MON COMPTEThe trend towards mergers inherent to market economies continues during periods of economic crisis. In 2014, the value of merger/acquisition transactions involving French companies amounted to 245 billion US dollars, twice that of 2013. French undertakings remain highly prized targets despite the economic slump in France. Last year, despite the Montebourg decree which purported to limit foreign investments, assets of a value of 112 billion dollars were acquired, the highest in 14 years. As well as the huge mergers that have taken place (Holcim/Lafarge merger – 39.5 billion dollars, Numéricâble’s takeover of SFR, GE/Alstom, Dongfeng’s equity stake in PSA), there have also been smaller mergers and acquisitions. When they lead to a takeover of sole or joint control of another undertaking, such operations must, under the merger control rules, be notified to the competition authorities, depending on the control threshold achieved and the markets concerned, either in Paris to the Competition Authority or in Brussels to the European Commission and frequently to other competition authorities too. The French Competition Authority handles around 200 merger operations each year, almost all of which are cleared.
I. Prior to clearance
1. Be proactive. Do not wait until a merger has been cleared to complain. An undertaking whose interests are threatened by a proposed merger should immediately analyze it, find out which authority will be handling it and identify the competition problems generated by it. The assistance of specialist lawyers and economists where necessary is very useful from this stage on. The company should present its documented findings to the Authority as of the pre-notification stage of the proposed merger, setting out the competitive risks of the operation so that the market test and the review of the merger can take full account of all the issues raised by the concentration.
2. Intervening at the review stage. The threatened undertaking should intervene regularly at this stage. It should ask to meet the case handlers, respond to market tests and suggest possible commitments. Indeed, the tactic often used by the notifying undertaking is to prepare in advance limited commitments in order to reduce the period of review and analysis by the Authority and by opponents of the proposed merger.
3. Lobbying and PR. It is often helpful while using the legal means available to also hire lobbyists and PR firms in order to optimize the impact of the arguments against the operation.
II. After clearance
4. Consider an appeal. In France, appeals against decisions authorizing (or prohibiting) concentrations fall to the exclusive jurisdiction of the Conseil d’Etat (Article R. 311-1, 4 of the Code of Administrative Justice). Appeals may be brought by the parties to the operation and by any third party who has an interest in bringing proceedings, for example if it is referred to in the contested decision as one of operators present on the market and has received a questionnaire during the market test (Conseil d’Etat, 19 May 2005, LawLex200500005772JBJ). For third parties, the deadline for lodging an appeal is two months from publication of the full-text version of the decision (not from the pre-publication of a summary on the Authority’s website prior to publication of the full version).
5. Provide solid reasoning and grounds for the appeal: In the event of an appeal for misuse of authority to the Conseil d’Etat, the appellant can rely on grounds based on “external legality” – jurisdiction, the compliance with certain guarantees of form and procedure or based on the substance (“internal legality”) – infringement of the law, error of law or fact. In France, total or partial annulments remain possible but are rare (see Conseil d’Etat, 9 April. 1999, LawLex200202021JBJ; 31 May 2000, LawLex200201934JBJ; 6 Feb. 2004, LawLex20040000223JBJ; France Antilles; 31 January. 2007, LawLex20070000141JBJ; 23 December. 2013, LawLex201300001889JBJ). The most successful appeals are those on the grounds of the validity of the control procedure, whether the operation is subject to control, definition of the relevant markets, assessment of the anticompetitive effects of the operation and the insufficiency of the commitments. Under French law, where an operation is annulled, the notifying undertakings must submit a modified notification within two weeks of the Conseil d’Etat’s ruling and the review process begins afresh.
6. Do not expect to obtain a suspension: Appeals on the grounds of misuse of authority do not suspend the operation. The implementation of interim measures is generally very difficult to obtain. Not only must the applicant have already lodged an appeal on the merits, but also the merger cannot have produced all its effects (Conseil d’Etat, 19 May 2005, cited above). However, the parties to the concentration will usually act quickly to transfer the ownership of shares and appoint new directors whereas the full-text publication of the decision (minus business secrets) which is in principle necessary for third parties to lodge an appeal usually comes only three weeks after the clearance decision itself. In this race against time, the applicant for interim measures to suspend the operation generally loses out. On the slim chance that such an action was held to be admissible, the applicant would have to prove the urgent nature of the application (which is assessed narrowly – for an example of a dismissal of an appeal on the grounds that the contested measures would not cause irreversible harm: see Conseil d’Etat, 22 October 2012, LawLex201200002176JBJ) and prove that there is a serious doubt as to the legality of the decision.
This difficulty in having an operation suspended is all the more reason to take a preventive approach and to act before the operation is cleared.
