35 THE FAILING FIRM DEFENCE The criteria of case law in order for it to apply: • the short-term exit of the acquired company; • the absence of alternative supply that is less harmful to competition; • the exit of the company in difficulty would be no less harmful to consumers than the planned takeover. FUTURE CONSEQUENCES OF probably be an increased level of concen- THE PANDEMIC ON MARKET tration in markets, insofar as some firms STRUCTURES will undergo financial distress and exit the market. Next to market exit, concentration An OECD study anticipates that "a struc- will be favoured by M&A activities driven tural consequence of the economic crisis by companies seeking to improve their triggered by the Covid-19 pandemic will condition by merging with healthier com- petitors. As a result, competition authori- ties will be called to scrutinise a number of urgent and critical mergers, including alleged “rescue mergers”, i.e. acquisitions The legal deadlines of firms that may be facing bankruptcy. constraints due to the state of In this context, merger control may play for merger control emergency relating to the corona pose genuine crisis, which also weighed heavily a key role in preventing transactions that challenges in times on our teams. would result in long-lasting harm to mar- of pandemic. ket structures" (OECD Competition Policy What solutions What are the main Responses to Covid-19, 27 April 2020). have been put in trends you are place to facilitate observing in terms of In cases where the targeted firm would the examination quality and quantity have exited the market in the absence of of transactions this year? the merger, the merger may sometimes be in this context? allowed to proceed despite the increased In 2020, compared to previous market power of the new entity. Conse- The Autorité has a permanent years, the number of mergers quently, the challenge is to carefully verify policy of supporting companies decreased overall as a result of that the "failing firm defence” is indeed in their reasonable requests and the crisis: 195 merger decisions of taking their constraints into compared to 270 in 2019. applicable in order to avoid a lasting nega- account. In 2020, the legal and The pattern during the year tive impact on the structure of the French regulatory deadlines set out in was very marked with a collapse market in question. Articles L. 430-5 and L. 430-7 in notifications between March of the French Commercial Code and June, followed by a strong (Code de commerce) were rebound at the end of the year. suspended, from 12 March As regards the type of 2020 to 24 June 2020. However, transactions, there has been no the Autorité decided to make global revolution in the type of every effort to maintain the cases submitted to the Autorité. usual deadlines, without taking Nevertheless, 2020 was marked advantage of this shift in the legal by a significant number of cases, deadlines, and continued to do its especially in the retail sector utmost. (clothing), concerning companies in difficulty that were taken over As such, between 18 March 2020 in the context of insolvency and 18 May 2020, 25 mergers proceedings and therefore were cleared, within an average benefited from a derogation from of 22 workdays, including the standstill effect of merger significantly large transactions. control. This rapid effort was maintained ÉTIENNE CHANTREL throughout 2020, despite the Head of the Mergers Unit of the Autorité de la concurrence REINVENTING OUR MEANS OF ACTION V I E W P O I N T