Prospective
The competitive assessment is forward-looking: the Autorité considers competitive risks based on a plausible economic scenario, including both the situation at the date of the decision and subsequent developments.
Standard
The legal test: whether the operation is capable of harming competition, notably by creating or strengthening a dominant position or buyer power placing suppliers in economic dependency (Art. L 430-6).
Rare
The economic progress/efficiency defence is very rarely decisive: in most cases the competitive balance is either positive, or addressable by commitments, or the harm is so severe that no efficiency gain could compensate.

The Purpose and Standard of the Substantive Review

The substantive assessment of a concentration aims to characterise its competitive risks through a forward-looking analysis based on all relevant data and a plausible economic scenario (CE, 21 December 2012, n° 362347, Groupe Canal Plus). The Autorité systematically begins by defining the relevant market in terms of the products or services concerned and its geographic extent. It then assesses whether the transaction is capable of harming competition, notably through the creation or strengthening of a dominant position or buyer power placing suppliers in economic dependency (Art. L 430-6, al. 1). This standard applies formally to Phase 2 decisions; the Phase 1 "serious doubt" criterion is assessed against the same notions.

Product and Service Market Definition

The relevant market is the place where a specific supply and demand meet. The Autorité draws on the decisional practice of European and national competition authorities, and of sector regulators, and verifies its continued relevance against recent market developments (including new products, internationalisation, and technological change). The market is defined primarily from the demand side: it encompasses all products or services that consumers consider substitutable (LD-AdIC § 512).

Demand Substitutability Criteria (LD-AdIC §§ 519–561)
▶Physical characteristics: products with identical physical characteristics that are used differently may be in distinct markets (e.g. disposable vs. refillable writing instruments); products physically different but serving the same function may be in the same market (e.g. alluvial and rock-quarry aggregates for the same construction use: Aut. conc., n° 10-DCC-98, 2010, Eurovia/Tarmac).
▶Commercial strategy: price differences, brand image, and distribution channel differences (manufacturer brands, distributor brands, hard discounter brands, first-price brands) can each support distinct market definition.
▶Legal and regulatory environment: a sector-specific norm or regulation can alter consumer behaviour or barriers to entry in ways that define a distinct market.
▶SSNIP test (hypothetical monopolist test): from the price elasticity of demand, the Autorité tests whether a hypothetical 5–10% price increase would cause sufficient consumer switching to products outside the candidate market to make the increase unprofitable. If yes, the market must be widened. The test is iterated by progressively adding the nearest substitutes (LD-AdIC § 553). Note the cellophane fallacy: where the candidate market is already monopolised, the current price is already at the monopoly level, so any further increase reduces profit — leading to spurious market widening. The test is only valid where pre-existing prices are competitive.
▶Diversion ratios and price correlation: alternative quantitative methods include calculating diversion ratios from market shocks (new competitor entry, new product launch, exchange rate changes) and price correlation analysis (at least two years of monthly data, corrected for seasonality and common cost factors).
▶Supply-side substitutability: where suppliers on one market segment can rapidly and easily switch to another segment, the two may be treated as a single market (e.g. where producers are simultaneously present on both segments, or can quickly adapt their offering: Aut. conc., n° 11-DCC-141, 2011, groupe 3M/Gergonne). Supply-side substitutability is relevant either at the market definition stage or in the assessment of potential competition.

Geographic Market Definition

The geographic market is the territory on which supply and demand can in practice interact for the defined product or service. The Autorité considers a range of factors: catchment area distances (in retail and services: time/distance to the store or service point); customer category characteristics (SMEs vs. multinationals); technical constraints on supply (implantation requirements for proximity to loading points in road transport); legal and regulatory constraints (national regulatory licensing requirements making the market national even where services are internationally procured); transport costs (high transport costs narrow the market; low transport costs allow international markets); and customer preferences (food products: national markets due to local taste and habit variations — Min. éco., 15 July 2004, aff. C 2004-112, Smithfield/Jean Caby).

Market Concentration and Shares

After defining the relevant market, the Autorité assesses the degree of market concentration. It uses the same tools as the European Commission, including the Herfindahl-Hirschman Index (HHI). Market shares of the parties and their competitors are analysed in value (euros) or volume (e.g. retail floor area or number of points of sale), based on the most recent available data. In retail, the Autorité assesses the market power of distribution groups including not only directly owned stores but also franchised stores where the franchisees' commercial policy is not sufficiently autonomous from the franchisor.

Beyond market shares, the Autorité then assesses competitive pressures — barriers to entry, potential competitors, and demand-side countervailing power — and internal market characteristics: enterprise characteristics (cost structures, margins, production capacity, competitive behaviour); product and service characteristics (position in the production chain, logistical constraints, differentiation); buyer and supplier characteristics; and market structure (regulatory framework, transparency, contract duration, distribution exclusivity, switching costs, two-sidedness).

Competitive Effects: The Three Types

Horizontal Effects Overlapping Activities

Where the concentration combines parties active on the same market, the primary risk is that the merged entity gains sufficient market power to act independently of competitive pressure — raising prices, reducing volume, quality, or variety unilaterally (unilateral effects). The most serious form is the creation or strengthening of a dominant position. Even below dominance, the disappearance of a « maverick » competitor can shift market equilibrium upward (Cons. conc., n° 06-A-20, 2006, Pan Fish/Marine Harvest).

A small addition of market share (less than 1%) to a very high initial share (>70–80%) may not constitute a « significant reinforcement » of a dominant position (Aut. conc., n° 12-DCC-02, 2012, Unéal/Hubau/Sicapa). GUPPI and UPP tests for horizontal effects: Aut. conc., n° 14-DCC-57, 2014, Orlait/Terra Lacta.

Coordinated effects: three conditions (Airtours criteria, confirmed CE 31 July 2009, n° 305903): market transparency enabling monitoring; a credible deterrent mechanism; and absence of effective challenge. Example of coordinated effects leading to prohibition: Aut. conc., n° 20-DCC-116, 2020, Soditroy, confirmed CE 14 October 2022, n° 445680.

Vertical Effects Different Levels of Value Chain

A concentration combining parties at different levels of the production or distribution chain does not produce a market share addition, but may raise competition concerns through market foreclosure: the merged entity could deny competitors access to an upstream input or downstream outlet (input foreclosure or customer foreclosure).

Analysis: the Autorité examines the merged entity's market power, the ability of competitors to react, potential competition, and buyer countervailing power; and then the credibility of specific foreclosure strategies (LD-AdIC §§ 677 et seq.). Example: Aut. conc., n° 15-DCC-104, 2015, Rubis/SRPP.

Positive effects of vertical concentrations (double marginalisation elimination) are a potential efficiency gain that may counterbalance concerns.

Conglomerate Effects Complementary Products/Markets

A conglomerate concentration combining activities in complementary but not directly competitive markets may create competition concerns if the merged entity uses its position in one market to leverage competitors out of another (e.g. through tied sales). Such effects often have short-term pro-consumer effects (synergies, scale economies) but become negative where competitors are progressively excluded.

Analysis: market power in the leveraging market, competitors' ability to react, entry barriers, and the credibility of a foreclosure strategy through tying (LD-AdIC §§ 711 et seq.). Example: Aut. conc., n° 17-DCC-12, 2017, Ecolab/Anios (prohibition on bundled sales as remedy).

Buyer Power

A concentration can reinforce the buyer power of the merged entity to the point where it places suppliers in a situation of economic dependency (Art. L 430-6, al. 1). These analyses arise primarily in the large-scale retail sector. Example: the Autorité assessed and ultimately dismissed the risk that a concentration between two food wholesalers could create or reinforce buyer power creating economic dependency among food suppliers (Aut. conc., n° 17-DCC-11, 2017, Métro AG/Colruyt France). In the overseas territories, buyer power concerns played a role in the GBH/Vindemia authorisation under commitments (Aut. conc., n° 20-DCC-72, 2020).

Economic Progress: The Efficiency Defence

Where competitive harm is identified, the Autorité can take into account whether the transaction makes a sufficient contribution to economic progress to offset the harm (Art. L 430-6, al. 1; LD-AdIC §§ 767 et seq.). The burden of proof is on the parties to build a substantiated and quantified argument demonstrating that the efficiency gains are capable of counterbalancing the anticompetitive effects.

Recognised Forms of Economic Progress

Cost savings (scale effects; productivity gains); economic benefits for society (broader economic spillovers); improved innovation capacity and R&D resources; improved international competitiveness; gains specific to vertical concentrations (double margin elimination); gains specific to conglomerate concentrations (scope effects).

Conditions for a Positive Balance

All four must be satisfied (LD-AdIC § 770): efficiency gains must be quantifiable and verifiable; specific to the concentration (no less anticompetitive alternative way to achieve them); at least partly passed on to consumers and the wider economy; and strong enough to counterbalance the competitive harm. Speed of realisation matters: gains further in the future are given less weight.

Why the Efficiency Defence Almost Never Decides French Merger Cases

The efficiency defence is theoretically available but practically rare as the decisive factor in French merger control. In most cases, either the competitive balance is positive without reaching the Phase 2 threshold, or identified concerns can be addressed through remedies, or the harm is so severe that no plausible efficiency gain could compensate. The parties must build a quantified, verifiable, transaction-specific argument — a high evidential burden in the context of a concentrated administrative review process.

The Failing Firm Exception

Where a concentration involves an enterprise that would disappear in the short term without the transaction, the Autorité may authorise the operation even if it harms competition (LD-AdIC §§ 785 et seq.). The analysis is stringent: the Autorité must be satisfied that the assets of the failing enterprise would in any case leave the market, that the acquisition does not produce competitive harm exceeding what would have occurred without it, and that there is no less anticompetitive alternative purchaser available. For enterprises subject to insolvency proceedings, the Autorité also permits derogations from the standstill to allow emergency rescue acquisitions.

Special Rules: Retail, Distribution Networks, and E-Commerce

Retail Sector

Retail concentrations receive dedicated attention (LD-AdIC §§ 800 et seq.). The Autorité defines retail markets using catchment areas based on the distance or travel time of customers. In grocery retail, it separately analyses the acquisition market (purchasing from suppliers) and the sales market (to consumers) at the local level. Franchise stores are assessed on whether the franchisees' commercial policy is sufficiently autonomous.

Distribution Networks

Where a concentration involves distribution network participants (franchisors, selective distribution system operators), the Autorité analyses the effects at each level of the chain separately and the combined vertical effects. Franchise termination can itself be used as a structural remedy.

E-Commerce and Online Sales

Online sales receive specific attention (LD-AdIC n° 9625 et seq.). The Autorité has examined whether online and physical retail channels are substitutable from the demand side (the answer varies by product type), and whether digital platforms create two-sided market dynamics that require specific analytical approaches. The emergence of influencer content monetisation markets has also been examined (Aut. conc., n° 19-DCC-94, 2019, Webedia/Eléphant).

Practical Guidance for the Substantive Assessment Stage
Define relevant markets at all possible segmentation levels, including the narrowest, and submit market share data for each segmentation across all parties and their main competitors. Market definition is the most frequent cause of incomplete notifications and of Phase 1/Phase 2 divergence.
Supply-side substitutability can expand a market and reduce apparent market share concentrations — but it must be credibly demonstrated, not merely asserted. Show that suppliers can actually switch rapidly and at low cost, with specific evidence from the industry.
Geographic markets in retail are inherently local: do not assume national market definition in retail without testing catchment areas. The Autorité will conduct a store-by-store, zone-by-zone analysis for retail transactions in any store acquisition scenario.
The GUPPI and UPP tests are now standard tools for horizontal assessment when products are differentiated. If the transaction involves meaningful horizontal overlaps in differentiated markets, prepare quantitative analysis early and submit economic studies in compliance with the Autorité's methodological requirements.
Coordinated effects analysis requires the three Airtours criteria. Do not concede collective dominance risk without specifically challenging each criterion: transparency, deterrence mechanism, and absence of effective challenge. Many oligopolistic markets do not meet all three.
For vertical concentrations, the positive double-marginalisation effect is a real efficiency argument — but it must be quantified and shown to be passed on to consumers, not merely retained by the merged entity.
The failing firm exception requires a high evidential standard. Evidence of imminent exit from the market, inability to restructure without acquisition, and absence of a less anticompetitive alternative buyer must all be documented concretely — not asserted as a general claim of financial difficulty.
Economic progress contributions that are not passed on to consumers and the broader economy are not sufficient. Gains that benefit only the merging parties do not satisfy the Art. L 430-6 test. Build the pass-on argument explicitly into any efficiency submission.
Preparing a Substantive Competition Analysis for a French Filing?

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This article is for general information and educational purposes only. It does not constitute legal advice. References to LD-AdIC (July 2020) and case law reflect sources available as at the date of publication. Always seek qualified legal advice for your specific transaction.