On January 16, 2020, the FCA dismissed a complaint by French terrestrial digital television broadcaster towerCast which alleged that its competitor TDF’s acquisition of Itas,[1] constituted an abuse of dominance on the wholesale markets for digital terrestrial television broadcasting services (the “Decision”).

While the transaction did not exceed neither the French nor the European merger control thresholds,[2] towerCast argued that the transaction would constitute an abuse of dominance by significantly strengthening TDF’s dominant position. Post-transaction, TDF and towerCast indeed remained the only two competitors on these markets.[3] The FCA concluded, however, that it did not have jurisdiction to review TDF’s acquisition under abuse of dominance rules.

The principles laid down in the 1973 European Court of Justice’s Continental Can ruling no longer apply

Interestingly, towerCast’s claim relied on the European Court of Justice’s (“ECJ”) 1973 Continental Can ruling.[4] In this ruling, the ECJ held that a company may abuse its dominant position by acquiring one of its competitors, in particular when the acquisition strengthens the acquiring company’s dominant position “in such a way that the degree of dominance reached substantially fetters competition, i.e., that only undertakings remain in the market whose behaviour depends on the dominant one.”[5]

However, the FCA recalled that the Continental Can ruling was delivered prior to the adoption of any European merger control regulation and concluded on this basis that the principle laid down by the Continental Can ruling could no longer apply.[6] The European Union legislator adopted a European merger control regulation for the first time in December 1989,[7] considering in particular that Articles 85 and 86 (now 101 and 102) were not “sufficient to cover all operations which may prove to be incompatible with the system of undistorted competition.”[8] This new legal instrument was conceived as “the only instrument applicable to such concentrations”[9].

Antitrust rules and merger control rules are distinct in nature

The FCA concluded that, under both EU and French law, a concentration could not be considered, in itself, as an abuse of a dominant position, in the absence of any abusive practices that would be severable from the concentration.

EU law. According to the FCA, after the adoption of Council Regulation No 4064/89, the application of Article 86 of the EEC Treaty (now Article 102 TFEU) to a concentration became devoid of purpose.[10] The FCA noted that this was further evidenced by the fact that the Commission no longer applied Article 86 of the EEC Treaty to mergers after the entry into force of Council Regulation No 4064/89.[11]

French law. Based on the FCA’s practice, as well as the Paris Court of Appeal and Supreme Court’s case law,[12] the FCA recalled that merger control and antitrust rules were also strictly distinct under French law. The FCA therefore cannot find that a transaction, even if it does not meet the national notification thresholds, constitutes in itself an abuse of a dominant position under Article L. 420-2 of the French Commercial Code. The FCA however specified that any abusive conduct distinct from the transaction itself may constitute an anticompetitive practice, and could result in the transaction being annulled[13] under Article L. 430-9 of the French Commercial Code. In the case at hand, the FCA nonetheless concluded that this provision did not apply, in the absence of any abusive conduct by TDF that could be detached from the merger itself.

In this Decision, the FCA therefore clarifies its position on the relationship between antitrust and merger control in Europe and France based on existing legislation. This position is however subject to change if the French legislator decides to implement an ex-post merger control mechanism in the near future.

[1]              The Itas group is a major French industrial player in the telecom sector in France and abroad.

[2]              Decision, para. 106.

[3]              Decision, para. 61.

[4]              Continental Can (Case C-6/72) EU:C:1973:22.

[5]              Ibid., para. 26. However, the ECJ annulled the Commission’s decision given that it had not, “as a matter of law, sufficiently shown the facts and the assessments on which it is based” (para. 37).

[6]              Decision, para. 131.

[7]              Merger control was introduced by Council Regulation (EEC) No 4064 / 89 of 21 December 1989 on the control of concentrations between undertakings, OJ 1989 L 395/1 (“Council Regulation No 4064/89”), subsequently replaced by Council Regulation (EC) No 139/2004 of 20 January 2004, OJ 2004 L 24/1.

[8]              Council Regulation No 4064/89, Recital 6.

[9]              Ibid, Recital 7.

[10]             Decision, paras. 131 and 140.

[11]             Decision, para. 135.

[12]             Decision, para.151. See also Decision, paras. 145-146 and 148-149, quoting: French Competition Council, Decision n° 93-D-29 of 6 July 1993; Paris Court of Appeal, Judgment n° 93/08166 of 28 June 1994; Supreme Court, Judgment n° 94-20055 of 26 November 1996; French Competition Council, Decision n° 98-MC-06 of 1 July 1998. French Competition Council, Decision n° 99-D-04 of 19 January 1999. French Competition Council, Decision n° 99-D-69 of 23 November 1999. FCA, Decision n° 10-D-32 of 16 November 2010.

[13]             Decision, paras. 153-154.