COMPETITION • FRENCH LAW • MERGERS
In the digital sector the law pertaining to concentrations is often solicited in respect of merger-acquisition transactions by the digital giants , which most often escape review by the competition authorities because they target innovative entrants or which have not yet monetized their innovation. In practice, the digital platforms in question use this intensive hostile takeover policy, either to kill the target where the growing community of users is liable to quickly create a serious competitor (killer acquisitions), or more frequently to integrate into their ecosystem young start-ups and develop their activity in order to increase their own community of potential users and strengthen their position in the dominated market or on neighboring markets (“consolidating” or “encompassing” acquisitions). In any case, potential competition is limited without these acquisitions being subject to merger control since they do not exceed the national or European thresholds for compulsory notification; in the first case, a source of innovation which could have boosted the competitive functioning of the market and benefit the consumer is eliminated, while in the second, it is confiscated by the dominant operator who collects the benefits by depriving consumers of an alternative offer.
In order to remedy the legal vacuum concerning predatory acquisitions, the Competition Authority, in its contribution to the debate on competition policy and digital challenges of 21 February 2020, proposed more frequent recourse to the referral mechanism provided for in Article 22 of Regulation No 139/2004, which allows national competition authorities to refer a non-notifiable concentration to the Commission, whether with regard to national or European thresholds, if it threatens to significantly affect competition on its territory.
It has also put forward the idea of introducing merger control specific to the digital economy which would be based on a twofold mechanism, with, on the one hand, the introduction of an obligation to provide information to the Commission and/or the competition authorities concerned, on any merger implemented by a structuring digital platform on the territory of the Union and, secondly, the addition of new notification thresholds that could be implemented ex-ante and ex-post, at the request of a competition authority, following competition monitoring, when three conditions are met: “all the companies or groups of legal persons or individuals who are parties to the merger have a total worldwide turnover greater than EUR 150 million; the transaction raises substantial competition concerns identified in the area concerned and; where applicable, the transaction does not fall within the jurisdiction of the European Commission”. The Authority argues, in support of its proposal, that such a system is already in place in Estonia, Hungary, Ireland, Lithuania, Norway, Sweden, the United States and Japan.
