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Jérôme Philippe is a partner at Freshfields Bruckhaus Deringer LLP and leads the antitrust, competition and trade practice group of the Paris office, while also being active in the Brussels office. He advises national and international corporate clients in French and European competition law, both before authorities and courts. Jérôme is also developing the firm’s regulatory practice, notably in relation to data privacy and cybersecurity.

Before becoming a lawyer, Jérôme graduated as an engineer, alumnus of École Polytechnique and ENSAE ParisTech, and an economist, with a PhD from the Toulouse School of Economics. He was head of the Office of Concentrations and State Aid at the French Directorate-General for Competition, Consumer Affairs and Fraud Control before joining Freshfields. He is a non-governmental adviser appointed by France at the International Competition Network.

Aude-Charlotte Guyon is counsel at Freshfields Bruckhaus Deringer LLP. She joined the firm’s Paris antitrust, competition and trade practice group in 2005, and advises French and international companies on all aspects of EU and French competition law including cartels, leniency, state aid, abuse of dominance, merger control, follow-on damages claims, commercial practices, distribution and consumer issues. She represents clients before competition authorities and the courts in the retail, pharmaceutical, consumer goods, energy and telecoms sectors.

GTDT: What have been the key developments in the past year or so in merger control in your jurisdiction?

Jérôme Philippe and Aude-Charlotte Guyon: The French Competition Authority (FCA), consistent with its practice of 2017, is cautiously monitoring compliance with the remedies made binding by its merger control decisions.

In 2018, the FCA monitored compliance with the remedies made binding by merger control decisions.

On 14 June 2018, the FCA dismissed the case for non-compliance with one of the commitments made in 2005 by Boiron when it acquired Dolisos in the homeopathic medicine sector. This was a commitment to maintaining Dolisos’s common-name medicinal products (ie, medicinal products coming from the dilution of a homeopathic strain). While considering that Boiron had not respected some of its obligations, the investigation report highlighted the difficulties in interpreting the commitment, owing to the ambiguity of the vocabulary and the imprecision of the conditions, which the laboratory might derogate from. After having considered the various possible interpretations and the legal and economic context, the FCA considered that it could not conclude that Boiron had failed to comply with its commitments.

On 27 July 2018, the FCA sanctioned Fnac and Darty to a fine of €20 million for failing to comply with commitments taken in the context of the cleared acquisition of Darty by Fnac in the retailing sector of brown and grey products. The clearance was subject to the divestment of six stores located in Paris and in the Parisian region. However, three of the six stores were not divested before the deadline owing to Fnac Darty’s failure to submit a divestiture contract and to get the FCA’s approval of buyers.

The FCA concluded that, by failing to comply with the commitments, Fnac Darty has distorted competition and limited consumer choice in several catchment areas. Even if the FCA recognised the efforts made by Fnac Darty to divest three of the six stores concerned, it also considered that difficulties encountered in finding a buyer for the three other stores should have led Fnac Darty to take appropriate measures to fulfil its commitments, for instance by asking the FCA for a ‘crown-jewels’ remedy, or, in other words, to substitute these three stores with others. The FCA fined Fnac Darty and ordered it to divest two stores that were not part of the commitments, instead of the three that were part of the commitments.

It is interesting to notice that this decision comes only one day after the French Administrative Supreme Court dismissed Fnac Darty’s actions against two decisions, dated 28 July 2017, by which the president of the FCA refused, on one hand, to approve the buyers and, on the other hand, to extend the deadline to comply with the commitments. At the occasion of these proceedings before the French Administrative Supreme Court, the compliance of the president of the FCA’s power to grant approval to buyers was challenged using the French Constitution (ie, the principle of equality before the law, freedom of enterprise) before the Constitutional Council, which concluded its compliance with the French Constitution.

On 24 August 2018, the FCA cleared the acquisition of Jardiland by InVivo subject to remedies aiming to address competition issues in the retailing of gardening products market in several catchment areas. InVivo committed to divesting itself of six stores and to terminate five franchise contracts. However, in order to avoid a potential failure to comply with its commitments, InVivo committed to eventually substitute the termination of a franchise contract by a franchise contract for another store and the divestiture of a store by the termination of a sixth franchise contract. These ‘crown-jewel’ commitments aim at taking into account the board’s potential refusal to divest or to terminate franchise contracts.

In addition, a quick look at the past year shows that the FCA has been fairly active, with 233 Phase I authorisation decisions of which five obtained conditional clearance and two obtained Phase II authorisation decisions, notably in the sectors of food retailing, vehicle retailing, real-estate services, insurance, medical biology, telecoms, travelling, transport, clothing, farming, waste management, hospital treatments and diagnostic services, and the manufacture of disinfection and hygiene products for animals.

The year 2018 was also marked by the French Ministry for the Economy and Finance review on public interest grounds (Phase III) of an acquisition cleared by the FCA. This is the first time the Ministry used this possibility, introduced more than 10 years ago.

In late 2016, Agripole encountered financial difficulties and received financial support from the French government. Despite this, the Paris Commercial Court opened safeguard proceedings for the benefit of Agripole and authorised its rental management by Cofigeo. On 12 June 2017, the acquisition of Agripole’s ready meals was notified to the FCA. The transaction was immediately implemented as the FCA agreed to apply the derogation from the suspension obligation. On 3 October 2017, the Paris Commercial Court ruled that Agripole’s ready meal business would be acquired by Cofigeo but the FCA’s merger control review was still in progress.

Generally speaking, the FCA is keen to receive quantitative data and economic analyses, both from the notifying parties and from third parties.

After a Phase II review, the FCA concluded that the acquisition would have led to a quasi-monopoly on the markets for the production of canned (1) Italian ready meals and (2) exotic ready meals, and to sharp price increases. Therefore, the FCA used its power of injunctions and cleared the acquisition subject to conditions relating to the divestitures of a brand and a production site. After the acquisition of TPS Canalsatellite by Vivendi and Canal Plus, this is the second case in which the FCA used its power of injunctions.

However, on 19 July 2018, the Ministry overrode the FCA’s decision because it considered that it would have jeopardised the industrial strategy to revitalise the sector and would have caused significant risks to employment. Although the Ministry cleared the acquisition without divestments, it required Cofigeo to maintain employment levels for the next two years.

Even if we cannot predict how frequently the Ministry will use its power to revise FCA’s merger control decisions, this case shows that the potential 25-day Phase III review (from the information or the receipt of the FCA’s decision) should also be taken into account.

GTDT: What lessons can be learned from recent cases to help merger parties manage the review process and allay authority concerns at an early stage?

JP & A-CG: Based on our experience, the outcome of a merger review is rather predictable. The process is very professional, and the FCA tends to rely increasingly on clear and unambiguous data in order to reduce the risk of appeals. In addition, the law was purposefully made to be very similar to the EU Merger Regulation, so that practitioners can take on board most of the EU experience, guidance and case law.

Pre-notification has now become compulsory in practice, and we see the same trend as before the European Commission; that is, most of the investigation is actually carried out during the pre-notification, and in many cases the parties are eventually allowed to formally file the case at a time when the FCA is well advanced in its analysis.

This brings many advantages in terms of the predictability of the outcome, except for the fact that the pre-notification is getting increasingly longer, and the timing is becoming more unpredictable. However, the latter should be outweighed by the very low rate of Phase II proceedings: in the end, most parties would still prefer to have more time than expected for Phase I review, rather than proceed to Phase II.

Generally speaking, the FCA is keen to receive quantitative data and economic analyses, both from the notifying parties and from third parties. Full cooperation with the authorities and information disclosure is very important to conclude a transaction. New information needs to be communicated regularly, particularly because of the new ‘stop-the-clock’ mechanism set up by the Macron Law under Phase I, allowing for suspension of the traditional time frame if a new fact has not been reported to the authority, or insufficient information is given to the authority by the notifying parties, or by third parties and because of the notifying parties.

Economists are often involved in the case teams, and there is a fair level of discussion between the FCA’s and the parties’ economists. This also tends to generate more foreseeable outcomes. In this respect, the document requests made by the FCA may be extensive in some cases, but remain, on average, less difficult to satisfy than those of the European Commission.

Finally, the FCA’s case teams are responsive, accessible and open to very direct communication, and in most cases the parties to the merger can experience a constructive and pragmatic approach.

On the whole, the quasi-absence of prohibitions before the FCA confirms that there is a high level of predictability of the outcome, even though notifying parties may have to face larger remedies requests than they were expecting. Nonetheless, the FCA’s decisions may still be challenged before the French supreme administrative court (the Council of State) on the grounds of abuse of power or for breach of the procedural rules.

GTDT: What do recent cases tell us about the enforcement priorities of the authorities in your jurisdiction?

JP & A-CG: The FCA gives the greatest deal of attention to sectors with high barriers to entry, such as retail, media and energy. 

In 2018, the FCA notably focused on the online advertising sector.

Indeed, for the first time, the FCA has examined the merger between two online platforms active in the property advertisement on behalf of real estate professionals: Concept Multimedia ( and Axel Springer Group ( The FCA conducted an in-depth investigation (Phase II) particularly because of the detailed assessment to be carried out in defining the relevant markets and the parties’ high market shares. During its investigation, for the first time, the FCA used an online questionnaire that was sent to more than 30,000 estate agencies and also took into account network cross-effects and the importance of data. After the Phase II review period, the FCA concluded that the merger would not significantly harm competition because of (1) the competitive pressure exercised by other platforms, such as Le Bon Coin, which will impede the parties’ incentive to increase prices; (2) the absence of elimination of competition through the coupling of service offers; and (3) the eventual swift development or entry by GAFA on the market for online property ads by real estate professionals (even if it does not constitute a constraint in the short term). On this basis, the FCA, on 1 February 2018, cleared the merger without conditions.

Further to this case, the FCA made public the results of a sector specific investigation into online advertising. The specificity of online advertising, compared to other forms of advertising, is that it can be targeted based on collected data of the internet user. Thus, such markets require specific assessment of the use of data from the FCA.

For instance, on 23 April 2018, the FCA cleared the acquisition of Aufeminin by TF1. During its review, the FCA notably assessed the horizontal effects of the acquisition on online advertising space markets. The FCA feared that TF1 could use the data of Aufeminin to put forward its own online advertising spaces. However, owing to the parties’ limited market shares and the low increment resulting from the transaction, the FCA considered that the use of data by TF1 will have a limited impact on the market due to the competitive constraint exerted by Google and Facebook.

GTDT: Have there been any developments in the kinds of evidence that the authorities in your jurisdiction review in assessing mergers?

JP & A-CG: With respect to evidence, economics is now a key tool used to assess the competitive effects of a merger. As soon as a case looks like it may raise difficulties, the FCA’s team of eight economists, headed by a chief economist, become involved. It is highly advisable to hire economists in advance on the parties’ side too. The FCA’s economists will use a methodology similar to that of the European Commission’s economists, and will have a direct dialogue with the parties’ economists.

When providing an economic study to the FCA, a party must provide its data, its model and show all calculations that were made. The FCA will always try to duplicate the parties’ economic work to confirm the results. It may also try to mix data from the parties and data from third parties to obtain more precise results. It will also run its own models on the parties’ data.

Unfortunately, the parties will only access the FCA’s models and precise results in Phase II. As with the European Commission, no such access is provided for in Phase I, so it is often difficult, when the parties disagree with the FCA’s output in Phase I, to identify the reasons for the difference in output. This may make it challenging to sort out the difficulties in Phase I, and may result in either opening a Phase II review or the need to give more remedies than would have been optimal.

The tests that the FCA’s economists carry out mainly relate to market definition, to assessment of unilateral effect (that is, price variation) or to the (often tentative and non conclusive) assessment of efficiencies. More precisely, they tend to use the ‘small but significant and non-transitory increase in price’ (SSNIP) test and correlation tests for market definition. The FCA will always be very interested in the availability of ‘crash-test’ data (the instant exit or entry of a competitor, which will generate an effect on others’ demands). As to unilateral effect assessments, they may use the upward pricing pressure, the illustrative price rise or the gross upward pricing pressure index (GUPPI) tests. For instance, the FCA used the GUPPI test in the Monoprix/Casino and Orlait/Terra Lacta mergers.

Regarding the retail sector, the definition of relevant markets has, for instance, evolved to take into account the actual behaviour of consumers. As shown in the Carrefour/Dia case, the effects of concentration are examined in a geographic area that is no longer defined by the time it takes consumers to reach the store, but by gathering customers who represent a certain percentage of its turnover.

In view of the complexity of those economic analyses and the close interaction between the economic and legal arguments, it is highly advised for complex deals that, in addition to the external economists hired by the parties, the team of lawyers includes those who have a good background in economics so that they can better integrate the economic output within the legal analysis.

Third parties are systematically called upon by the FCA in difficult cases, through the market test process. In complex deals, there are traditionally one or two market tests in relation to market definition, competition analysis, barriers to entry, market dynamics, etc, plus one or two market tests in relation to remedies at the end of the process.

In addition to the companies that will be called upon during the market test, any interested company can intervene on the basis of the public notice that appears on the FCA’s website, which gives information about the case and a deadline for any party that would like to intervene.

Traditionally, the FCA carefully listens to third parties, while trying to isolate what signals a true competition issue and what mainly relates to the mere wish to oppose the merger.

The Numericable/SFR case showed the significant role that third parties can have, although the merger control procedure is traditionally bilateral – consisting of a discussion between the FCA and the merging parties. Third parties are also able to complain about the lack of notification or to challenge the decision of the FCA.

Third parties were especially helpful to the authority since the examination of the transaction effects was not focused on the potential decrease in the number of competitors but rather on their ability to replicate the new entity offerings. The competitive risk was linked to the heterogeneous development of broadband networks between Numericable (which has by far the most developed infrastructure) and its competitors. The reinforcement of Numericable could fundamentally alter the new entity’s incentives, as it no longer has the need to open up access to its former under-exploited network to other operators. That is why the authority finally imposed network access commitments to allow broadband offerings by competitors without waiting until their own infrastructures had been developed. Merger control therefore progresses to an advanced analysis of the incentives of the parties.

Third parties are systematically called upon by the FCA in difficult cases, through the market test process.

However, there is no legal obligation for the FCA to consult third parties when the commitments are amended. In the Wienerberger case, a third party contested the legality of the authority’s decision as it was not consulted on the modified commitments undertaken by the merger parties (there was no supplementary report after a second set of commitments and the draft decision taking into account the changes made to the initial commitments was not communicated to third parties, unless their rights could be affected by the new commitments) but the complaint was dismissed.

GTDT: Talk us through any notable deals that have been prohibited, cleared subject to conditions or referred for in-depth review in the past year.

JP & A-CG: While no deal was prohibited during 2018, five deals were cleared subject to conditions with a wide range of possible remedies that may be accepted by the FCA such as: termination of a contract (termination of franchise contracts in the above-mentioned Jardiland/InVivo decision), divestiture of an activity (divestiture of a production site and a brand in the Agripole/Cofigeo decision; divestiture of a company in the Zormat, Les Chênes, Puech Eco/Carrefour decision), setting up an internal Chinese wall (limitation of information exchanges, strict division between the management teams and strict division between the material and immaterial means of the new entity and those of the parties with regard to the creation of a joint venture between Global Blue France and Planet Payment France decision) and to provide non-discriminatory access to resources (in the GBH/Hypermarché Géant Casino decision).

Most of these remedies would be monitored by a trustee who is appointed and paid by the parties but who reports to the FCA. According to the FCA’s guidelines, the nomination of a trustee is not required in case exceptional circumstances. In the GBH/Hypermarché Géant Casino decision, the FCA considered that no trustee had to be appointed owing to the similarity of the commitments with the one made binding in 2011; the possibility of controlling commitments from documents’ communications; and the third parties’ possibility of contacting the FCA in the case of difficulties related to the implementation of commitments.

GTDT: Do you expect enforcement policy or the merger control rules to change in the near future? If so, what do you predict will be the impact on business?

JP & A-CG: We expect enforcement policy to focus on the digital, healthcare, distribution and energy sectors as they were clearly mentioned as priorities of action for 2019 by the FCA.

Further, the merger control rules may change in the near future. Indeed, after carrying out a wide consultation with stakeholders in 2018, the FCA developed a project to simplify merger control, which will enable the reduction of information required from undertakings, the extension of the benefit of the simplified procedure and the introduction of a fully electronic filling forms for transactions benefiting from the simplified procedure. Thanks to this project, decisions should be issued more quickly, which is a positive development for businesses with regard to their timing to complete transactions. 

We expect enforcement policy to focus on the digital, healthcare, distribution and energy sectors as they were clearly mentioned as priorities of action for 2019 by the FCA.

In 2019, the FCA will also engage in the revision process of its merger control guidelines, and state its position on the introduction of a new ex post merger control procedure. Indeed, after having excluded the introduction of an alternative threshold based on transaction value, the FCA launched a second public consultation, specifically on the introduction of an ex post merger control procedure enabling the FCA to control mergers that do not meet the thresholds but that still raise competition concerns. Businesses that do not meet the thresholds, particularly in the digital sector (but the legislation would normally be for all sectors), could be impacted by this project with regard to the legal certainty of their transactions.

Finally, the FCA and the Bundeskartellamt have launched a joint project on algorithms and their implications on competition. As the FCA noticed that there might be interdependencies between algorithms and undertakings’ market power leading to additional barriers to entry, this joint project could bring some interesting developments with regard to the substantive appraisal of transactions by these two competition authorities.

The Inside Track

What are the most important skills and qualities needed by an adviser in this area?

First of all, the dual background of law and economics, so that both will be intimately mixed in the strategy. This is the best way to avoid involuntary discrepancies between the economic and legal arguments. Second, a good knowledge of the FCA and of the way it works, in order to save time and fruitless discussions and so that work can be done within an atmosphere of trust. Last but not least, being a tough and inventive negotiator.

What are the key things for the parties and their advisers to get right for the review process to go smoothly?

Focus on the truly significant points and do not waste too much time on others: experience shows that in discussions too much time is spent on issues that are theoretically interesting and appear important at first sight (such as principles of market definition) but are not necessarily key to the outcome of the case. This may slow the process, and as a result the pressure may become excessive at the end of the review (because of the corporate constraints), which tends to harm the parties’ negotiation capacity.

What were the most interesting or challenging cases you have dealt with in the past year?

Our team is involved in a large number of merger control cases every year. Most notably, in 2018, we obtained the extremely infrequent result of a client’s being cleared from alleged non-compliance with merger undertakings after the French competition authority had ex officio started a case.

We also filed the first merger case (apart from changes of affiliations of local retail outlets) of the newly established competition authority of New Caledonia, in the French overseas territories.

Jérôme Philippe and Aude-Charlotte Guyon
Freshfields Bruckhaus Deringer LLP

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