FRANCE
Canal Plus—Or Minus?
No more monsieur sympa—Mr. Nice Guy—at the Autorité de la Concurrence, France’s antitrust watchdog. In September the AdC shocked the
French corporate world by withdrawing its 2006 authorization
for the merger of France’s two largest pay satellite television
providers—CanalSat, owned by market leader Canal+ Groupe,
and Télévision Par Satellite (TPS). The AdC said that the companies failed to uphold several conditions required for approval
of the deal. The authority gave Canal+ a choice: dismantle the
merger, or apply for authorization again.
Canal+ reapplied in October, and also filed an appeal
with the Conseil d’État, the
highest judicial review body in
France. While there is no time-line for the appeal, the AdC will
likely make a new decision by
March, this time taking into account the changes to the satellite TV market since 2006. And
because of the alleged noncompliance, the AdC will likely impose stricter conditions.
Because this is the first time
that the antitrust agency has
invoked its power to withdraw
a merger authorization, some
lawyers think that the AdC may
be planning to take a more assertive stance on enforcement.
“This decision is going to
have major implications in
France, and it shows that the
competition authority is not
afraid to take a strong posi-
tion against those who do not
fully comply with their commit-
ments,” says Matthieu Adam,
a partner at Fasken Martineau Dumoulin in Paris who spe-
cializes in French and E.U. antitrust cases. “And not only in
merger control—it could extend to abuse of dominant position
cases as well.”
In a press release Canal+ called the AdC’s ruling “dispro-
portionate,” and said that several of the merger conditions
should have been revised to take into account technological
changes that have occurred over the past five years. Pascal
Wilhelm of Wilhelm & Associés, who is representing Canal+
in the case, said in an e-mail that these changes have worked
against his client.
Wilhelm added that Canal+’s arguments will be based on
the “process followed by the authority, the violation of fundamental rights, and the disproportion of the decision compared
with the claims against Canal+.” Vivendi SA, which owns Canal+, is being represented by Bird & Bird in Paris.
In its own press release, the AdC said that because the
merger created a pay-television monopoly, it attached condi-
tions to its approval in order to allow other businesses—name-
ly telecommunications companies—to gain access to program-
ming, and thus be able to compete with Canal+. The AdC said
that the company failed to uphold ten of the 59 conditions in
the authorization. In particular, Canal+ was supposed to make
seven of its own programming channels (mostly movie chan-
nels) available to its competitors, and to maintain the quality
of those channels. But the company didn’t make the channels
available until later than agreed. As a result, Le Nouveau Ca-
nalSat (as the merged provider
was named) had an advantage in
capturing former TPS custom-
ers because only it offered the
channels in question. The AdC
also said that Canal+ failed to
comply with commitments con-
cerning its relationships with
independent and third-party
operators regarding the acquisi-
tion of broadcasting rights.
While the punishment
(which also included a € 30
million fine) surprised French
observers, Canal+’s noncompliance did not. The Conseil
Supérieur de l’Audiovisuel,
France’s audiovisual media authority, previously documented
the damage caused by Canal+’s
delayed access when it found
that 90,000 TPS customers
migrated to the new CanalSat
service before any third party
could even make a competing
offer. And last year, AdC chairman Bruno Lasserre gave a
speech saying that the authority
would be especially attentive to
merger conditions.
French law gives the AdC the power to force compliance
through injunctions, or to withdraw the merger authoriza-
tion. The AdC said it chose the latter because an injunction
would have not resolved past violations, and also because the
breached conditions were essential to the merger authorization.
It cited “negligence . . . and a repeated lack of diligence and ill
will from Canal+.”
Eric Morgan de Rivery, a competition partner at Jones Day
in Paris and Brussels, says, “I have the impression that the au-
thority felt that it had been taken in, and they wanted to make
an example out of [Canal+].” Morgan de Rivery, who has rep-
resented clients before the AdC and E.U. courts, adds: “I’m
reluctant to say this is a new strategy, because this is such an
extreme case. But it’s a good way for the authority to make it
known that their decisions must be complied with, and that no
one can fool around with them. Those who are filing a merger
application will certainly look at it twice before agreeing to
stringent commitments.” — Mike Elkin
French antitrust regulators say
that one of the country’s leading
media companies failed to follow
the conditions for a merger.
