Clifford Chance

On 14 January 2025, the French Competition Authority ("FCA") launched a public consultation to gather feedback on the introduction of a merger control framework to catch transactions likely to harm competition but falling below national notification thresholds.

Background

The Illumina / Grail judgment of 3 September 2024 – the end of the extensive interpretation of Article 22 of the EU Merger Regulation

This public consultation takes place in the context of the Illumina / Grail saga, at the end of which the Court of Justice of the European Union ("CJEU") put an end to the European Commission's ("Commission") extensive interpretation of Article 22 of the EU Merger Regulation ("EUMR"). This interpretation had allowed the Commission to accept referrals by national competition authorities ("NCAs") of transactions falling below the EU and national merger control thresholds (CJEU, 3 September 2024, Illumina/Grail, C-611/22 P).

In its decision, the CJEU clarified the framework for referrals under Article 22 EUMR by indicating that the Commission could accept such referral requests only in cases where NCAs themselves have competence under their national law. The CJEU held that in the event the thresholds in force do not allow NCAs to examine below-threshold transactions that are likely to have a significant impact on competition, it was open to the Member States concerned to revise their national notification thresholds.

Noting the consequences of this judgement, the FCA undertook to identify the existing or necessary tools that could ensure that any merger likely to have a significant impact on competition on the French territory could not escape scrutiny.

This assessment by the FCA is taking place in parallel to the legislative process to raise the national turnover thresholds. The legislative proposals have been adopted on first reading by the French Senate and are now under discussion at the French National Assembly.

Learnings from the FCA's previous public consultations

The FCA allegedly noted an increase in mergers involving companies with significant market impact but low turnover, thus escaping review by the FCA. It previously launched two public consultations in 2017 and 2018 on this issue and examined several potential approaches to acquire the power to examine such mergers.

Following these consultations, the FCA had advocated for the use of Article 22 EUMR, as it considered that it offered a practical solution within the existing legal framework.

However, the FCA had ruled out (i) the introduction of a threshold based on the value of the transaction, similar to thresholds introduced in Germany and Austria (this was notably due to the feared risk of overwhelming the FCA with a large number of notifications for transactions that raised no competition issues); and (ii) the re-introduction of a threshold based on market shares (which would notably require defining a relevant market, rendering the notification system more cumbersome).

The 2025 public consultation

Eager to find a balance between legal certainty for companies and the need for an effective merger control system to prevent harm to competition, the FCA proposed three options, two of which would require the intervention of the French legislator:

• Option 1 – A call-in system ("pouvoir d'évocation" in French). This option would grant the FCA the power to call in a merger that does not meet the notification thresholds, based on (i) a quantitative criterion, requiring the parties to the merger to exceed a certain cumulative turnover in France and (ii) a qualitative criterion, requiring that the transaction threatens to significantly affect competition in the territory. Similar systems are already in place in ten Member States of the European Economic Area such as Italy, Sweden, Ireland and Norway (noting that each country defined its own criteria).
• Option 2 – A new mandatory notification obligation based on the existence of previous decisions from the Commission, the FCA or a designation as a gatekeeper under the EU Digital Markets Act ("DMA"). The FCA's second option proposes to introduce a new mandatory notification requirement for certain companies holding a degree of market power (such as a dominant position), as established by a decision of the Commission or the FCA, or by the company's designation as a gatekeeper under the DMA. The FCA explains that this option is inspired by a similar system already in place in Switzerland.
• Option 3 – The status quo option with the use of provisions on anti-competitive conduct. The FCA's final option is to limit the scope of the FCA's action in respect of mergers falling below national notification thresholds to the enforcement of provisions on anti-competitive agreements and abuses of a dominant position. In practice, this status quo option would not result in any intervention from the legislature, as the FCA considers that it can already use EU and national rules on anti-competitive practices to conduct ex-post reviews of mergers falling below national thresholds. The ability of NCAs and courts to challenge these transactions under abuse of dominance rules was already confirmed by the CJEU in the Towercast judgment (CJUE, 16 March 2023, Towercast, C-449/21).

Stakeholders were invited to submit their observations on each of these three options until 16 February 2025.