On May 12, 2021, following an in-depth “Phase 2” review, the French Competition Authority (“FCA”) issued its second ever merger control prohibition decision, as it considered that Ardian’s proposed acquisition of sole control over pipeline company Société du Pipeline Méditerrannée-Rhône (“SPRM”) raised serious competition concerns.
SPRM is a French company active in hydrocarbon transportation, who owns and operates the Mediterranean-Rhône Pipeline (the “PMR”), a 760 km long pipeline network which supplies the depots in the south-east of France with refined products: diesel, gasoline, domestic fuel oil and jet fuel. Since its creation in 1968, and despite the withdrawal of historical shareholders such as BP, Shell or Total, the infrastructure has never been controlled by a single operator.
On September 14, 2020, Ardian, a French private equity and asset management company active in the transport, telecommunications and renewable energies sectors, notified its plan to acquire sole control over SPMR with the FCA. At the time, Ardian already owned 42.2% of SPMR’s shares and was planning on acquiring ENI’s 5% participation.
On December 8, 2020, the FCA opened a Phase 2 investigation. Although the FCA acknowledged that Ardian had provided a number of useful elements during Phase 1, it considered that further review was needed to determine whether the pipeline constituted an “essential facility”.
The FCA’s competition concerns
On May 12, 2021, the FCA blocked the transaction after having identified the following issues.
First, the FCA considered that the PMR constitutes an essential facility given that it has a de facto monopoly position in the market for the pipeline transportation of refined petroleum
products in the south of France. According to the FCA, other transportation methods of refined petroleum products (rail, road and river) are not a credible alternative to the transport services offered by the PMR. In addition, the FCA noted that given the high amount of investment required for the creation of an oil pipeline and the regulatory constraints of the licensing regime, the PMR is infrastructure that cannot be easily replicated by competitors.
Second, post-transaction, Ardian would have been in a position to unilaterally determine SPMR’s commercial policy and, given that it is not a user of the infrastructure, would have been incentivized to set SPMR’s prices at a level that would take full advantage of SPMR’s monopoly situation. By contrast, prior to the transaction, none of SPMR’s shareholders could make strategic decisions relating to the PMR on their own, and shareholders such as Esso or ENI, who are users of the PMR, had no interest in raising prices as much as possible.
The FCA also noted that alternatively, in order to maximize its profits, Ardian could have decided to reduce the quality of services offered by the PMR or limit investments.
Third, the FCA took the view that the French State’s countervailing powers were insufficient to rule out the risk of harm to competition. Specifically, although the French government is able to exercise a power of supervision over companies operating oil pipelines, this power mostly relates to general energy policy the continuity of supply of petroleum products in France (for example, the Minister for Ecology is in charge of appointing a representative entitled to “oppose any decision of the company that may be contrary to the government’s general energy policy”). Hence, the State’s supervision would not have prevented Ardian from exploiting the market power derived from its control over SPMR.
Eventually, the FCA concluded that Ardian had neither demonstrated that the efficiency gains generated by the transaction would offset its anticompetitive effects, nor offered sufficient remedies. The FCA also considered that imposing remedies on Ardian was inadequate in the present case. In particular, the FCA noted that the risks identified by the FCA were directly related to the main purpose of the notified transaction, i.e., the takeover of the PMR by Ardian, which ruled out the possibility of issuing structural injunctions.
For the second time since its creation and in the absence of suitable remedies, the FCA decided to formally block a merger. The decision follows the withdrawal of the Pisto / Trapil transaction in July 2020, in which the FCA had also identified competition concerns in the refined petroleum product transport and storage markets following a Phase 2 review.
The Parties may appeal the decision before the French Administrative Supreme Court (Conseil d’Etat) within two months.
 FCA Decision no. 21-DCC-79 of May 12, 2021 (to be published). See also FCA’s press release of May 12, 2021, available here: www.autoritedelaconcurrence.fr/ en/press-release/hydrocarbon-transport-pipeline-autorite-blocks-takeover-societe-du-pipeline.
 See article 6 of decree n° 2012-615 of May 2, 2012, adopted on the basis of article L. 632-2 of the French Energy Code.
 The FCA’s press release does not describe the commitments offered by Ardian. More details will be provided when the decision is published.
 Pursuant to Article L. 430-7, III, of the French Commercial Code, in “Phase 2” procedures only, in the event that the parties to a merger fail to offer sufficient remedies, the FCA may impose remedies that it considers adequate (following an adversarial debate).
 Under this transaction, Pisto, a company specialised in petroleum product storage, intended to acquire sole control over Trapil, the leading company for refined product (petrol, diesel, heating oil, jet fuel) pipeline transport in France. See the FCA’s press release of July 24, 2020, available at www.autoritedelaconcurrence. fr/en/press-release/oil-pipeline-autorite-takes-note-sole-control-acquisition-projects-withdrawal-trapil.