds (including one specifically applicable to retail activities) are proportionate and justified, and therefore do not need to be changed.
In the context of digital or high-tech company acquisitions (which can lead to high valuations of companies that may achieve “low” turnovers), the FCA considered the possibility of introducing a transaction value threshold (as has recently been implemented in Germany and Austria).
However, the FCA ruled out introducing a transaction value measure, concluding that it would not be justified in the context of the French economy. The FCA indicated that it would closely monitor the implementation of the measure in Germany and Austria to see what lessons can be drawn.
Launch of a public consultation about “ex post” control
Based on the example of several countries (including Sweden, the United Kingdom and the United States), the FCA considered introducing an “ex post” control into French law, which would enable the FCA to require a very limited number of transactions that may raise competition issues to be submitted for merger control on its own initiative. This would include transactions that potentially give rise to dominant or monopolistic positions in specific markets or that may result in a significant reduction of competition.
The FCA has initiated a public consultation on this issue, which is open until 28 September 2018.
Changes in the simplified notification procedure
The FCA announced that it will reduce the information requirements imposed on firms within the simplified procedure. Several pieces of compulsory information that are not regarded as essential by the FCA for merger control (financial products from investments, intangible, tangible and financial assets, along with financial debts) will therefore no longer be required, and the number of files parties are required to submit will be reduced from four to one.
The FCA believes that widening the scope of the simplified procedure to include more types of mergers would lead to 70% of mergers being examined within a shorter time period (around three weeks). Therefore, the FCA suggests widening the scope of simplified notification procedure to the following operations:
- horizontal overlap of activities (where the parties operate in the same markets), when the combined market share of the parties concerned is below 25%;
- vertically linked markets (where the parties operate in different markets but those markets are still linked), when the market share of the parties in question in one market or the other is below 30%;
- horizontal overlap, when the total market share of the parties concerned is below 50% and the growth of market share following the operation is below 2%;
- acquisition of sole control of an entity where the acquirer already has joint control over the target with another stakeholder;
- transactions relating to the planned creation of a full-functioning joint venture exclusively active outside the national territory;
- transactions relating to the joint acquisition of real-estate assets under the sale of property for future completion (Vente en état futur d’achèvement, VEFA).
Creation of a new ultra-simplified notification procedure
The FCA suggests that operations benefiting from the simplified procedure could be notified using an online form on the FCA’s website, which will provide the entity’s advisors with guidance on submitting their notification file.
New guidelines for 2019
Finally, the FCA announced a review of its merger control guidelines.
In this respect, any interested third party is invited to send its observations on these guidelines to the FCA by 28 September 2018. The FCA will take these observations into account and release a further draft for public consultation at the beginning of 2019. New guidelines are expected to be released in the spring of 2019.