COMPETITION • FRENCH LAW • MERGERS
In order to delineate the scope of application of the rules of the Commercial Code in the field of merger control, it is necessary to take account of the rules specific to the press, audiovisual communications, banking and insurances sectors.
Article 11 of the Law of 1 August 1986 prohibits, “under penalty of nullity, the acquisition, takeover or leased management of a printed daily political and generalist newspaper where such operation has the effect of allowing a natural or legal person or a group of natural or legal persons to own, directly or indirectly control, or edit as lease managers daily printed general or political newspapers of which the total of distribution exceeds 30% of the distribution on the national territory of all daily print publications of the same kind“. Similarly, the Law of 30 September 1986 on freedom of communication contains provisions (Art. 38 and 39) aimed at limiting direct or indirect equity participation in a television station by a single person, as well as the accumulation of broadcast authorizations, whether these concern a single means of audiovisual communication or several (mergers in the area of multimedia). In particular, Article 39, I prohibits holdings of more than 49% of the target undertaking, except where the latter’s audience share does not exceed 8% of the total television ratings for both analog and digital broadcasting. How these specific provisions sit with rules of a more general nature is open to debate. Some commentators consider that the exclusion of these sectors is called into doubt by Article L. 410-1 of the Commercial Code, which provides that Book IV on competition applies to all economic areas without distinction.
For audiovisual communications, the Law of 1 August 2000 amended the wording of Article 41-4 of the Law of 30 September 1986, which formally excluded this sector from the field of application of the general law governing mergers. Since the NRE Law, paragraph 1 of Article 41-4 has expressly subjected this sector to merger control. The LME Law of 4 August 2008 changed the wording of the provision without changing its meaning. The text now provides that “when a concentration directly or indirectly concerning a producer or a distributor of radio and television services is the subject of an in-depth review in application of the last subparagraph of III of Article L. 430-5 of the Commercial Code, the Competition Authority shall, before taking a decision in application of Article L. 430-7 of the same code, obtain an opinion from the Audiovisual Supervisory Authority (Conseil supérieur de l’audiovisuel – CSA). To that effect the Competition Authority forwards any applications for such operations to the CSA. The CSA then provides its observations to the Competition Authority within a period of one month following the receipt of this communication”. Both the general rules and the sector-specific rules will be concurrently applicable.
The Administration has traditionally considered that it the banking sector was not excluded from the scope of application of merger control, and that the sector-specific rules added to, rather than replaced, ordinary provisions. The DGCCRF (General Directorate for Competition Policy, Consumer Affairs and Fraud Control) in its analysis considered that “there is however the cause to consider that Title V of the 1986 Ordinance (now Book IV, Title III, of the Commercial Code) could apply to merger operations concerning credit institutions, insofar as the special rules laid down by the banking law with regard to concentrations were included essentially for the sake of prudence and were not related to the general objectives of maintenance of competition pursued by the ordinance. Those special rules are therefore applied in addition to the general rules of law under Title V, but cannot be considered as derogating from them or as substitutes for them“. Thus, on the occasion of the Crédit Agricole /Credit Lyonnais merger, the Conseil d’État, hearing an application for the annulment of the conditions posed for the merger by the Credit Institutions and Investment Firms Committee (CECEI), since integrated with other institutions within the Prudential Supervisory and Resolution Authority (Autorité de Contrôle Prudentiel et de Résolution), which considered itself to have the authority to review sectoral mergers, declared that “merger operations of banking activities are not subject to the prior authorization of the Minister of the Economy”. The Conseil added that despite the authorization bestowed by the legislator on the CECEI to ensure the proper functioning of the banking system, that body does not have a general jurisdiction to carry out merger control but must limit itself to ensuring that the operation in question is not contrary to Article L. 420-2 of the Commercial Code, which prohibits the abuse of a dominant position, and not the creation or strengthening thereof. The banking sector was not therefore subject to merger control where the operation in question was not of a European dimension. After that case, the legislature amended Article L. 511-4 of the Monetary and Financial Code the provisions of which are, as a result of the integration of the CECEI within the Prudential Supervisory Authority, now to be found in Article L. 612-22 of the Monetary and Financial Code and which requires the Competition Authority to request an opinion from the Prudential Supervisory Authority prior to ruling after an in-depth review of a concentration in the banking sector. The control of banking mergers, as in other sectors, is therefore clearly under the jurisdiction of the competition authorities.
The LME Law introduced provisions to the Insurance Code relating to merger control in this sector. Article L. 413-2 provided that where a concentration concerning, directly or indirectly, a company referred to in Articles L. 310-1 or L. 310-1-1 was the subject of an in-depth review in the application of the last subparagraph of III of Article L. 430-5 of the Commercial Code, the Competition Authority should elicit, before taking a decision in application of Article L. 430-7 of the same code, the opinion of the Committee of Insurance Undertakings (Comité des entreprises d’assurance). The Competition Authority had to inform the Committee of Insurance Undertakings of any actions relating to such operations. The Committee sent its opinion to the Competition Authority within a period of one month following receipt of this information. The opinion of the Committee was made public under the conditions laid down in Article L. 430-10 of the Commercial Code. These provisions have been moved to Article L. 612-22 of the Monetary and Financial Code, which applies to all entities subject to supervision by the Prudential Supervisory and Resolution Authority.