Ex-post control of mergers – First application of the Towercast ruling: For the first time, the French Competition Authority uses its power to examine a “concentration” not captured by merger control rules.
In decision no. 24-D-05 of May 2, 2024, the French Competition Authority reviewed a completed concentration that fell below the national thresholds for merger control. This was done under to Articles 101 of the Treaty on the Functioning of the European Union (“TFEU”) and L. 420-1 of the French Commercial Code, which prohibit anti-competitive agreements,
This approach follows the Towercast ruling by the European Court of Justice of March 16, 2023 (C-449/21), which recognized the possibility for national authorities, under certain conditions, to control transactions that have already been implemented, under to Article 102 TFEU, prohibiting abuses of dominance.
The French Competition Authority alleged that three groups of companies (Akiolis, Saria and Verdannet) had implemented a global plan to divide up the French market for the collection of animal by-products geographically, and which was implemented by the conclusion of 21 reciprocal business transfer agreements.
These transfer agreements constituted five separate transactions, none of which met the French notification thresholds set out in Article L. 430-2 of the French Commercial Code, or those in the European merger control Regulation (EU Regulation no. 139/2004 of January 20, 2004).
The companies argued that a completed transaction could not be subject to ex-post control under of Articles 101 TFEU and L. 420-1 of the French Commercial Code, especially since the jurisdictional notification thresholds had not been met.
Relying on the Towercast ruling by the European Court of Justice, the French Competition Authority holds in its decision that the European merger control Regulation does not preclude a transaction which does not have a Community dimension, and which falls below the national merger notification thresholds, “from being reviewed by a competition authority of a Member State as constituting an abuse of a dominant position prohibited by Article 102 TFEU with regard to the structure of competition on a market with a national dimension“.
With this decision, the French Authority makes an important point: it confirms that the Towercast ruling also applied Article 101 TFEU, emphasizing that the EU Merger Regulation “is part of a legislative package designed to implement Articles 101 and 102 TFEU and to establish a system of control ensuring that competition is not distorted in the internal market of the Union“. The Authority also points out that Article 101 TFEU, like Article 102 TFEU, is a provision with direct effect which can be applied in the absence of an ad hoc merger control system.
In its decision, however, the French Competition Authority dismissed the case on the grounds that the object of the agreements was not anti-competitive, and that the documents provided did not allow for an analysis of the agreements’ effects.
This decision marks an important turning point in the application of competition law, affirming national competition authorities’ prerogative to review, ex-post, concentrations that do not exceed national and European control thresholds, under Articles 101 TFEU and 102 TFEU and similar national provisions.
Thus, transactions qualifying as “concentrations” but falling below the national notification thresholds can still be challenged by the French Competition Authority after their implementation, on grounds of abuse of dominant position or anti-competitive agreements. From now on, companies involved in an acquisition project will have to assess the competitive impact of the transaction in terms of both merger control and anti-competitive practices.
