In this series of 4 short videos, Marie-Emilie Rousseau-Brunel and Flora Pitti-Ferrandi, partners at Vivien & Associés, explain their respective roles as employment and competition lawyers in the course of a typical private M&A transaction in France.
The first video deals with the employment and competition issues that are generally considered during the due diligence phase.
In employment law, this phase typically includes the preparation of a due diligence report on the compliance of the target company with French employment rules and the provision of a roadmap on how best to comply with such obligations in the future. It also identifies any mandatory pre-closing steps required under French employment law for the transaction.
In antitrust law, the phase can include some specific analysis on the compliance of certain commercial agreements (eg joint ventures, partnerships, distribution, etc) with competition rules. We also analyse the merger control filings that are required for the transaction, the so-called “multi-jurisdictional analysis”.
The second video discusses the possible mandatory pre-closing steps required for the transaction.
In employment law, there are two main mandatory pre-closing steps that can be triggered in a French M&A transaction. First, French labor law requires the provision of specific mandatory information and for consultation with the works council (the “CSE” in French) of any French company (with at least 50 employees) involved in a M&A transaction (buying, selling and/or target company). Second, some transactions (such as mergers, acquisitions, divestiture, etc.) in relation to mid-size French companies (as defined by French and UE regulations) require specific information to be given to each employee of the target company.
EU and French competition laws require pre-closing filings when two conditions are met: first, the transaction qualifies as a “concentration” and second, if it exceeds the applicable turnover thresholds. Even if EU turnover thresholds are not met, the transaction can potentially trigger multiple national thresholds within the EU. A coordinated approach throughout Europe is essential.
The third video concerns timing issues related to the mandatory pre-closing steps for the transaction.
In employment law, each company of at least 50 employees involved in the M&A transaction must inform and consult its works council prior to any formal decision is made by the legal representatives of said company in respect to the proposed M&A transaction. The CSE is required to give its opinion within one month although this can be extended to two or three months in certain circumstances.
In antitrust law, the merger filings are the responsibility of the buyer. They can only occur once the M&A transaction is sufficiently advanced to enable a proper antitrust review. Evidence as to the stage of the transaction can take different forms (eg agreement in principle, letter of intent, offer letter, put option with an agreed form of share purchase agreement, etc). Both the French competition authority and the EU Commission typically provide for an informal pre-filing phase followed by a 25 business days Phase I review period.
The fourth video describes the process for the mandatory pre-closing steps.
In employment law, the main process is the provision of information to, and consultation with, the works council. There are three main steps in this process. First, a timetable must be established that will coordinate the different meetings that must be held. Second, the information note must be drafted, which must provide sufficient, clear, and detailed information on the transaction. Finally, the opinion of the works council must be obtained. However, the works council’s opinion is non-binding and t the employer can close the consultation at the end of the legal timeframe if the employer considers it has provided all the required information.
In antitrust law, the process before the French competition authority and the EU Commission entails two main steps. First, there is a quasi-systematic informal pre-filing phase. This phase is completely confidential and its duration can vary depending on the information the authorities request. Once the authorities are satisfied with the information provided, the parties can officially file, and so trigger the formal 25 business days review period. During this formal phase, the authorities inform the market of the transaction and open a period for third party comments. The authorities must issue their clearance decision by the end of the formal review period.