DAMITT 2023 Year in Review: Merger Control Trends in Germany and France

According to the announcements made President Benoît Cœuré during his New Year address to economic stakeholders,¹¹ merger control activity promises to remain robust in 2024. To address this surge, President Cœuré announced his plan to increase merger control thresholds to account for cumulative inflation, which has been significant since the last reform of the thresholds in 2008.

While it is true that the number of deals that will have to be notified to the FCA may decline because of these changes, parties should keep in mind that the FCA is also considering alternative enforcement avenues. For example, President Cœuré has confirmed that the FCA may rely both on Article 22 of the EU Merger Regulation, which allows the French enforcer to refer deals below the thresholds to the European Commission, and on the Towercast precedent,¹² which confirms that national competition authorities can also address mergers under Article 102 TFEU (abuses of dominance), to make sure potentially problematic deals are reviewed, irrespective of the parties' turnover. The FCA may therefore soon follow in the footsteps of the Belgian Competition Authority, which is the first national competition authority to have applied the Towercast case law so far.¹³

Simultaneously, the FCA has announced a strategic emphasis on AI and the digital sector as a whole, planning to closely monitor the implementation of the Digital Markets Act (DMA) by large online platforms. As summarized in its 2024-2025 roadmap,¹⁴ the FCA promised to use "all the tools available to control merger transactions (using, if necessary, appropriate remedies or, in their absence, prohibiting such transactions" and may not hesitate to refer deals to the European Commission under Article 22.

Finally, 2024 will see a change in leadership for merger enforcement at the FCA. Etienne Chantrel, who has been the head of the merger unit at the FCA since 2017, will be leaving at the end of March. His replacement has not been announced yet but speculations run high as to whether President Cœuré, who comes from a pro-business background, will appoint someone with a different take on enforcement. Any drastic change in the FCA's approach remains unlikely, but is certainly possible.

When planning transactions that may attract antitrust scrutiny, parties should be prepared for extensive pre-filing discussions with enforcers (the impact on timing may differ between jurisdictions). After a peak in 2022, there was a decline in the average length of Phase II merger investigations in Germany in 2023, returning to durations more in line with those observed in prior years. Conversely, for the third consecutive year, France saw Phase II reviews reach record-breaking lengths in 2023. The steady increase in the average duration of Phase II reviews over the past four years indicates that the environment for parties to transactions may become even more challenging in the future, underscoring the need for careful planning and strategic foresight while keeping an eye on the clock.

The evolving outcome of investigations also poses challenges. Merging parties should not be fooled by the seeming relaxation of competition authorities' scrutiny. While the FCO eventually cleared all six of the Phase II transactions it reviewed, two required remedies and two of the four remaining unconditional clearances were pulled and refiled. In France, in addition to four cases leading to Phase I remedies and one unconditional clearance in Phase II, the parties were compelled to withdraw their filings to avoid a formal prohibition in two instances. The absence of formal prohibitions should not be any more comforting to those considering deals subject to review in France.

Finally, companies also need to be aware of the new tools that the agencies now have at their disposal to target potentially problematic deals. In France, the FCA has made it clear that it will use the opportunities afforded by the European Court of Justice in the Towercast case to assess non-reportable mergers under Article 102 TFEU. And in Germany, the FCO has been equipped with new tools in the context of the 11th amendment to the GWB. It remains to be seen in the coming years how these tools will impact overall enforcement statistics going forward.