Competition Newsletter August 2018

Author:Ms Emmanuelle van den Broucke
Profession:Dentons
 
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The Minister of Economy intervenes to authorize the takeover of William Saurin by Cofigeo without divestment of assets

For the first time since the reform of the merger control system in 2008, the Minister of Economy used his evocation power to overrule the French Competition Authority's decision and required from Cofigeo commitments intended to preserve employment.

In this case, the context is doubly unusual since the French Competition Authority was referred to for authorization after Cofigeo's effective takeover of the "ready meals" pole of the Agripole group (William Saurin, Panzani, Zapetti, Garbit, etc.) For the record, the Financière Turenne Lafayette group, which headed the Agripole group, had been placed in great difficulty following the death of its president and main shareholder revealing the falsification of the group's accounts. Following the dismantling of the group, Cofigeo asked to benefit from the concession for companies subject to insolvency proceedings. When a target is experiencing serious economic difficulties, the French Commercial Code provides for a derogation from the suspensive effect of the notification which allows the companies to complete effectively all or part of the transaction without having to wait for the French Competition Authority's authorization.

However, this derogation does not deprive the French Competition Authority from the possibility to refuse or provide conditions for the takeover a posteriori. As the new entity would become the market leader in canned ready meals, the transaction was deemed to raise competition concerns. After conducting an in-depth examination of the transaction, hearing all the parties and market players, the French Competition Authority cleared the takeover subject to conditions. In order to protect consumers from price increase risks, the French Competition Authority ordered Cofigeo to sell its brand Zapetti and a production site to a third-party operator. This type of post-transaction measure is very rare, as this is only the second time the Authority has used its power of injunction in the context of a merger authorization and has forced a divestment of assets.

Even rarer, the Minister of Economy decided to use his evocation power. Since the analysis of the merger control was taken away from him and given to the French Competition Authority in 2008, the Minister of Economy has retained the possibility to rule on the transaction in issue when it has a strategic nature...

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