Global menu

Our global pages

Close

Digital as a key priority for French Competition Authority

  • United Kingdom
  • Competition, EU and Trade
  • Corporate
  • Technology
  • Technology, Media and Telecoms

31-07-2020

On 9 July 2020, the President of the French Competition Authority (“FCA”) Isabelle de Silva presented to the press the annual activity report of the FCA for 2019.

Last year was marked by a strong merger control activity with no less than 270 clearance decisions, a new record. On the behavioural side, in 2019 the FCA imposed €632 million in fines, almost three times more than in 2018. It should however be noted that out of the €632 million of fines, €623 million were imposed in only three cases:

  • 415 millions in the restaurant vouchers cartel (Edenred France, UP, Natixis Intertitres and Sodexo Pass France);
  • 58,3 millions in the compote cartel (Materne, Andros, Conserves France, Délis/Vergers de Châteaubourg, Charles Faraud/Charles&Alice and Valade); and
  • 150 millions on Google for abusing its dominant position in the online advertising sector.

On merger control, Isabelle de Silva indicated in the report that the current crisis was going to change the landscape of mergers in the long term and that “we will undoubtedly see restructuring movements in the sectors most affected by the crisis. Consolidating acquisition policies, particularly on the part of the major platforms, which have been much less affected by the crisis, require more than ever careful and reinforced supervision. In this respect, this new context could justify supplementing the national and European framework to ensure that acquisitions by dominant or structuring companies are not made without the regulator's right of oversight”.

The President then echoes to the Competition Authority's contribution of 21 February 2020 which recommended providing the FCA with new tools to enable it to review transactions "below the thresholds". The FCA proposed (i) the introduction of an obligation to inform the competition authorities concerned of all mergers by “structuring” operators (if the transaction involves competitive risks, notification could be required) and (ii) the introduction of a power of the competition authorities to order a notification (ex post or ex ante) for deals under the notification thresholds if they meet certain pre-defined conditions which may give rise to competition concerns.

In that regard, a bill is currently being discussed and provides for the introduction of specific ex ante merger control for structuring undertakings (to be defined by the French Competition Authority). Structuring undertakings will have to notify any concentration operation within one month of its implementation. The FCA may then, within this period, at its discretion, require the undertaking to notify the concentration. Finally, It will be up to the structuring undertaking to prove that the acquisition in question is not harmful to competition (reversal of the burden of proof).

To date, the Bill provides the following:

“I. - The Competition Authority shall draw up a list of structuring undertakings.

"To determine whether an undertaking is a structuring undertaking, the authority takes into account, at the French and European or global levels, several of the following indices: its dominant position on one or more markets, in particular multisided markets, the number of single users of the products or services it offers, its vertical integration and its activities on other related markets, the benefit it derives from large network effects (“effets de réseau”), its financial valuation, its access to data essential to access a market or the development of an activity, the importance of its activities to third parties market access and the influence it exerts on the activities of third parties.

"II. - The structuring undertakings mentioned in I of this Article shall inform the Competition Authority of any merger within the meaning of Article L. 430-1 likely to affect the French market within a period of one month prior to its implementation.

"III. - The Chairman of the Competition Authority or a Vice Chairman designated by him may enjoin a systemic undertaking, mentioned in I of this Article, that is party to a merger to submit it, prior to its completion, to the procedure provided for in Articles L. 430-3 to L. 430-10 [merger control filing].

"IV. - When the Competition Authority initiates an in-depth examination of a transaction notified pursuant to this Article, the structuring undertaking must provide proof that the transaction is not likely to harm competition." ;

[…] "They also have access to the principles and methods of algorithm design as well as to the data used by these algorithms."

On the merits, Isabelle de Silva indicated, on 8 July during a Concurrences event, that competition authorities should look at data collection and access to data (how it will be used) in merger control reviews and not focus so squarely on market definition. Reviewing relevant markets and then looking at potential horizontal and vertical issues could be lacking when it comes to concentrations in the digital economy.  She indicated, about the European Commission’s 2014 review of Facebook/Whatsapp, that because of this, “we missed the risk that data could be collected in all markets and could be used in a more global way

On the abuse of dominant position from digital “platforms”, the President of the FCA said during the Centre on Regulation in Europe (CERRE) webinar on 11 June 2020 that:

  • the digital economy could present new forms of dominance where a company holds a low market share but competition among market players is weak;
  • notions such as a user community or a company's business strategy could be put to better use to define dominance in cases involving digital markets;
  • the dynamics of the digital world make it even more difficult to use the notion of essential infrastructure, which may require a new category of dominance; and
  • this new category of dominance could be a category of intermediary market power, before the point of dominance, that could be applied to platforms.

In light of the above, digital platforms appear to be more than ever in the spotlight of competition authorities in France and more generally in the EU, whether for their acquisitions or with regards to their commercial practices.