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Foreign investment monitor

France uses expanded powers to block two deals

While prohibition cases in Europe have remained rare so far, the end of 2020 and beginning of 2021 saw the French government block two deals in quick succession under its strengthened and expanded foreign investment review regime.

The proposed acquisition of France’s leading retailer, Carrefour, by Canadian Convenience store chain Couche-Tard was nipped in the bud by French Minister of Economy Bruno Le Maire. Just days after the bid was announced he sent a “courteous, clear and definitive no” to the Canadian group, before any formal notification on the investor’s side. By considering the proposed transaction between two food retail groups as involving a strategic sector on the basis that it impacted France’s food security, the government showed its willingness to adopt a broad interpretation of its ever-growing list of strategic sectors, thereby expanding its reach to “several thousands of companies,” as acknowledged by M. Le Maire.

woman shopping

Bruno Lemaire blocked Canada’s Couche-Tard from acquiring retailer Carrefour

By contrast, the prohibition of the acquisition of military solutions pioneer Photonis by US defense manufacturer Teledyne was not so clear-cut. The decision ended a tumultuous saga after almost a year of negotiations between the French government and the US conglomerate. Initially, the government was focused on designing a package of commitments for Teledyne which would protect France’s strategic interests while preserving its economic attractiveness. And by the end of 2020, Teledyne had finally agreed to a set of stringent conditions, notably granting a minority shareholding interest and veto rights to the French public investment bank, Bpifrance. Yet, the government, through Defense Minister Florence Parly, announced a U-turn at the last minute, concluding Photonis’s activities were too strategic to be managed by a non-French player, irrespective of any potential commitments. Photonis was subsequently acquired by HLD, the French investment group, for €370m, much less than the €500m Teledyne was initially offering.

Both cases illustrate France’s clear commitment toward favoring the protection of its national interests over its economic attractiveness, particularly in the context of the pandemic. From a practical perspective, future foreign investors will have to face a government with increasingly broad and flexible review powers targeted at protecting the French national interest.