The Mergers & Acquisitions Review: France

Overview of M&A activity

Following the covid-19 outbreak and the several lockdown periods of 2020, M&A activity broke new records across the world. The French market remained quite competitive, reaching deal value levels similar to 2019, although the rebound in M&A activity was less significant in France than in the rest of the world.2

The year was notably shaped by a few major domestic deals. The takeover of Suez by Veolia, which started at the end of summer 2020, marked the French M&A activity of the year, because of its size (€22.2 billion), its hostile nature and the involvement of a large number of market players, including certain leading private equity funds. These big moves are still going on, with the recent announcement of Vivendi's takeover bid over Lagardère, one of the major French press and publishing groups.

Certain global trends are also being imported into France. Like other European financial markets, the Paris stock exchange has recently listed an increasing number of Special Purpose Acquisition Companies (SPAC), whose investments ought to be aligned with Europe's current challenges such as sustainable business (2MX Organic sponsored by Mr Niel and Mr Pigasse) or the ecological transition (Transition sponsored by Mr Caïtucoli). In the same vein, shareholder activism is still on the rise with the recent development of 'Say on Climate' resolutions at the latest shareholders' meeting season of French listed companies.

The control regime for foreign investments in France kept strengthening in 2021, both in its scope and its implementation. The list of sectors subject to control was extended to R&D activities in the technologies used in the production of renewable energy (as from 1 January 2022) and biotechnology are now subject to control on a permanent basis. This regime also impeded significant M&A transactions. In December 2020, the French Ministry of Economy refused to authorise an investment (acquisition of Photonis by the US-based Teledyne). In February 2021, Bruno Le Maire, the French Ministry of Economy, also publicly stated its opposition to the proposed acquisition of Carrefour by Couche-Tard, a Canadian food distributor, which led to the withdrawal of Couche-Tard's offer.

Europe also experienced a buying frenzy across its border as the total value of European outbound deals reached its highest value since 2008 (€62 billion). In this regard, significant outbound acquisitions were announced by French companies, notably the takeover of Borsa Italiana by Euronext, valued at €4.3 billion, and the €1.5 billion acquisition of Agios Pharmaceutical's oncology business by Les Laboratoires Serviers.

General introduction to the legal framework for M&A

The French Commercial Code and the French Civil Code provide the statutory framework and form the legal basis for the purchase and sale of assets or legal entities. Additionally, the French Monetary and Financial Code and the General Regulations of the French Financial Markets Authority (AMF) provide the regulations relating to takeovers. As a general rule, French takeover rules apply if the target is a French or European Union (EU) public company whose securities are listed in France and, in some instances, if the company is dual-listed. In 2020, the provisions applicable to French-listed companies were gathered into a specific section of the French Commercial Code to enhance the readability and accessibility of French law.

Rules relating to the financial services industry and the listing and public offering of securities are set out in the French Monetary and Financial Code and the General Regulations of the AMF. The prevention and the repression of market abuses are set forth by the EU Market Abuse Regulation.3

French merger control rules are mainly contained in the French Commercial Code. These rules apply to cross-border mergers having effects on the French market (as currently defined in accordance with worldwide and French turnover thresholds) but with no 'EU dimension'. Mergers with an 'EU dimension' (i.e., involving companies whose turnover exceeds the thresholds set by the EU Merger Regulation) are instead subject to the review of the European Commission.

Within the framework of the applicable laws and the general regulations of the AMF, NYSE Euronext operates the three French-regulated markets (one stock market (Euronext Paris) and two derivative markets (Monep and MATIF)) and some multilateral trading facilities (MTF) (such as Euronext Growth).

Developments in corporate and takeover law and their impact

i Transfer of criminal liability following a merger

In November 2020, the French High Court made a major overturn of precedent with regard to the criminal liability of companies subject to a merger. According to the French High Court, the criminal liability of the merged company shall be transferred to the merging company, notwithstanding the winding-up of the merged company.4 Prior to this decision, French case law used to consider that the criminal liability of the merged entity shall not be transferred to the merging entity, as the merger results in the disappearance of the legal entity of the merged company.

This solution shall apply to mergers completed following publication of this decision and to mergers completed prior to this date in case of fraud (i.e., where the merger is decided for the sole purpose of avoiding the criminal conviction of the merged company).

ii Say on Climate and guidelines from the French Financial Markets Authority on Shareholder Activism

Shareholder activism continues to grow in France by diversifying its fields of action. While shareholder activism has historically targeted the corporate governance of French-listed companies, the movement is now tackling the environmental impacts of these companies.

Under pressure from new activist shareholders, who in 2020 filed resolutions at the general meetings of Total and Vinci, certain French-listed companies (notably Total, Vinci and Safran) deliberately decided in 2021 to include resolutions on climate, environmental transition or ecological matters (the 'Say on Climate') to their annual general meeting's agenda. More generally, the climate issue became more and more important at these annual meetings, with an increasing number of written questions on this issue and speaking time devoted to it.

In response to the continued development of shareholder activism, the French Financial Markets Authority issued a communication to contribute to the debate arising out of shareholder activism.5 The French Financial Markets Authority notably clarified that listed companies are allowed to reply to the public statements targeting them at any time, even during the 'quiet period' (i.e., the time period immediately prior to results announcement and during which listed companies shall refrain from disclosing information). Pursuant to this recommendation, activist shareholders should also disclose to the relevant listed companies the significant information they share with other shareholders as part of their activist campaign.

iii Strengthening the foreign investment control regime

Like most G20 countries, France has implemented a foreign investment control regime, under which certain foreign investments in business sectors deemed to be sensitive (which means posing a potential risk to public order, public safety or national defence interests) require prior authorisation from the Minister of the Economy. The foreign investment regulation has been successively strengthened over the past few years, notably by expanding the list of business sectors deemed sensitive to public order, public safety or national defence interests. In response to the covid-19 crisis, the Ministry of Economy has further temporarily tightened the foreign investment regulation to cope with the threats that high market volatility may imply for certain strategic and sensitive sectors. In this respect, the Ministry of Economy now has power to screen acquisitions of more than 10 per cent of the voting rights in sensitive listed French companies by non-EU or non-European Economic Area investors until 31 December 2021.6

The scope of foreign investment control is steadily expanding. The sector of biotechnology, temporarily added in the context of the covid-19 outbreak, will be subject to the regime on a permanent basis. Further, the R&D activities on technologies involved in the production of renewable technologies recently became a sector subject to the foreign investment control regime. 7

Foreign involvement in M&A transactions

In 2020, French investors remained more active in acquiring outside Europe, with outbound activity valued at €76.8 billion (below the peak reached in 2019 at €97.9 billion).8 In 2020, a total of 275 foreign investment projects were controlled by the Minister of the Economy, which accounts for a 27 per cent growth compared to 2019, and close to 50 per cent compared to 2018.9 This is partly as a result of the strengthening of the control threshold adopted in the covid-19 crisis context.10

i Cross-border inbound deals

Inbound transactions reveal a drop in number, with 232 transactions in 2020 versus 272 in 2019. However, 2020 saw a major inbound M&A transaction with the €5.2 billion acquisition of Hivory by Cellnex.

ii Cross-border outbound deals

2020 was marked by major French outbound deals such as the takeover of Borsa Italiana by Euronext, valued at €4.3 billion, and the €1.5 billion purchase of Agios Pharmaceutical's oncology business by Les Laboratoires Serviers. Moreover, the $15.8 billion acquisition of Tiffany by LVMH, announced in 2019 and suspended in 2020 in the context of the crisis, was finally completed in January 2021.

Significant transactions, key trends and hot industries

i An11 active level of activity in 2020

French M&A activity bounced back in the second half of 2020, driven by several high-value transactions. The total deal value remained steady at €74.5 billion (compared with €74.7 billion in 2019), despite a significant decrease in the number of deals (23.5 per cent drop).12

ii Most active sectors in 2020

In 2020, technology, business services and industrials and chemicals were the three most targeted sectors in terms of number of deals.

Several of the top 10 deals occurred in the industrials and chemicals sector, driven by the €22.3 billion takeover of Suez by Veolia, the €1.7 billion acquisition of les Dérivés Résiniques et Terpéniques by Firmenich, and the €1.1 billion purchase of Altuglas International by Arkema, and in the business services sector with the €7.8 billion public takeover of Ingenico by Worldline.

iii Tender offers in 2020

In 2020, the number of tender offers remained consistent with the number of takeover bids announced in 2019 (29 in 2020 compared to 30 in 2019).13 However, these public bids were up to 10 times more significant in value than in 2019.

The attention of the Paris market players was notably focused on the takeover of Suez by Veolia. Due to its hostile nature, the transaction gave rise to a significant number of lawsuits and the implementation of defensive measures by the board of directors of Suez (notably the incorporation of a Dutch foundation). The lawfulness of the transaction was challenged by Suez and its advisers with regard to French securities law (mandatory bid rule threshold, opening of a pre-offer period), French labour law (right of Suez's employees to be informed and consulted) or European competition law.

Other significant takeover bids were initiated by reference shareholders with a view to delisting the listed company. X Niel, through its holding company, successfully completed a €3.1 billion tender offer over Iliad. Natixis also completed a €3.7 billion tender offer over BPCE.

iv Initial public offerings

Initial public offerings dropped compared to 2019, which saw two major transactions valued to more than €500 million, with an aggregated amount of €498 million versus €2.931 billion in 2019. However, the successful introduction of two SPACs (2MX for €300 million and Transition for €215 million) was completed in 2020.

Financing of M&A: main sources and developments

i Overview of financing sources

Since spring 2021, the recovery in global economic activity has continued after having slowed down at the beginning of 2021 (because of the spread of the covid-19 Delta variant). However, French state-guaranteed loans, the emblematic measure to face the economic downturn generated by the covid-19 outbreak, are still available until 31 December 2021 and with respect to loans granted in 2020, the starting date of amortisation which should have occurred in 2021 may be postponed for one year.

After having strongly increased in 2020 (the gross indebtedness of non-financial corporations has increased to €217 billion (i.e., 12 per cent greater than the gross indebtedness at the end of 2019)), the annual growth rate of external financing for non-financial corporations through bank lending and debt issuance has decreased at the end of the second quarter of 2021. The level of indebtedness remains around 14 per cent greater than their pre-pandemic level. This decrease is mainly because companies are still well-funded because they borrowed heavily in the first wave of the pandemic, constituted cash reserves and now aim at retaining earnings.

The cost of external financing through bank lending and debt issuance in the market remains low. Nevertheless, in this environment of abundant cash reserves and sustained policy support, firms have replaced short-term financing by instruments with longer maturities. This change in maturity supports the view that interest in using external finance for business investment, as opposed to liquidity buffers, has increased.

However, in this context, French authorities have called on non-financial corporations and the private equity sector for an increase in the level of equity. For that purpose, the French state has created equity loans guaranteed by the French state for small and medium companies and mid-size companies.

Lastly, 2021 has confirmed the attractiveness of the French market for debt issuance in the market and private debt funds financing. During the pandemic, those funds have showed their resilience and how they can support their investments when needed. Private debt funds have reinforced their role of financing the real economy alongside the banks and debt capital markets.

ii Recent legal reform

Modernisation of the law on security interest

After the reform of the law of contracts in 2016 and the reform of security interest in 2017, France continues the modernisation of its civil law. The Ordinance No. 2021-1192 dated 15 September 2021 reforming the law relating to security interests and guarantee was published on 16 September 2021. Subject to the related decrees having been published, most of the provisions of this reform will come into force on 1 January 2022. It aims to increase the attractiveness of French law applicable to security interests and guarantee through the modernisation of its rules (sometimes by merely replacing an old-fashioned wording by an easier to understand provision) and the creation of a new balance between a better efficiency of the security interests and guarantee on the one hand and the protection of the grantors of security interest or guarantors on the other hand.

This Ordinance reshapes the section of the French Civil Code related to the guarantee to harmonise all rules that have been distributed in different Codes so far. Thus, all rules related to the mandatory mention applicable to the guarantee agreement entered into by a natural person (i.e., mandatory mention of the amount secured by a guarantee and of the fact that a guarantee is committed on a joint and several liability basis) are removed from the French Consumer Code and the French Monetary and Financial Code and inserted in the new chapter of the French Civil Code governing the guarantee, as are the rules related to the mandatory information that a professional secured creditor shall give to guarantors (information on the outstanding amount of the secured debt and, when the guarantor is a natural person, on any payment default under the secured debt). In addition, the Ordinance inserts in the law the guarantor warning duty imposed by case law on the beneficiary of a guarantee and extends its scope to well-informed guarantors alongside lay guarantors. At last, some of the protective measures applicable to the guarantors are extended to grantors of third-party security interest (such as, without limitation, as the information duty, the warning duty, the personal recourse, the subrogative recourse and the discharge of the guarantor in case of loss of the subrogative recourse).

With respect to the security interests, the Ordinance creates two new categories of security interests: the cash collateral and the assignment of receivables by way of security. It specifies the regime of security on shares and receivables. In particular, it expressly recognises the possibility to grant several rankings of security interests over receivables and financial securities. It recognises the possibility to exclude dividends from the pledge over a financial securities account, and, in cases where such dividends are pledged, it no longer requires the dividend account to be opened on or prior to the granting of the security interest. It deletes the nullity related to registration of security interest over ongoing business. It simplifies certain aspects of the fiduciary security interest. For example, there is no longer an obligation to mention in the agreement the value of the assets that are transferred to the fiduciary. At the time of enforcement of the fiduciary security interest, if it is not possible to sell the assets at a price at least equal to the value given by the expert, the fiduciary may sell the assets at a price that in its opinion reflects the value of the assets.

At last, the Ordinance expressly provides that all agreements creating security interests or guarantees may be executed by way of electronic signature.

Modernisation on the law of insolvency proceedings

The Ordinance 2021-1193, which implements into French law the Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt was published on 16 September 2021. It came into force on 1 October 2021 and therefore applies to proceedings opened on or after 1 October 2021. It aims at increasing the attractiveness of French insolvency law by restoring the balance of powers between stakeholders.

Certain preventive mechanisms are strengthened and certain measures that were part of the covid-19 legislative framework are confirmed such as the possibility for the debtor subject to conciliation proceedings to request a grace period allowing the judge to postpone or reschedule payment of due amounts for the duration of the proceedings.

New accelerated safeguard proceedings are introduced by merging the existing accelerated financial safeguard into the accelerated safeguard.

The Ordinance introduces classes of affected parties in replacement of the creditors' committees. Classes of affected parties will be mandatory and automatic under the new merged accelerated safeguard. Only affected parties are entitled to vote on the draft of the restructuring plan. The Ordinance also provides a separation into two distinct classes of secured creditors benefiting from security interest over assets and other creditors and the constitution of one or more classes of equity holders (where applicable if they are affected by the draft restructuring plan). The distribution into classes will take into account subordination agreements entered into before the opening of the proceedings and brought to the attention of the court-appointed receiver.

The Ordinance creates a post-money lien that benefits claims arising from a cash contribution made to the debtor during the observance period, authorised by the judge or for the implementation of the safeguard or reorganisation plan adopted by the court or for a modification of the plan adopted by the court.

The Ordinance clarifies the regime applicable to granting and enforcement of security interests in insolvency proceedings. Thus, it inserts in the law exceptions to the 'hardening period nullity' that have been created by case law such as the mechanism of the substitution of security interests of equivalent nature and scope created as well as Dailly assignment made pursuant to a master agreement entered into prior to the cessation of payments. The protective measures applicable to natural persons who are guarantors are now the same in reorganisation proceedings as in the safeguard proceedings. Any increase in the basis of a contractual security interest or a contractual right of retention (in particular, top-up clauses in financial securities account pledges) made after the opening of the proceedings is now prohibited. The Ordinance clarifies the situation of the grantor of third-party security interests subject to insolvency proceedings. The stay of enforcement proceedings is extended against the beneficiary of those security interests.

Employment law

On 22 September 2017, the government enacted several ordinances14 that were ratified by Parliament on 29 March 2018: the Macron labour law reform has brought significant changes to French labour law with a view to simplifying the existing rules and regulations under the French labour code and granting more flexibility for employers in respect of employee management, thus attempting to make France more attractive to foreign investors. The Macron labour law reform includes provisions that may have an effect on M&A transactions: the main ones are as outlined below.

The Macron labour law reform has created a unique representative body in lieu of the existing staff delegates, works councils and health and safety committees: social and economic committees (SECs). An SEC should have been implemented in companies with 11 or more employees since 1 January 2020. SECs thus replace the works councils, and exercise similar functions to those of the works councils. As is the case for works councils, relevant compulsory consultations with SECs must be carried out within certain time limits (see Section VII.iv).

i Employment restructuring

Rules governing collective redundancies for economic reasons

Under French law, to implement collective redundancies for economic reasons, employers must provide valid economic grounds justifying the redundancies. Since the Macron labour law reform, these grounds must be assessed at the level of the French territory only (i.e., at the level of the French employer company only, or at the level of the French company and any other entities of the group located in France if those entities belong to the same business sector as the French company). Before the Macron labour law reform, such grounds were assessed at the level of the group as a whole, in France and abroad.

These amendments further progressed the simplification of the redundancy rules that had been initiated under the El Khomri Law of 8 August 2016, which introduced two main changes to the redundancy rules: the codification of two grounds of dismissal previously only recognised by case law (restructuring aimed at safeguarding a company's competitiveness and the closure of a company); and the addition of economic indicators defining the concept of economic difficulties.

Since the El Khomri Law was enacted, economic difficulties have been mainly assessed on the basis of a significant decrease in the number of orders from or the turnover of a company, assessed by reference to a number of quarters and the number of employees within a company (e.g., in companies with less than 11 employees, a decrease of the turnover during one quarter is considered as a sufficient ground for an economic redundancy). These indicators do not constitute an exhaustive list, and any other element justifying the existence of economic difficulties can be used to justify economic difficulties. Therefore, despite these modifications, French case law will continue to be of key relevance when establishing whether a company is facing economic difficulties.

The Macron labour law reform has also provided security and visibility with regard to potential disputes arising following a dismissal by introducing a judge-binding scale of damages – the Macron scale – granted for unfair dismissals (employees with less than one year of seniority within a company can be awarded up to one month's salary, while employees with 30 years' seniority and above can be awarded up to 20 months' salary). However, since its enactment, the Macron scale has met with resistance from the labour courts, as some judges consider that the capping of damages would interfere with the right to adequate compensation granted by the Termination of Employment Convention (No. 158) of the International Labour Organization and the European Social Charter. In this context, an opinion of the French Supreme Court dated 17 July 2019 has stated that the Macron scale is in conformity with applicable law and conventions.15 However, an opinion of the Supreme Court does not have the legal value of a final ruling or precedent, nor does it bind other courts. As of mid-2021, despite the Supreme Court's opinion, more than 30 labour courts and courts of appeal, including the Paris court of appeal, had rendered decisions ruling out the application of the Macron scale. A future ruling of the French Supreme Court on this issue is therefore awaited.

Collective mutual termination procedure

To facilitate job reorganisations and headcount adjustments other than for economic reasons, the 2017 Macron labour law reform introduced an ad hoc voluntary termination procedure called the collective mutual termination procedure. Recent case law has specified that this procedure could also apply to headcount adjustments based on economic grounds.16 Under the collective mutual termination procedure, employees apply for a voluntary departure plan that must be validated by the French Labour Administration. Companies do not have to demonstrate economic difficulties before implementing such an agreement. Under the supervision of the Labour Administration, a voluntary departure plan must contain specific provisions, and in particular on the maximum number of job terminations contemplated and the modalities of information for SECs (no consultation with an SEC is required). The collective mutual termination procedure does not prevent an employer from hiring new employees either for a new position or a position occupied by an employee who agreed to the mutual termination of his or her employment contract.

ii Employees' right to make an offer to buy shares or assets in small and medium-sized companies

Pursuant to the Hamon Law of 2014, as modified by the Macron Law of 2015, companies with fewer than 50 employees, or companies with between 50 and 250 employees that fall into the category of small and medium-sized companies (i.e., companies with a turnover below €50 million or a balance sheet total below €43 million), must inform their employees of any proposal to sell 50 per cent or more of the shares of the company or the sale of the company's business as a going concern, with a view to allowing them to make an offer to purchase the shares or the business.17 The Hamon Law does not grant any priority or pre-emption rights to employees; however, the procedure does impact the timetable for a proposed transaction, and can also have an impact on the confidentiality of the transaction.

Regarding companies with fewer than 50 employees, those employees must be informed of a proposed sale no later than two months prior to the signing of the transaction. In addition, the transaction cannot take place before the expiry of this two-month period unless all employees have informed the company that they do not wish to make an offer.

In companies with between 50 and 250 employees, the employees must be informed of a proposed sale at the latest when the SEC of the company is informed and consulted on the transaction in question. Unlike in the case of companies with fewer than 50 employees, the law does not set any specific deadline prior to which the transaction cannot take place (except that the SEC consultation process will have to be completed before any binding documentation with respect to the transaction is signed, in compliance with generally applicable French employment law rules).

The law provides that employees are subject to an obligation of discretion with respect to the information that they receive by virtue of the new law. However, the level of information regarding a company and its activities that must be given to the employees in connection with a specific procedure is not clearly set by the Hamon Law. According to a strict interpretation of the law, when a company informs its employees of their right to make an offer to buy the company or the business, it is not required to give information on any other potential bidders or any documents relating to the company or its strategy.18 However, should one or more employees ultimately decide to make an offer to buy the company or the business, the Hamon Law (and its implementing Decree of 28 October 2014) is silent as to the level of information that the company must provide.

Failing to comply with the obligation to inform employees that they can make an offer to purchase the shares or assets of a company exposes a seller to a monetary fine that cannot exceed 2 per cent of the value of the underlying transaction.

Following an information procedure under the Hamon Law, the contemplated sale must take place within two years of the date on which the employees are informed of the transaction; otherwise, the company must complete the information process again.

iii Reinforced role of the SEC of the target of a takeover bid

Pursuant to Law No. 2014-384, which entered into force on 29 March 2014 (the Florange Law), in a public company takeover context, the SEC of a target company must be formally consulted and issue an opinion (either positive or negative) on the takeover bid (whether friendly or hostile).

The consultation of the target company's SEC must be completed (i.e., a positive or negative opinion must be issued) within one month of an offer being filed. If the SEC has not issued an opinion within this time frame, it will be deemed to have been consulted, except in certain exceptional circumstances where the SEC can justify in court that it did not receive sufficient information about a transaction.

In any case, the board of directors or the supervisory board of the target company cannot make a decision with respect to a takeover bid (including whether to recommend the bid) until the consultation process with the target company's SEC has been completed. Note that in a situation in which the bidder has entered into a prior agreement with the target (generally called a tender offer agreement) specifying the main terms and conditions of the offer and providing for a break-up fee based on the recommendation of the target's board, it should be carefully assessed whether such agreement triggers the obligation to consult the SEC prior to its signature.

During the consultation process, the target company's SEC may ask the offeror questions about its industrial and strategic plans for the company. It may also choose to be assisted by a third-party expert (whose fees will be paid by the target company, and who will issue a report that will assess the offeror's industrial and strategic plans and their impact on the target company and its employees). The third-party expert has three weeks from the filing of the offer to issue its report.

iv Timing and duration for the consultation of SECs

Duration of SEC consultation

The Macron labour law reform of 2017 set specific time limits for SECs (which, as indicated above, have replaced works councils as of 1 January 2020) to issue their opinion in cases where their consultation is compulsory. Unless an agreement is reached between an employer and trade union representatives (or, failing that, the SEC) that provides for a specific time frame for their consultation and except for very specific projects (i.e., tender offers, collective redundancies), the members of an SEC must issue their opinion within the following time limits (the starting point being the date on which the employer discloses the whole information on the project and its consequences):

  1. one month generally;
  2. two months if an SEC is assisted by an expert; and
  3. three months in very specific situations where the consultation is carried out in a company that has one or more local SECs involved in the consultation process that are assisted by at least one expert.19

If an SEC has not issued an opinion within the relevant time limits, it will be deemed to have been consulted and to have issued a negative opinion.

Timing for SEC consultation

As a general principle, under French law, the SECs of the entities directly concerned by a deal must be consulted on a project before any decision or implementation with respect to that project can take place (i.e., before the signature of any binding documentation).

An SEC does not have any veto right and cannot, even in case of a negative opinion, block a transaction. However, it can delay the implementation of a project, notably by claiming that the information-consultation period of one, two or three months has not duly started because the information provided was not sufficient.

Focus on recent case law

A recent series of court decisions, rendered in the context of the contemplated takeover of Suez by Veolia, illustrated this principle in the context of a three-party operation.

In August 2020, Veolia publicly announced its intention to (1) acquire Suez's shares owned by Engie (i.e., a minority block of 29.9 per cent), and, at a later stage, (2) to issue a tender offer for the rest of Suez's shares. At that time, Suez decided not to consult its SECs, given the fact that the first phase of Veolia's project only involved the acquisition of a minority block and, as such, no change of control per se. Suez Group's SECs and trade unions disagreed with this approach, as they considered that they should have been consulted on the whole contemplated operation, which as global project would eventually lead to the takeover of Suez by Veolia. In consequence, they introduced various court proceedings to obtain the suspension of the implementation of the project until the relevant consultation processes would be duly completed.

Firstly, in interim proceedings the Paris Court of Appeal ordered the suspension of the effects of the sale of the Engie-owned shares to Veolia, on the grounds that Suez's SECs had not been consulted on the global project, and this despite the fact that Suez was not the initiator of the operation.20 Secondly, in subsequent proceedings on the merits, the Versailles Court of Appeal ruled that the obligation to consult Suez's SECs had been triggered by the specific nature of the contemplated takeover and the influence acquired over Suez by Veolia through the purchase of the Engie-owned shares (i.e., 29.9 per cent of Suez's shares), given the project's impact on the organisation, management and general running of the company, and this despite the fact that the project was brought by a third party (i.e., Veolia). However, the court further ruled that the documents and information that could be communicated by Veolia and Engie to Suez at this stage had been duly provided to Suez SECs, and that Veolia could as such recover all of its rights as a shareholder of Suez.21 Case law shall be closely monitored in the upcoming years to assess whether these decisions will have a lasting effect over future M&A operations.

v Addition of 'environmental consequences' to the competences of the SEC

Pursuant to the Climate and Resilience Law of 22 August 2021, which entered into force on 25 August 2021, SECs now have a specific competence with respect to the contemplated environmental consequences of the decisions taken by their company. The Climate and Resilience Law thus introduced a new SEC consultation obligation relating to the environmental consequences of the projects and issues on which SECs are mandatorily consulted (including, among others, projects affecting the volume and structure of the company's workforce or in case of modification of the economic or legal organisation of the company). In addition, the recurring yearly SEC consultations on (1) the company's strategic orientations; (2) the company's economic and financial situation; and (3) the company's social policies, working conditions and employment, shall now include information on the environmental consequences of the company's activity.

vi Partial transfer of the employment contracts of employees partially dedicated to an activity

In case of transfer of an activity by application of the French Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE),22 the employment contract of employees who are partially attached to the transferred activity should in principle be transferred up to the portion of their functions attached to the transferred activity, unless this split of contract is impossible or deteriorates the employee's rights or working conditions, based on a recent decision of the French Supreme Court.23 This decision departs from the former position of the Supreme Court, according to which the employment contract of an employee who was 'mainly dedicated' to a transferred activity could be transferred in its entirety. This new principle, which in fact mirrors the Court of Justice of the European Union (CJEU)'s most recent decision in this respect,24 may not be easily practicable, notably when the activity is transferred to a third party, and especially if such party is a competitor. The impact of this new ruling could, however, be limited by the application of the 'impossibility' and 'deterioration of the working conditions' exceptions that it provides. Future related case law shall be closely monitored to further assess the consequences of such overturn on future TUPE-reliant deals.

vii Obligations to look for a buyer in the event of the closure of a business division

Among its provisions, the Florange Law has introduced an obligation for an owner seeking to close a business to attempt to find a buyer for the business. This obligation applies to any intention to close any business division with more than 1,000 employees when that closure would result in planned collective redundancies (i.e., more than 10 employees). This obligation provides for specific information obligations towards the SEC and the employees of the target business, as well as an obligation on the company or the group to consider all offers to acquire the business and to justify any decision taken in respect of such offers to the SEC.

viii Obligations of employers to fight corruption and protect whistle-blowers

The Sapin II Law on transparency, the fight against corruption and the modernisation of the economy created two new obligations for employers aimed at fighting corruption and protecting whistle-blowers.

Since 1 January 2018, employers with more than 50 employees must implement an internal process allowing employees to report, confidentially, any of the following that they have had knowledge of personally during their employment: a crime or criminal offence; a serious and obvious violation of an international treaty ratified or approved by France; or a threat or serious damage caused to the general interest. However, facts, information or documents, in whatever format, relating to national defence secrets, medical secrecy or attorney–client privilege are excluded from the whistle-blowing right.

Employers with more than 500 employees must also implement a code of conduct that must give a definition as well as examples of what could constitute an act of corruption, and also include disciplinary sanctions to be taken if it is violated; a process allowing employees to report, confidentially, any violations of the company's code of conduct; and a training programme for executives and staff most exposed to the potential risks of corruption.

Any employee who submits in good faith a report of a violation will be considered a whistle-blower and will benefit from a specific protective status against dismissal, providing that they have had personal knowledge of the facts (which excludes deduction and speculation) and are completely disinterested (which excludes receiving financial rewards as well as any other interests).

Reports of violations must be followed by an internal investigation that must verify the truthfulness of the report. Therefore, when implementing such processes, employers must ensure their compliance with the French labour regulations, in particular with regard to the protection of employees' rights to privacy as well as with regard to mandatory information and the consultation of employee representatives, particularly when implementing monitoring devices.

ix Risk of requalification of equity instruments granted to managers (management packages) as remuneration subject to social security charges

The Paris Court of Appeal ruled in July 2017 that gains realised by managers upon the sale of equity instruments (warrants in the case at hand) in the context of a leveraged buyout exit, when such instruments were granted to managers (because of their status) and kept by the latter to the extent that they remained within a company, should be considered as a salary for social contributions purposes (i.e., the gain would be subject to social contributions at a rate of around 40 per cent to 50 per cent on an employer's part, and around 20 per cent to 30 per cent on an employee's part).25

Indeed, it was held that the conditions under which such warrants were granted (to employees only) and may be kept (for as long as the beneficiaries remain within a company) establish a strong link with the employment agreement or corporate office (e.g., directorship) of the relevant beneficiary.

The case was referred to the French Supreme Court, which confirmed the analysis of the Paris Court of Appeal insofar as it approved that its finding that such gains should be considered as salary as long as they were granted to managers because of their status of employee or corporate officer of the company.26 However, contradicting the Paris Court of Appeal, it considered that the basis for calculating the related social security contributions was the acquisition gain and not the capital gain on disposal. In turn, the Supreme Court remanded the case back to the Paris Court of Appeal, but made up of a different panel of judges. Should the decision be confirmed, it cannot be ruled out that this principle would apply to any kind of equity instrument awarded in the same circumstances as the ones at stake. The final outcome of this litigation will need to be monitored closely, considering its potential significant impact on the cost of management packages. In this regard, the recent decision of French Administrative Supreme Court as regards tax treatment of management package (for further details, please refer to Section VIII.i) could influence this case-law.

x The PACTE Law

Published on 23 May 2019, the PACTE Law provides for a large set of rules intended to increase employees' involvement in company decisions and achievements, notably by promoting employee share ownership, enhancing employee representation on boards of directors and supervisory boards and promoting employee profit-sharing and saving plans.

Promotion of employee share ownership

The conditions for the allocation of free shares have been simplified and broadened. In particular, the French Commercial Code limits the total number of free shares that could be granted by a company to its employees and managers to a maximum corresponding to 10 per cent of the share capital. Article 163 of the PACTE Law provides that, for the purposes of this limit, free shares that have not been definitively allocated at the end of the vesting period, or those that are no longer subject to the retention obligation, are no longer taken into account.27 In addition, Article 162 et seq. of the PACTE Law supports the development of employee share ownership by allowing, under certain conditions, the allocation of shares to employees in simplified joint-stock companies and by allowing employers to contribute unilaterally to employee share ownership funds.

Enhancement of employee representation on boards of directors and supervisory boards

The law provides for an increased number of employees on boards of directors and supervisory boards. More specifically, the boards of directors and supervisory boards of companies with more than 1,000 employees in France (including subsidiaries) or 5,000 employees in France and abroad (including subsidiaries) must include at least two employees when the number of non-employee board members exceeds eight (instead of 12) and at least one employee when the number of non-employee members is less than or equal to eight (instead of 12). In parallel, the scope of the exemption from the obligation to appoint employees within boards of directors and supervisory boards has reduced. In particular, public holding companies with less than 50 employees, which had so far been exempted from this obligation if one of their subsidiaries had appointed employees as board members, are no longer exempt.

Promotion of employee profit sharing and saving plans

Companies with fewer than 50 employees are exempted from the 20 per cent employer flat contribution on amounts paid for mandatory profit sharing and voluntary profit sharing, as well as on payments into an employee savings plan. Companies with 50 or more employees and less than 250 employees are also exempted from this contribution, but only on the amounts paid as voluntary profit sharing.28 Such measures originated from parliamentary discussions about the PACTE Law but were enacted in Law No. 2018-1203 of 22 December 2018 on the financing of social security for 2019.

Tax law

i New case law on management packages tax regime

Management packages allow managers to share in the return on the investment made by the financial investor, generally in the context of an attractive tax treatment (i.e., capital gains tax treatment in most cases which is more favourable than salary taxation). However, the exact tax qualifications of these gains are often uncertain.

In three decisions dated 13 July 2021 rendered in a very formal plenary session,29 the French Administrative Supreme Court has clarified the tax treatment of management packages in France.

In these three cases, the French Tax Authorities had reclassified the gains related to the acquisition of stock warrants or stock options as salaries and not as capital gains.

First, the French Administrative Supreme Court judged that an income will be deemed to exist if the stock warrant or the stock option was acquired at a preferential price. This income must be taxed as a salary, with respect to the year of acquisition or subscription of the options or warrants, when it 'originates essentially from the person concerned carrying out his or her functions as a director or employee'. The French Administrative Supreme Court specifies, however, that the preferential nature of the acquisition or subscription price has no impact whatsoever on the nature of the gain subsequently realised by the taxpayer upon the exercise or transfer of stock warrants or stock options, or upon the transfer of shares acquired following the exercise of these instruments (in other words, this additional gain can be treated as a capital gain or as a salary income).

Second, the French Administrative Supreme Court judged that the gain resulting from the exercise of the options or warrants is taxable with respect to the year in which the options or warrants are exercised, and not in the year in which the shares acquired by exercising the options or warrants are sold. As for the gain resulting from the sale of the warrants, it remains 'in principle' taxable according to the regime of capital gains on the sale of securities unless, taking into account the 'conditions of realisation of the gain', this gain 'must be considered as acquired, not because of the seller's capacity as an investor, but in consideration of his or her functions as an employee or manager'.

These decisions represent a shift from the traditional reading of the case law of the French Administrative Supreme Court on this subject, which is based on the criteria of capital risk and subscription price at arm's length to qualify a gain as a capital gain or as a salary.30 In any case, they create significant uncertainty as to the tax treatment of gains from existing and future management packages.

ii Confirmation by case law of the retroactive effect of mergers and its limits

On 13 September 2021, the French Administrative Supreme Court issued a decision confirming both the principle of retroactive tax treatment of mergers and the limits imposed on it by the official guidelines of the French Tax Authorities.31

The French Administrative Supreme Court judged that:

there is nothing to prevent all the consequences of the merger from being taken into account, for the determination of the taxable profits of the absorbing company, in the closing balance sheet of the fiscal year during which the agreement was definitively concluded. However, the effects of the merger [...] dating from before the most recent of the opening dates of the fiscal years of the two companies during which the agreement was definitively entered into may not be taken into account.


The French Administrative Supreme Court endorses the limits set by the French Tax Authorities' official guidelines on this retroactive effect. If the date of retroactive effect precedes the closing date of the absorbing company, the transactions of the absorbed company carried out between these two dates can only be included in the absorbed company's profit, as the closing balance sheet of the previous fiscal year of the absorbing company cannot be modified.32

iii DAC 6 and professional secrecy: referral to the CJEU

Ordinance No. 2019-1068 of 21 October 2019, which came into force on 1 July 2020, transposed DAC 633 into Articles 1649 AD to 1649 AH of the French Tax Code. This Directive places an obligation on intermediaries to report certain arrangements, and in the event of non-compliance with that obligation, they may be subjected to a fine.

As a reminder, this measure applies to cross-border arrangements (i.e., arrangements that include France and another state) and that may be considered as 'potentially aggressive' according to one or more 'hallmarks'.

Considering that the obligation on lawyers to report suspicions breaches their right to professional secrecy, the French Administrative Supreme Court has asked the CJEU whether the provisions of Article 8ab, Paragraph 534 of the Directive are likely to infringe the right to a fair trial35 as well as the right to respect for correspondence and private life36 in that they do not exclude lawyers acting in the context of a judicial assignment or an assignment to assess the legal situation of their client.

Competition law

The French Competition Authority has had responsibility for merger control since 2009 and has increasingly adopted a more efficient approach to the application of its rules. In 2020, 195 concentrations were reviewed by the Authority, 10 of which were cleared conditionally (that is, with remedies or injunctions), two were the subject of a decision of inapplicability of control by the Authority (due to the withdrawal of the filing for one case, and the fact that the transaction did not constitute a merger and therefore did not have to be submitted to mandatory clearance for the other case) and, one was prohibited.

On 12 May 2021, the French Competition Authority prohibited a merger for the second time since it was invested with merger control power in 2009.37 In this case, the Ardian group, an investment fund notably active in the transport, telecommunications and renewable energy sectors intended to acquire control of the Société du Pipeline Méditerranée-Rhône, active in the transport of hydrocarbons by pipeline. The Competition Authority carried out an in-depth examination of the transaction involving the takeover of the pipeline Méditerranée-Rhône, a 760-km-long pipeline network that supplies depots in south-eastern France with refined products. The transaction would have given Ardian sole control over the pipeline's commercial policy, whereas today the infrastructure is controlled by several operators, of which some are shareholder-users. However, the Competition Authority considered this pipeline to be an essential infrastructure and that, consequently, Ardian, which is not a user of the pipeline, would have had an interest in increasing prices, by taking full advantage of the pipeline's monopoly situation. Furthermore, although this infrastructure is subject to state control, the Competition Authority observed that this control relates only to the preservation of the security of France's supply of petroleum products and not to the preservation of competition rules. Thus, given the insufficiency of the proposed commitments, the Competition Authority prohibited the transaction.

Also, the Minister of Economy has a power to revoke a case, which he has made use of once, in 2018. Subsequent to an in-depth examination, the Competition Authority had cleared Cofigeo's acquisition of securities and assets of the ready meal branch of Agripole38 subject to the divestment of both a production site and a brand. Without such injunctions, not only would Cofigeo become the undisputed leader in most of the relevant markets, but it would also own all the best-known brands in the sector. The remedies, therefore, aimed at preventing the price increase regarding essential goods.

The Minister of Economy made use of his power to revoke a case no later than on the day the Competition Authority's decision was issued. This power enables the Minister of Economy to review the merger in question on the basis of public interests (other than the protection of competition), such as industrial developments or the stability of employment. The Minister highlighted that the target company was facing severe financial difficulties and that Cofigeo was an important job provider in a difficult employment area. The transfer of assets ordered by the Competition Authority would have exposed Cofigeo and its employees to insolvency.

As a result, the Competition Authority's decision will not be implemented and shall be replaced by that of the Minister of Economy.

i Application of the merger control guidelines of 23 July 2020

New guidelines on merger control were adopted by the Competition Authority on 23 July 2020, thus revising the previous guidelines dated July 2013.

The revised guidelines are mainly a redesign of the previous ones, although they take into account the experience of the Authority and case law since 2013 and set out changes in the existing procedure.

As regards procedural processes, businesses can now request the appointment of a rapporteur in charge of the case and are provided with their contact details within five working days of the request. The guidelines furthermore ensure that the Authority will indicate to the notifying party whether their file is complete or not within 10 days of the notification. The scope of the simplified notification procedure is also clarified and extended, following the Authority's intent to increase the proportion of transactions that fall under the simplified procedure from 50 to 70 per cent of the transactions eligible for the simplified procedure, with a view to streamline the notification procedure. The revised guidelines also reproduce the provisions contained in a decree dated 25 April 2019 on the simplification of merger procedures, which in particular raises from 25 per cent to 30 per cent the threshold from which a market is considered to be affected for the analysis of vertical effects. The guidelines also deal with the online notification procedure launched by the Authority on 18 October 2019, for which transactions subject to the simplified notification procedure are eligible.

As regards the substantive analysis, the 2020 guidelines recast the analysis of the effect of concentrations. They thus present a list of the relevant elements to consider: market shares, the level of market concentration, the characteristics of the businesses, the characteristics of the products or services, the characteristics of the parties' consumers or suppliers, the characteristics of the market, and the potential competition sources. A new appendix is dedicated to the competitive pressure in online sales, and the guidelines also consider the situation of two-sided markets. As far as the Authority's prospective analysis is concerned, the guidelines now state that it takes into account 'current or anticipated developments within a reasonable time frame, which depends on the specificities of the sector'. They also include, within a single section, all the possible remedies to be offered by the parties, which also provides an interesting view of the relevant decisional practices of the Authority with respect to remedies since 2013.

Finally, the revised guidelines integrate the recent case law regarding gun jumping in the section dedicated to procedural infringements.

ii Substantial penalties for gun jumping

When French thresholds are met, a pre-merger filing is mandatory. This applies to all concentrations, including foreign-to-foreign transactions, even in the absence of an overlap between parties' activities.

Individuals and companies acquiring control of all or part of an undertaking are responsible for notifying. In the case of a merger, this obligation is incumbent upon the merging entities. In the case of a joint venture, parent companies must file a joint notification.

Sanctions for not filing or for closing before clearance are as follows:

  1. corporate entities: up to 5 per cent of the turnover in France during the previous financial year (plus, where applicable, that of the acquired part generated in France); and
  2. individuals: up to €1.5 million.

An example of a sanction for the first type of gun jumping (i.e., for failing to notify) can be found in Case No. 13-D-22.39 On 26 December 2013, the Competition Authority imposed a fine of €4 million on Castel Frères, a company active in the wine sector, for failing to notify an acquisition. This merger had been reported to the Authority by a third party in the context of the examination of another acquisition by Castel Frères. The fine was reduced to €3 million on appeal.40

Regarding the second type of sanction for premature implementation, the Competition Authority imposed a fine for a breach of the standstill obligation for the first time in 2016. In the Altice/SFR case, shortly after having cleared this merger, the Authority conducted a dawn raid on the premises of the companies, and found evidence that Altice was involved in SFR's business and strategy prior to clearance, notably in approving the participation of SFR in a public tender, assisting SFR in renegotiating a network-sharing agreement with Bouygues Telecom, determining the prices of SFR internet retail offers and coordinating with SFR in the context of OTL's acquisition. As a result, on 8 November 2016, the Competition Authority imposed a fine of €80 million on Altice Group for implementing two transactions prior to obtaining merger control clearance.41 This is one of the highest global fines ever enforced for such a practice.

Finally, parties may be required, subject to a periodic penalty for non-compliance, either to file a concentration or to demerge. Transactions that have been completed without clearance are illegal and not enforceable. There are no criminal sanctions for not filing.

iii Diversification of remedies that can be imposed by the Competition Authority

Regarding commitments and injunctions, in its revised merger control guidelines the Competition Authority provides several examples of its decision-making practice, which is characterised by a preference for structural remedies (e.g., divestment of minority shareholdings). However, in the case of complex transactions, the Authority pragmatically accepts behavioural remedies, of which it provides several examples. In that respect, in 2019 the Authority published a 'Study on Behavioural Remedies', with a view to provide a summary analysis of decision-making practice dealing with such remedies, while providing material for broader discussion on the adaptation of the Authority's intervention method and its application of behavioural remedies in its upcoming decisions. In that context, the study underlines that, from 2009 to 2017, behavioural remedies were accepted in 55 per cent of clearance decisions in which competition concerns were identified (i.e., out of 68 decisions that were subject to commitments). Overall, although the Authority emphasises the plasticity and flexibility of behavioural remedies, it nevertheless underlines its will to favour structural remedies where they provide a better response to the competition issues, particularly because of the complex and time-consuming monitoring behavioural remedies require. The trend towards behavioural remedies increased in 2020, when, out of the 10 concentrations the Authority cleared subject to remedies, five were conditionally approved on structural remedies,42 two on behavioural remedies43 and three on combined remedies.44

As an example of a decision authorised subject to behavioural remedies, the Authority cleared the merger of two agricultural cooperatives, Coopérative Dauphinoise and Terre d'Alliances, subject to commitments aiming notably to prevent the competition concerns identified in the markets for retail distribution of gardening, do-it-yourself, landscaping and pet products. Regarding these markets, the parties have undertaken to submit for prior approval by the Competition Authority any strategic decision (for example, certain changes of brand) relating to one of the stores located in the catchment areas where the transaction results in the business of the parties overlapping, because such a decision could influence the competitive structure in the catchment area of those stores.45

Note that, among the eight cases cleared partly or wholly based on structural remedies in 2020, the Competition Authority accepted fix-it-first commitments in one case, to remedy the anticompetitive effects of the acquisition by Groupe Bernard Hayot of Vindémia Group, which comprises the subsidiaries of the Casino group in La Réunion, Mayotte, Madagascar and Mauritius.46 Within the retail distribution and supply markets of food and non-food products, the Competition Authority identified two major risks of anticompetitive effects on competition. In the food retail and book retail markets, the Competition Authority considered that, in several catchment areas, consumers were likely to have no satisfactory choice between competing retailers after the transaction. In the upstream supply market of large food stores, the Competition Authority found that the transaction was likely to make certain local suppliers even more economically dependent on the parties to the transaction. The Competition Authority notably addressed the aforementioned concerns in advance by approving Groupe Bernard Hayot's commitment to sell four hypermarkets, two supermarkets and a cultural products store to two buyers already identified: Make Distribution and the Tak group.

The Competition Authority carefully monitors the implementation of remedies and may withdraw an authorisation in cases of non-compliance. In such a case, the parties will have to either restore the situation to how it was before the transaction (i.e., unwind the operation) or re-notify the transaction to the Competition Authority within a month. Compliance with commitments by companies is central to the process of French merger control. The power of the Authority to withdraw merger approvals was validated in 2012 by a decision of the French Constitutional Court in the context of the appeal by Canal Plus and Vivendi against an order to re-notify the purchase of its former rival TPS.47 The Authority withdrew its approval on the ground that Canal Plus Group did not fulfil several commitments that were attached to the authorisation decision.

If such non-compliance with remedies is confirmed, the Competition Authority is also able to impose financial penalties on the notifying parties of up to 5 per cent of their net turnover achieved in France. In this regard, in 2018, the Competition Authority fined the Fnac and Darty Group €20 million for non-compliance with commitments made when Darty was taken over by Fnac.48

iv Actual changes in the French merger control regime

For several years, the French Competition Authority has considered and analysed different alternatives for reviewing transactions that do not meet the relevant thresholds but may affect competition.

In this regard, the French Competition Authority refused to review a non-notifiable concentration through the lens of dominant position in a decision adopted in January 2020.49 In this case, Towercast argued that TDF's acquisition of Itas, completed in October 2016 without prior clearance as the French thresholds were not exceeded, nevertheless constituted an abuse of dominant position. Towercast was mainly referring to the judgment issued by the Court of Justice in the 1973 Continental Can case at a time when there was no merger control regime at a European level. The Competition Authority confirmed that the EU Merger Regulation is intended to apply solely and exclusively to concentrations and to exclude the application of any other provision of competition law and, as a consequence, held that a concentration that does not trigger turnover thresholds cannot be reviewed ex post on the ground of abuse of dominant position. This decision has been challenged before the Paris Court of Appeal, which, on 1 July 2021, stayed proceedings and requested a preliminary ruling on this question to the CJEU.

The Competition Authority had indicated in its decision of 2020 that Article 22 of the EU Merger Regulation should in principle enable a national competition authority to request that the European Commission assess a merger that does not have a European dimension but would threaten to significantly affect competition within the territory of the Member State or States making the request, regardless of the Member State's own jurisdiction to control the merger.

The Competition Authority has therefore welcomed the new approach announced in September 2020 by Margrethe Vestager regarding referrals of merger transactions by national competition authorities to the European Commission pursuant to Article 22 of the EU Merger Regulation. Prior to this, the European Commission had always stated that it would only accept a referral if the merger transaction exceeded the national notification thresholds in at least one Member State. Amending its policy in this field, on 26 March 2021, the European Commission has adopted guidelines that provide indications about the categories of cases that may constitute suitable candidates for a referral in situations where the transaction does not have a European dimension and is not notifiable under the laws of the referring Member State or States.50

When the European Commission sent an Article 22(5) notice concerning the proposed acquisition of Grail by Illumina to the Member States in February 2021, the Competition Authority was the first authority to make use of this referral option. Several other Member States of the European Economic Area (Belgium, Greece, Iceland, the Netherlands, Norway) joined its request and, the European Commission has accepted, on 19 April 2021, to assess this transaction under the EU Merger Regulation. This is the first time since Margrethe Vestager's announcement that the European Commission reviews a transaction that was not subject to a mandatory notification under the national and European turnover thresholds. Following the referral request sent to the Commission by the Competition Authority, Illumina and Grail lodged an application for interim relief before the French Administrative Supreme Court against this request. The court dismissed this action, holding that the Competition Authority's referral request could not be separated from the procedure for examining the transaction, which was conducted by the European Commission under the supervision of the CJEU, and that consequently it had no jurisdiction to review such a request.51


The main trends of 2021 mentioned above should continue in 2022, with a high level of foreign investment scrutiny and an ever-increasing number of climate resolutions to be submitted to the shareholders' vote at the next season of listed companies' general meetings.

The current economic growth in France could maintain a high level of M&A, although the upcoming presidential election could slow down the level of activity or postpone the announcement of certain transactions to the second half of 2022.


1 Didier Martin is a partner at Bredin Prat.

2 Financial data extracted from Mergermarket, 'Trend Reports 2020 (France)'.

3 Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation).

4 Ruling of the Criminal Chamber of the French High Court dated 25 November 2020, No. 18-86.955.

5 Statement by the French Financial Markets Authority dated 28 April 2020.

6 Decree No. 2020-892 of 22 July 2020 and decree dated 22 September 2021.

7 Order dated 10 September 2021 and related to foreign investment in France.

8 Financial data extracted from Mergermarket, 'France M&A Data Q4 2020'.

9 Financial data extracted from Mergermarket, 'Trend Report Q1–Q4 2018 (France)'.

10 Les Echos, 'La France, championne du contrôle des investisseurs étrangers en Europe', 24 March 2021.

11 Financial data extracted from Mergermarket, 'Trend Report Q1–Q4 2020 (France)'.

12 ibid.

13 Financial data extracted from the Observatory of Tender Offers 2021 report.

14 Ordinances Nos. 2017-1385 to 2017-1389 dated 22 September 2017; and Ordinance No. 2017-1718 dated 20 December 2017.

15 Opinion of the Court of Cassation, 17 July 2019, No. 19-70.011.

16 Administrative Court of Cergy-Pontoise, 16 October 2018, No. 1807099.

17 These provisions of the Hamon Law do not apply to companies that are subject to insolvency proceedings.

18 The guidelines that have been published by the French Ministry of Labour for the implementation of the Hamon Law confirm this approach.

19 Decree No. 2017-1819 dated 29 December 2017, Article 1.

20 Paris Court of Appeal, 19 November 2020, No. 20/06549.

21 Versailles Court of Appeal, 15 April 2021, No. 21/00378.

22 The automatic transfer of employees dedicated to a transferring 'autonomous economic entity', by application of Article L. 1224-1 of the French Labour Code.

23 French Court of Cassation, 30 September 2020, No. 18-24.881.

24 European Court of Justice, 26 March 2020, No. 344/18.

25 Paris Court of Appeal, 6 July 2017, No. 14/02741.

26 French Court of Cassation, 4 April 2019, No. 17-24.470.

27 Article L.225-197-1 of the Commercial Code, amended.

28 Article L.137-15 of the Social Security Code.

29 French Administrative Supreme Court, 13 July 2021, Nos. 428506, 435452 and 437498.

30 See French Administrative Supreme Court, 26 September 2014, No. 365573 and 12 February 2020, Nos. 421441 and 421444.

31 French Administrative Supreme Court, 13 September 2021, No. 451564.

32 See BOI-IS-FUS-40-10-20, No. 110.

33 Council Directive (UE) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

34 'Each Member State may take the necessary measures to give intermediaries the right to a waiver from filing information on a reportable cross-border arrangement where the reporting obligation would breach the legal professional privilege under the national law of that Member State. In such circumstances, each Member State shall take the necessary measures to require intermediaries to notify, without delay, any other intermediary or, if there is no such intermediary, the relevant taxpayer of their reporting obligations under paragraph 6.

Intermediaries may only be entitled to a waiver under the first subparagraph to the extent that they operate within the limits of the relevant national laws that define their professions.'

35 Protected by the Charter of Fundamental Rights of the European Union, Article 47, and by the European Convention on Human Rights, Article 6.

36 Protected by the Charter of Fundamental Rights of the European Union, Article 7, and by the European Convention on Human Rights, Article 8.

37 Case No. 21-DCC-79.

38 Case No. 18-DCC-95.

39 Situation of the Castel Group in light of Article 430-8 of the Commercial Code, decision dated 20 December 2013, Case No. 13-D-22.

40 Judgment of the Supreme Administrative Court dated 15 April 2016, Appeal No. 375658.

41 Situation of the Altice Group with regard to Section II of Article L.430-8, decision dated 8 November 2016, Case No. 16-D-24.

42 Cases Nos. 20-DCC-28, 20-DCC-90, 20-DCC-92, 20-DCC-132 and 20-DCC-164.

43 Cases Nos. 20-DCC-126 and 20-DCC-191.

44 Cases Nos. 20-DCC-38, 20-DCC-72 and 20-DCC-82.

45 Case No. 20-DCC-82.

46 Case No. 20-DCC-72.

47 Case No. 2012-280 further to a request for a preliminary ruling on a question of constitutionality.

48 Case No. 18-D-16.

49 Case No. 20-D-01.

50 Commission Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation to certain categories of cases.

51 Conseil d'État, decision No. 450878, 1 April 2021.

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