On March 1, 2022, the Conseil d’État rejected a claim brought by French telecommunications and internet provider Free in connection with the contemplated merger of TF1 and Métropole Télévision (“M6”), two of the largest media companies in France. The Conseil d’État held that because the opening of a pre-notification phase by the French Competition Authority (“FCA”) is, by nature, “purely preparatory,” an applicant may not seek its annulment.
Background
Under Article L. 430-3 of the French Commercial Code, parties to a reportable merger must submit a notification to the FCA before implementing such merger, and may do so “as soon as they are in a position to present a project that is sufficiently advanced to allow for the examination of the case.” Similar to the European Commission, the FCA may, at the request of the notifying parties, initiate the review of a merger case prior to its formal notification, during a so-called “pre-notification” phase[1]. The opening of a pre-notification phase enables the FCA to carry out various investigative measures and in particular to conduct market tests or send requests for information to third parties.
Between the public announcement of the contemplated TF1/M6 merger in May 2021 and its formal notification in February 2022, the FCA had opened such a pre-notification phase, leading to the launch of a market test and to the issuance of requests for information to a number of third parties, including Free and its parent company, Iliad.
Iliad considered that the merger should be assessed not by the FCA but by the European Commission because it would confer joint control over the new entity to Bouygues, TF1’s parent company, and RTL Group, M6’s parent company—as opposed to an acquisition of sole control by Bouygues as the parties claimed.[2] In this context, in January 2022, both Free and Iliad applied before the Conseil d’État, the French supreme administrative court, for the annulment of the FCA’s decision to initiate pre- notification proceedings (requête en excès de pouvoir). In their application, Free and Iliad also asked the Conseil d’État to make a reference for a preliminary ruling to the French Constitutional Council, arguing that Articles L. 450-8 and L. 464-2, V of the French Commercial Code, which empower the FCA to fine companies for obstruction to an investigation, are incompatible with the French Constitution.
The Conseil d’État’s ruling
On March 1, 2022, the Conseil d’État dismissed Free and Iliad’s claim. It found that the FCA’s decision to open a pre-notification phase into a transaction that is likely to be formally notified is a procedural step of a “purely preparatory” nature which, as such, cannot be challenged for annulment. The Conseil d’État specified that the “purely preparatory” nature of the pre-notification phase is not called into question by the FCA’s powers to send requests for information to third parties and impose fines on companies in the event of a failure to respond.
Free and Iliad’s request that the Conseil d’État make a reference for preliminary ruling regarding the constitutionality of Articles L. 450-8 and L.464-2, V of the French Commercial Code was also dismissed on the ground that it was only filed in support of the request for annulment, which had itself been rejected.[3]
The contemplated TF1/M6 merger is currently the subject of an in-depth investigation, following the FCA’s decision to open “phase 2” proceedings on March 18, 2022.[4]
[1] See the FCA’s Merger control guidelines of July 2020 (Lignes directrices de l’Autorité de la concurrence relatives au contrôle des concentrations), paras. 191-200.
[2] Iliad thus argued that the undertakings concerned by the merger were actually Bouygues and RTL Group (itself owned by German mass media company Bertelsmann), meaning that the turnover thresholds set by EU merger control rules would have been met and thereby triggering the European Commission’s competence.
[3] Under Order No. 58-1067 on the organic law on the Constitutional Council of November 7, 1958, the Cassation Court or State Council must be seized to decide whether preliminary questions on legal provisions shall be sent to the Constitutional Council for it to rule on their compliance with the Constitution. One of the conditions for such question to be referred to the Constitutional Council is that the challenged legal provision must be applicable to, or constitute the legal ground of a claim. In the case at hand, the State Council rejected Free and Iliad’s claim; therefore, this condition was no longer met.
[4] See press release from the FCA, available at : https://www.autoritedelaconcurrence.fr/en/press-release/tf1m6-autorite-de-la-concurrence-opens-depth- examination.