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Below-Threshold Mergers: France and Other EU Countries Contemplate Call-In Powers
Below-Threshold Mergers: France and Other EU Countries Contemplate Call-In Powers
20 May 2025
The CJEU’s ruling in Illumina/Grail struck down the European Commission’s extensive interpretation of Article 22 EUMR, which had allowed referrals of transactions that did not meet national or EU merger control thresholds. In the wake of the ruling, the EC called upon EU Member States to adjust their merger control rules. For example, on 10 April 2025, the French Competition Authority (FCA) announced its intention to introduce a call-in mechanism in France.
In this blog post, we delve into recent developments across EU countries and in particular France where we examine the proposal for call-in powers in more detail and highlight the pivotal elements that need to be further defined to provide companies with more predictability and legal certainty.
Background
The contemplated French proposal is not isolated. It coincides with a growing appetite across Europe to expand national merger investigation tools to capture potentially harmful below-threshold transactions.
In recent years, regulators across the EU have voiced concerns about “killer” acquisitions, namely acquisitions of nascent competitors with little or no turnover but significant competitive potential. These transactions typically escape ex-ante merger control review because the target’s turnover falls below the EU and national jurisdictional thresholds. This led the EC to issue new guidance on the interpretation of the referral mechanism under Article 22 EUMR, to plug this perceived enforcement gap. The EC also encouraged EU Member States to refer transactions to the EC, including when they do not meet the national merger control thresholds. Following Illumina/Grail, which invalidated referrals by EU Member States lacking jurisdiction to review the transaction, the EC now relies exclusively on referrals from EU Member States with such jurisdiction. This shift has prompted calls for EU Member States to widen their enforcement toolbox, with the introduction of call-in powers emerging as the preferred option.
While ten EEA Member States already have call-in mechanisms, others including Belgium, Czechia, Finland, Greece and the Netherlands are considering the introduction of similar tools. In March, the Netherlands launched a public consultation on a proposed call-in mechanism, which would grant the Dutch competition authority (ACM) the discretion to call in transactions where the concentration could significantly affect competition. The draft legislation remains subject to change, and once it comes into force, the ACM is expected to issue guidance on the criterion for its intervention.
These call-in mechanisms inherently result in greater uncertainties for companies compared to traditional turnover thresholds and add another layer of complexity. They paradoxically run counter to broader regulatory trends aimed at simplifying and reducing administrative burdens for merging companies voiced in recent EU developments (e.g., EU’s 2023 Merger Simplification Package and 2024 Draghi report).
The French proposal
The FCA is working on a proposal based on the following criteria:
- quantitative criteria: a turnover threshold easily assessable;
- a local nexus in France;
- qualitative criteria: risk to competition on French territory; and
- short and defined deadlines.
Balancing Effective Control and Legal Certainty
While a call-in power is an effective tool to catch potentially harmful transactions that might otherwise escape scrutiny, it comes with challenges in terms of predictability and legal certainty.
Effective Control
- Efficient use of administrative resources – The introduction of call-in powers, alongside the proposed increase in French merger control thresholds (from €50 million to €80 million), currently under discussion before the French Parliament, would lead to a more efficient allocation of FCA resources. Taken together, these changes should allow the FCA to focus on the potentially most harmful transactions by reducing, at least in theory, the number of reportable notifications.
- “Clear” criteria – The FCA’s proposed quantitative criterion (i.e., turnover threshold) is a useful starting point to mitigate legal uncertainty. However, the FCA’s recent statement that the turnover threshold would be “cumulative” for all entities involved would undermine this objective, as it would lead to a systematic risk of call-in for companies with significant turnover in France. In the same vein, clear, objective, and predictable criteria with respect to qualitative criteria (in particular, the risk to competition in France) would be needed to ensure greater legal certainty and predictability.
- Local nexus – A local nexus requirement is particularly welcome, though it would need to be clearly defined to ensure call-in powers are limited to transactions with a material and direct nexus to France, thus excluding transactions with only a marginal, indirect or potential connection with French territory.
- Procedural safeguards – The FCA has committed to setting “clearly defined and short enough” deadlines for its intervention, starting “as soon as possible after the closing” to increase legal certainty and predictability for companies. However, the FCA has yet to define the exact timeframe for its intervention. Ideally, this should be no later than the closing date and within a short timeframe, in line with the shortest timeframes in other EEA countries (e.g.,15 days in Iceland and 60 days in Ireland).
Call for More legal Certainty
- Safe Harbour. Safe harbour thresholds, as already in place in Hungary and Italy, would provide greater legal certainty and would be key to minimising the number of precautionary consultations or filings.
- Sector-Specific Application. Call-in powers in other EEA Member States have been applied across a wide variety of industries, extending beyond the “innovative” sectors (e.g., digital or pharmaceutical sectors) typically associated with such mechanisms. Narrowing the scope to specific sectors (similar to Lithuania’s focus on online advertising) might reduce uncertainty while maintaining the mechanism’s effectiveness.
- Harmonisation Across the EEA. Call-in powers vary widely across EEA countries, creating further uncertainties and resulting in significant diversion of legal costs and business resources to identify transactions potentially subject to call-ins and to navigate a variety of procedures. Aligning procedural requirements with existing regimes in the EEA would reduce costs and ease the burden on companies involved in cross-border transactions. The proliferation of various call-in powers across the EEA raises questions about the need for greater cooperation and harmonisation.
- Interaction with the Ex-Post Review. A legal guarantee that the FCA will not subsequently review transactions subject to call-in via ex-post review under Articles 101 and 102 TFEU, following prior consultation with the FCA, would be crucial to ensure better legal certainty and predictability.
Next steps
The FCA intends to submit its proposal during 2025, which will then require formal approval by the French Parliament. The definition of qualitative criteria and the accompanying guidelines will be pivotal in mitigating risks for businesses.