FRANCE Law and Practice Contributed by: Bertrand Barrier, Anne Toupenay-Schueller and Cyril Deniaud, Jeantet
Authorisation requests are filed by the investor before the Office for the Control of Foreign Investments in France (which is part of the Ministry of Economy). The Office for the Control of Foreign Investments may then either authorise (with or without conditions) or refuse the investment. If a transaction is carried out without prior authorisa- tion, the transaction may be cancelled and subject to a penalty. In addition, the Ministry of Economy may notably: • suspend the voting rights attached to the invest- ment; • prohibit the distribution of dividends; • suspend the sale of any assets; or • appoint an agent responsible for protecting nation- al interests within the company. 7.4 National Security Review/Export Control French law does not provide for a national security review of transactions other than the foreign invest- ment screening regulations considered under 7.3 Restrictions on Foreign Investments . 7.5 Antitrust Regulations In France, transactions must be notified to the French Competition Authority ( Autorité de la concurrence ) when the companies’ combined turnover exceeds EUR150 million worldwide, and EUR50 million in France for at least two parties. It should be noted that thresholds are lower in retail. The procedure has two phases: • Phase 1 assesses whether the transaction raises competition concerns. If not, it is cleared. • Phase 2 allows a deeper investigation, if con- cerns exist. The French Competition Authority can approve the transaction, block it, or require rem- edies such as divestitures or behavioural commit- ments. At the EU level, transactions are controlled by the European Commission when they have an EU dimen- sion: combined global turnover above EUR5 billion and EU turnover above EUR250 million for at least two parties (unless most of the turnover is in one mem-
ber state). The process also has two phases: a short review and an in-depth review. The EC may authorise, prohibit, or condition its approval. The completion of a transaction before clearance (“gun jumping”) is strictly prohibited and can result in heavy fines. French companies employing at least 11 employ- ees must establish a works council ( Comité social et économique or CSE). The information and consulta- tion of the works council of companies having more than 50 employees is required for projects regarding the economic and legal organisation of the company (which includes the acquisition of shares of the com- pany). The procedure requires the filing of a memorandum, clearly and precisely explaining the proposed trans- action and its legal and economic impact on employ- ment. The works council must then issue an opinion, positive or negative, with or without the assistance of an expert. However, this opinion is not binding, as the works council does not have the right of veto. Penalties for non-compliance However, it is essential that the works council con- sultation procedure be completed before any bind- ing commitment to execute the transaction is agreed. Signing any commitment prior to obtaining an opin- ion constitutes a criminal offence of obstructing the actions of employee representatives and is heavily penalised. 7.6 Labour Law Regulations The Works Council Procedure Accordingly, standard corporate practice involves executing either a put-option agreement (where only the seller is required to complete the works coun- cil procedure) or a memorandum of understanding (where both parties must complete the works coun- cil procedure). Once the works council’s opinion has been obtained, the parties can proceed to sign the share purchase agreement.
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