On 14 June 2018, the French Minister of Economy announced its intention to review the decision by which the French Competition Authority (the “FCA”) cleared the acquisition of certain securities and assets of Agripole group (“Agripole”) by Financière Cofigeo (“Cofigeo”) subject to conditions1. This is the first time the French Minister of Economy (the “Minister”) uses its own so-called ‘evocation’ power since it was introduced in 2008 in the Article L. 430-7-1 of the French Commercial Code (the “FCC”).
On 12 June 2017, Cofigeo notified the FCA of its intention to acquire exclusive control of certain securities and assets of Agripole, which was subject to insolvency proceedings. Cofigeo, the “Raynal & Roquelaure” and “Zapetti” ready meals producer, was notably targeting Agripole’s “William Saurin”, “Panzani” and “Garbit” brands as well as the corresponding production sites.
The FCA decided to conduct an in-depth examination of this transaction after it had identified several competition concerns (Phase II). According to the FCA, as a result of the transaction Cofigeo would indeed hold market shares over 80% on the market of Italian canned ready meals (e.g. raviolis or cannelloni) and over 70% on the market of “exotic” canned ready meals (e.g. chili con carne or couscous). The FCA expressed concerns that the new entity would have been able to raise its prices without being constrained by actions of its customers and its actual or potential competitors.
Taking into account these competition concerns, the FCA required Cofigeo to sell its Zapetti brand, under which Italian and exotic canned ready meals are sold, and a production site for private labels products2. According to the FCA, these conditions will enable a competitor to provide a credible alternative to the products of the new entity.
On the very same day the decision of the FCA was made public, the Minister published a press release indicating its intention to use its evocation power.
First referral of a FCA decision by the Minister of Economy
The ‘evocation’ power of the Minister was introduced by the Law on the Modernization of the Economy of 4 August 2008 which had also transferred merger control jurisdiction from the Minister to the FCA3.
Article L. 430-7-1 of the FCC grants the Minister of Economy the power to intervene at two different points of the procedure. First, within 5 business days as from the date on which it receives a decision of the FCA clearing a transaction after a Phase I review, the Minister may ask the Competition Authority to open a Phase II review. Second, this Article grants an ‘evocation’ power to the Minister pursuant to which he may ask for the referral of given transaction after the FCA has reviewed and cleared the transaction further to a Phase II investigation. The Minister can then review the compliance of the proposed transaction with general interest other than competition. The grounds for referral include notably industrial development, the competitiveness of the companies concerned as regards international competition or the creation or safeguarding of jobs4. The Minister indicated that it intended to review the acquisition of assets by Cofigeo in light of the objectives of safeguarding jobs and industrial development.
The Minister has 25 working days to ask for the referral of a transaction after it has been cleared by the FCA in Phase II and to issue a decision. In this Cofigeo case, the Minister’s decision should therefore intervene on 19 July 2018 at the latest, as indicated in the press release of 14 June 2018. In the meantime, any interested third party can address its observations to the Minister or ask to be heard5.
The Minister will have the possibility to prohibit the transaction or to authorise it. The authorisation decision may be conditional upon the effective implementation of commitments, if necessary.
Finally, the decision of the Minister may be brought before the Supreme Administrative Court (Conseil d’Etat).
As an additional clearance step for transactions, the evocation power of the Minister is not specific to France. Similar mechanisms indeed exists in several jurisdictions, such as United-Kingdom or Germany, although organized differently. In our view, the decision of the Minister of Economy for referral should not be construed as a sign that the evocation power will be broadly used in the future. The holding of Agripole was indeed involved in a fraud scandal discovered in 2016. This scandal led to the dismantling of the holding company and endangered about 3.000 jobs. The Minister of Economy scrutinized closely this matter from the beginning6, which may explain its decision to review the case. In any event, parties to a transaction filed to the FCA should allow 5 additional working days after obtaining the FCA’s clearance in case of Phase I review and 25 additional working days if clearance was obtained after a Phase II review before closing their transaction.
- Press release of the French Minister of Economy and Finances, 14 June 2018, n° 543.
- It is only the second time the FCA uses its injunction power. The only precedent was a decision of 23 July 2012 relating to the acquisition of TPS and CanalSatellite by Vivendi Universal and Canal Plus. In this decision, the FCA imposed on the Canal Plus group several conditions including notably to guarantee clear rules governing the access of independent channels to distribution services by CanalSat or to make all its own movie channels distributed in its CanalSat offer available for third-party distributors.
- Law No 2008-776 of 4 August 2008, Modernisation of the Economy.
- L. 441-7-1 II of the FCC.
- French Minister of Economy and Finances, decision of 21 June 2018.
- By Order of 15 December 2016, the French Minister of Economy and Finances announced the unlocking of € 70 million with a view to maintain the group’s activity.
Compliments of Eversheds Sutherland, a member of the EACCNY