On December 5, 2024,[1] the Paris Court of Appeals (“Court of Appeals”) clarified the scope of its judgment of June 27, 2024, referring back the assessment of TDF’s acquisition of Itas to the French Competition Authority (“FCA”).[2] The Court ruled that the referral was limited to further investigation, while the final decision would be taken by the Court of Appeals (not the FCA).
Background
In 2017, Towercast filed a complaint with the FCA alleging that French television broadcaster TDF’s acquisition of its rival Itas, in a transaction that fell below EU and French merger control thresholds, was abusive under Art. 102 TFEU and L. 420-2 of the French Commercial Code. The FCA’s investigative unit issued a statement of objections alleging that the transaction was liable to constitute an abuse of TDF’s dominant position on the wholesale market for the broadcasting of digital terrestrial television. The FCA’s decision-making body (the Collège), however, dismissed these objections on the ground that there is a “clear dividing line between merger control and the control of anticompetitive practices”[3]: since the adoption of the EU Merger Regulation in 1989 and national merger control regimes subsequently, only these rules apply to concentrations, not Article 102 TFEU and Article 420-2 of the French Commercial Code prohibiting the abuse of a dominant position (the “Decision”). Towercast appealed.
On July 1, 2021, the Paris Court of Appeal stayed the proceedings and referred a question to the European Court of Justice (“ECJ”) on the relationship between the EUMR and the review of concentrations under Article 102 TFEU. On March 16, 2023, the ECJ ruled that the adoption of the EUMR as a provision of secondary EU law could not preclude the direct application of Article 102 TFEU, a higher norm of primary EU law. It also clarified the standard for the assessment of concentrations under Article 102 TFEU.[4]
On June 27, 2024, following the ECJ ruling, the Paris Court of Appeals annulled the FCA’s decision. Rather than immediately ruling on the merits by application of the devolutive effect of appeals,[5] the Court held that it was appropriate to conduct an investigation to assess whether the transaction “substantially impeded competition.”[6] The Court noted that (i) significant time had passed since the issuing of the statement of objections, (ii) an ex post assessment of a merger was complex in light of sparsely developed EU case law on merger control based on Article 102 TFEU (i.e., the Continental Can case), and (iii) the sector was subject to ex ante (telecom) regulation, which further complicated the analysis.[7] The Court of Appeals thus referred the case back to the FCA for further investigation.
Towercast’s request for interpretation
On August 28, 2024, Towercast submitted a request for interpretation to the Court of Appeals for clarification as to whether the referral back to the FCA was limited to further investigation of the matter—a position supported by Towercast and the French Ministry for the Economy—or also extended to the power to rule on the case on the merits—as contended by the FCA and TDF.
The Court of Appeals’ ruling
The Court of Appeals ruled in favor of Towercast and the French Ministry for the Economy by clarifying that the Court referred the case back to the FCA for further investigation, specifically on the issues identified in its judgment of June 27, 2024 (that is, the changes in the wholesale market for broadcasting of digital terrestrial television, changes to actual and potential competition on this market, trends in TDF and Towercast’s performance).
The Court of Appeals confirmed the reasoning it had taken in its judgment of June 27, 2024, that is, the annulment of the FCA (Collège) decision did not impact the validity of the FCA (investigative unit) statement of objections. As such, it is for the Court of Appeals to rule on the merits of the case in lieu of the FCA (Collège). That situation is different from the one where the FCA rejects a complaint without having issued a statement of objections, as in such case the devolutive effect of appeals would not operate and thus the FCA would both lead the investigation and take the final decision.
Takeaways
The ruling confirms that, where the annulment of an FCA decision on appeal does not affect the validity of a statement of objections issued by the FCA’s investigative unit, for example, because the FCA’s decision under appeal did not reject the statement of objection’s substantive findings, the Court of Appeals will rule on the merits of the case by application of the devolutive effect of appeals. This does not prevent the Court from referring the case back to the FCA for further investigation while retaining the power to take the final decision.
Such additional investigative measures may be appropriate, in particular, where significant time has passed between the statement of objections and the annulment of the FCA’s decision and in complex cases, such as the review of mergers under general antitrust provisions (Article 102 TFEU and Article 420-2 of the French Commercial Code), considering the “sparsely developed” case law in this field.
[1] Paris Court of Appeal, December 5, 2024, RG n°24/14636, Towercast.
[2] Paris Court of Appeal, June 27, 2024, RG n°20/04300 (“Initial Ruling”).
[3] Decision 20‑D‑01 of the French Competition Authority of January 16, 2020 regarding a practice implemented in the digital terrestrial television broadcasting sector and Towercast v Autorité de la concurrence (Case C‑449/21), ECLI:EU:C:2023:207, para. 21.
[4] A merger is unlawful under Article 102 TFEU if it is established that “the degree of dominance thus reached would substantially impede competition, that is to say, that only undertakings whose behaviour depends on the dominant undertaking would remain in the market.” Towercast v Autorité de la concurrence (Case C‑449/21), ECLI:EU:C:2023:207, para. 52.
[5] The devolutive effect of an appeal is the principle that transfers the entire scope of a lower court’s decision to a higher court for comprehensive review.
[6] Initial Ruling, para. 67.
[7] Initial Ruling, para. 72.