French Minister of Economy triggers Phase III and decides to examine a merger operation already cleared by the French Competition Authority
Published on 26th Jul 2018
On 14 June 2018, the French Competition Authority (FCA) cleared a merger in the canned pre-prepared meals market involving the sole control acquisition by Financière Cofigeo (Cofigeo) of certain securities and assets of the pre-prepared meals division of its main competitor, Agripole Group, as a result of the latter's administrative receivership. During the receivership proceedings, the Paris Commercial Court called for the takeover of certain of Agripole's subsidiaries and assets, notably all of the best-known canned pre-prepared-meal brands, and finally selected Cofigeo to take over these assets.
An in-depth competitive review of the operation led the FCA to conclude that the operation was likely to create a quasi-monopoly in the French market for Italian and exotic pre-prepared canned dishes. The FCA therefore concluded that remedies were necessary to balance the significant effects on competition and cleared the merger subject to the divestment of specific assets (a production site and one of the Agripole's brands).
However, the French Minister of Economy decided, in accordance with article L. 430-7-1 of the Code of Commerce, to use the power to review the merger for public-interest reasons other than safeguarding competition. Those reasons can include industrial development, firms' competitiveness, and the creation and stability of employment. In this respect, the Minister stated that the decision was taken in the context of "heavy frauds" that led to Agripole's receivership and takeover.
In a press release, the FCA acknowledged the Minister's decision and emphasised that this was the first time since the new merger control legal framework came into force in 2008 that the Minister had used its power to review a merger operation. It should be noted that prior to 2008, the Minister of Economy undertook all merger control reviews.
The Minister's decision announcement
On 19 July 2018, in accordance with the Code of Commerce provisions, the Minister announced that he had taken the decision to clear the merger.
Clearance was decided without divestment of specific assets, thus in contradiction with FCA's decision, but nonetheless subject to a two-year commitment for Cofigeo to maintain employment within the group.
Indeed, safeguarding employment was the public interest reason justifying the use by the Minister of its power to review the merger.
In this case, the Minister considered that the industrial strategy underlying this merger would have been jeopardised by the assets' divestment and that the economic consequences of divestment would have resulted in significant risk in terms of employment.
While this is the first time since 2008 that the Minister of Economy has used its power to review a merger even after it has been approved by the FCA, it will be interesting to see whether it is used more often in the future, particularly given the additional costs involved in submitting to what is essentially a "Phase III" investigation.