Emmanuel Macron, as Minister and President: a rather positive competitive record in competition law

Audran, Franck; Behar-Touchais, Martine; Buy, Frédéric; Chaiehloudj, Walid; Choffel, Antoine; Harnay, Sophie; de La Rosa, Stéphane; Pelé, Sophie; Provost, Marion; Thill-Tayara, Mélanie

What is the competition balance sheet of Emmanuel Macron, Minister of the Economy and then President of the Republic? It is remarkable that Emmanuel Macron had a very strong reforming will in competition and distribution law, by opening markets (regulated professions, bus transport, rail transport...), by protecting the weakest operators (farmers, members of distribution networks when they are subject to too restrictive clauses, ...), and now, by wanting to reindustrialize and restore France’s autonomy (especially in the field of health). While the results of this policy remain contrasted, it sometimes takes several attempts to achieve the expected result (see Egalim and Egalim 2), and there is a lack of hindsight on certain reforms. However, at the time of the assessment, we can speak of a rather positive result.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article.

Introduction, Martine Behar-Touchais, Professor, University of Paris 1 Panthéon-Sorbonne, Former member of the College of the Competition Council
The liberalization of bus transport: A mixed picture, Stéphane de La Rosa, Professor of Law, Université Paris-Est Créteil, Chaire Jean Monnet
The opening of the rail sector to competition: Between political will and market realities, Franck Audran, Partner, Gide Loyrette Nouel, Paris, and Antoine Choffel, Partner, Gide Loyrette Nouel, Paris
Taxis vs VTC: Has the competitive war taken place?, Walid Chaiehloudj, Professor, University of Perpignan, Associate Researcher, GREDEG, University of Côte d’Azur, Member of the College of the Competition Authority of New Caledonia
The effects of the Macron law on the profession of notary: some elements of assessment, Sophie Harnay, Professor of economics, University of Paris Nanterre, EconomiX, UPL, CNRS, Former member of the College of the French Competition Authority as qualified persons
The health sector under the presidency of Emmanuel Macron: Retrospective and perspectives, Sophie Pelé, Partner, Dechert, Paris, Marion Provost, Partner, Dechert, Paris, and Mélanie Thill-Tayara, Partner, Dechert, Paris
The Macron years in distribution law, Frédéric Buy, Professor, University of Aix-Marseille

Introduction

Martine Behar-Touchais
Professor, University of Paris 1 Panthéon-Sorbonne
Former member of the College of the Competition Council

1. What competition record for a man who is neither right nor left? President Macron’s record on competition law reveals a liberal but also protective and interventionist president.

But the market and economic operators are not easily tamed. Regardless of the commander-in-chief, competition and distribution law reforms rarely achieve their goals in a single battle [1]. "Twenty times on the job," Boileau would have said. This is why, for example, after the EGalim law, we have the EGalim 2 law, hoping that it will be enough.

Nevertheless, Emmanuel Macron, Minister of the Economy and then President of the Republic, has shown a real reforming voluntarism in competition and distribution law (I.), even if the results are somewhat contrasted (II.).

I. A reforming voluntarism in competition and distribution law

2. Since the Macron Law of August 6, 2015, competition law and distribution law texts have followed one another with an assertive reforming will, pursuing several objectives.

3. First, reform to restore freedom, by opening markets and removing rents.

Emmanuel Macron, in his role as liberator of the hindered markets, first listened to the sirens of Mario Monti, then European Commissioner for Competition, who proclaimed in 2003 [2] this sentence that has become famous: "We must give the liberal professions their freedom. "This was followed by the deregulation of the market of regulated professions, by the Macron law of August 6, 2015, which opened access to these professions, and in particular to the profession of notary, while trying not to upset the balance.

Emmanuel Macron has also been involved in the transport market, having stated in 2017 that he wanted to prioritize "everyday transport" [3]. Already, when he was still a future president, he had liberated the market for coach transport, bringing the famous "Macron coaches" to the baptismal font. As Stéphane de La Rosa writes, "these buses have become the mirror of ’a France at a very low speed’, ’which, in order to work, study or love, must push further, without having the luxury of being in a hurry’". At the same time, Emmanuel Macron has jumped on the bandwagon of the liberalization of passenger rail transport by passing the law of June 27, 2018, known as the "Rail Pact," which stems from the transposition of the fourth rail package. This market is being opened up to competition in France according to two distinct models: the "open access" model for high-speed lines, which will be able to be operated by several rail operators; and the conventional markets (TER, Transilien, Intercités), where the organizing authorities will put all or part of the network out to tender. However, it will not be until 2023 that the entire national rail network, with the exception of certain RER routes, will be fully open to competition. From December 2023, all new operating contracts for TER (regional express train) routes will have to be put out to tender, as has been the case for TGV lines since December 2020.

These market openings have been accompanied by a certain amount of data openness, to allow mobility between bus and train, with the Law No. 2019-1428 of orientation of mobilities (known as "LOM") of December 24, 2019. For Walid Chaiehloudj, "this law raises mobility to a high level of the republican pact". But at this stage the reforming will has somewhat weakened, not daring to go as far as ensuring the equality of charges of the different transport operators, which are cabs and platforms of vehicles of tourism with driver (VTC). Fortunately, judges have taken up the slack, qualifying the VTC driver as an employee [4], and admitting the unfair competition of platforms that emancipate themselves from the rules of labor law [5].

But Macron, the reformer, is not a follower of freedom at all costs. He also likes to play the role of protector, which leads him to a sometimes fussy interventionism that borders on dirigisme.

4. Second, reform by limiting freedom for protective purposes.

It is this role of protector of operators that he deems "oppressed" or at least weak, that led the Minister of Economy Macron to want to protect first the members of distribution networks, against clauses that would hinder their freedom of exit and limit their post-contractual activity (art. L. 341-1 and L. 341-2 C. com. from the Macron law of August 6, 2015).

Then it was the turn of the farmers subjected to the buying power of the food industry and the large food distribution companies. Everything starts from a unanimous observation: the farmers who feed the country must be able to live with dignity from their work. But the question of a better distribution of value, which was the "common thread" of the Macron years, as Frédéric Buy reminds us, is so formidable that President Macron convened the États généraux de l’alimentation, which led to the EGalim laws [6] and then EGalim 2 [7]. Written contractualization and price construction from upstream appeared to be the essential conditions for returning value "to the farm" [8]. The EGalim 2 law will then generalize written contracts and their multi-year nature, impose automatic price revision clauses, protect the prices of agricultural raw materials excluded from negotiation, and reintroduce non-discrimination in tariffs for agricultural and food products in order to combat price wars. Furthermore, finally, protection will not only be achieved through interventionism by the Ministry of the Economy, but also by rebalancing the balance of power resulting from the growing power of producer organizations and associations of producer organizations. The Union will be a force to be reckoned with, without coming up against the law on agreements, if the red lines are not crossed [9].

We should not forget, in this procession of reforms, that of Title IV of Book IV of the Commercial Code, by Ordinance No. 2019-359 of April 24, 2019, to which are already added the DDADUE Act No. 2020-1508 of December 3, 2020, the ASAP Act No. 2020-1525 of December 7, 2020, for international agreements of the power plants, and Ordinance No. 2021-859 of June 30, 2021, transposing the Directive of April 17, 2019, on unfair trade practices in business-to-business relations within the agricultural and food supply chain.

While some protective measures are legitimate (notably when the protected operator was truly subject to a more powerful partner), others certainly go too far. In particular, the powers of the Minister of the Economy have become disproportionate [10] - the power to impose a penalty payment and to liquidate it without a judge (art. L. 470-1 III C. com.), the power to control (or to control itself by means of a penalty payment) the price of any advantage (art. L. 442-1 I 1° C. com.), etc. Balance must not be imposed on operators alone. Protecting is a difficult art. Every strategist must know where to stop.

Fortunately, the Constitutional Council has kept a watchful eye on this, censuring, for example, the no-fault structural injunction provided for in the Macron bill [11], but which disproportionately infringed on entrepreneurial freedom and property rights [12].

5. Finally, reform to restore autonomy and reindustrialize.

But the Covid-19 crisis has made our dependence on globalization apparent (shortage of masks, curare and other drugs). As Sophie Pelé, Marion Provost and Mélanie Thill-Tayara point out, the President of the Republic’s objective is now to "make France [by 2030] the leading European nation in terms of innovation and sovereignty in health". Vladimir Putin’s war against Ukraine has further reinforced this need to become self-sufficient again, at least in Europe, in many other areas (energy, titanium, etc.). Globalized competition was the competition of a peaceful world. The economic sanctions against Russia will undoubtedly redraw the markets of tomorrow.

6. To carry out this procession of reforms, the Macron method has gradually emerged. After having been criticized by the notary’s office for his lack of consultation during the Macron Law, the President has made consultation a priority (the Estates General on Food, etc.), as well as the a posteriori evaluation of the reforms [13]. At most, it is regrettable that the assessment is sometimes made by the promoters of the law, who may have a certain complacency for their legislative offspring.

Has all this energy in favour of competition and distribution law had the expected results?

II. Contrasting results

7. There are so many competing interests that such reforms cannot please everyone.

Thus, first of all, the opening of the market caused great stress to the notary’s office, which had to get used to the Macron law. At a press conference [14], Isabelle de Silva, president of the Competition Authority at the time, stated that "[l]a reform is a real success (...) We have seen a strengthening of the territorial network and the economy remains very healthy and dynamic in the sector". From 2016 to 2020, the objective was to create 2,383 offices; 2,263 were created [15], which is very close. However, due to the health crisis, the Authority is only recommending, by 2023, the liberal installation of 250 notaries, 50 bailiffs and no judicial auctioneers, a profession particularly affected by the health crisis.

If we look at the notaries themselves, not all the offices created are cases of new entrants. Some older notaries have taken advantage of the opportunity to move to nicer neighborhoods. Others, new to the market, have taken advantage of the draw and time-stamping to obtain the right to create an office and immediately sell it. But, despite these unintended side effects, the main thing was that many candidates for installation, who could not find an office in the previous system, were able to settle. Sophie Harnay specifies, however, that "[s]elon the CSN, the law would have ( ...) induced a relocation of supply to urban areas, to the detriment of rural areas. The risk of legal deserts may not have been avoided. Moreover, interprofessionality, partially liberated, has not been used much.

And according to Isabelle de Silva, "there has been no wave of bankruptcy", even if the notary’s office insists on the difficulties of newcomers. No bankruptcy? Or not yet? We have just experienced a period of great prosperity in the real estate market. What will happen when the market turns and the number of sales drops? The recurrence of cyclical variations in the real estate market shows that this is inevitable. We will then see a concentration of the notary services market around large firms that are able to absorb these shocks.

Finally, shouldn’t an open market be accompanied, at least in the long term, by the means of free competition, more flexible pricing, and liberated advertising rules?

8. In the transport sector, there is clearly a lack of experience in the passenger rail market, which has high barriers to entry, given the investments required. But there are high expectations for this opening of the market. Maîtres Choffel and Franck explain that " Beyond the expected improvement in the quality of services and a reduction in prices, the modal shift (i.e. from road or air to rail) is one of the hoped-for effects of this liberalization.

Nevertheless, on December 18, 2021, when passengers were able to board a Trenitalia train in Paris bound for Milan via Lyon, a symbolic step in the opening of the market to competition was taken. In the fall, Transdev beat out the SNCF in the tender for the Nice-Marseille route on the TER network. Railcoop, for its part, has started to open up cross-border routes, such as Lyon-Bordeaux and Nantes-Lille.

It is too early to make an assessment, but competition in this sector is on the move.

We have more experience with the bus market. On routes longer than 100 km, it quickly took the form of a duopoly made up of FlixBus and BlaBlaBus, with FlixBus now capturing two-thirds of the market.

9. If we finally take distribution law, the evaluation of the Macron Law made by deputies on November 29, 2018 [16] led to a finding of uselessness for its provisions concerning networks [17]. Their first observation is that the Macron Law has not led to "vast movements to join or leave the networks." This was to be expected. The starting point for the reform was the opinion of the French Competition Authority (Autorité de la concurrence) No. 10-A-26 of December 7, 2010, concerning large-scale food retailing. Therefore, outside this sector, no text was required. Moreover, even in the food sector, the deputies noted that "[l]he very premise of the independent retailer’s desire to change his brand name, which would be thwarted by these contractual specificities, has been questioned, in particular by the federation of cooperative and associated commerce and by the French federation of franchising, because of the cost of changing brand name, the importance of the retailer’s long-term involvement in the brand name and the attachment of the clientele to a given brand . It istherefore not obvious that inter-brand mobility is hindered ( ...) by the entanglement of variable contractual durations".

As regards post-contractual clauses, the first case law was still pending at the time of this evaluation. With a little more hindsight, it can be said that the law has had a beneficial effect in the area of non-competition and non-reaffiliation clauses, where it has brought French law closer to EU law, but it has given rise to a veritable cacophony on transitional law, which fortunately the Cour de cassation has just put an end to [18].

The evaluation of the EGalim law has also just been made [19] by various deputies, including Mr. Besson-Moreau, its promoter. But the fact that after EGalim, it was necessary to have EGalim 2, shows that EGalim lacked efficiency. The deputies testify to the success of the raising of the threshold of resale at a loss and the supervision of promotions to stop the deflationary spiral, which destroys value for both manufacturers and farmers, and this without food prices getting out of control. On the other hand, this has not allowed farmers to be better paid, even if "the lack of available data on agricultural prices and margins does not allow for an objective assessment of the concrete effects of the law, particularly with regard to the consideration of production costs" [20]. The report states that there is too little constraint to use the tools of the EGalim law, a constraint that has since been increased by the EGalim 2 law, which will have to be evaluated in a few years.

10. A five-year period is not the time of the economy. We need much more hindsight on a certain number of reforms to be able to say whether or not each reform is a success. It is sometimes necessary to learn from the inadequacies of a first text in order to pass a more accomplished text.

But there is still one reform that President Macron could promote during this five-year term. It is the European Business Code, which includes a Title II devoted to market law. This draft code was written by a multinational team of professors and practitioners brought together by the Association Henri Capitant and the Fondation pour le droit continental. Let us hope that Mr. Macron will be able to put forward this offer to codify what is the DNA of Europe during his presidency of the EU.

The liberalization of bus transport: A mixed record

Stéphane de La Rosa
Professor of Law, University of Paris-Est Créteil
Jean Monnet Chair

1. Coach transport is a field of activity that was presented as a showcase for the economic reforms promoted by the Minister of the Economy, who would become the eighth President of the Fifth Republic, in the wake of political upheaval.

2. Known to most people as the Macron law, law no. 2015-990 of August 6, 2015 for growth, activity and equal economic opportunity pursued the ambition of freeing up "constrained activities" [21] by strengthening the supply of services in several sectors, first and foremost transport. To this end, law no. 2015-990, under its "mobilities" section, made major changes to the transport code by providing for the opening of regular non-urban public transport lines by coach. Now known as the "Macron coaches", this mode of transport has enabled many people to travel cheaply between major cities and, at the same time, has accentuated social and temporal differentiation in the various forms of travel. These buses have become the mirror of a "France at very low speed", "which, in order to work, study or love, has to push forward, without having the luxury of being in a hurry" [22].

3. By liberalizing bus transport, Minister Emmanuel Macron considered that "[l]he development of this mode of transport, which is more efficient in terms of cost, more ecological and safer than the use of an individual vehicle, will be an important factor of mobility for the youngest and most price-sensitive travelers. It will contribute to the tightening of the territorial network and to the development of new services on the busiest routes and on those poorly served by other public transport modes" [23].

4. Although it is not the intention here to draw up a complete assessment of the liberalization of this mode of transport - which is in fact carried out annually by the Transport Regulation Authority (hereafter ART) - an analysis from the point of view of competition law provides a general understanding of this sector. Over the last seven years, coach transport has developed on the basis of a regulatory framework that has remained stable and has been supplemented during the five-year period (I.). Envisaged as an open and competitive market, this activity has gradually narrowed into an oligopoly that is segmented according to the nature of the routes and the scope of the regulation exercised by the ART according to the distance covered (II.).

I. The stability and depth of the normative framework

5. The law of August 6, 2015 opened the possibility for public road passenger transport companies to provide regular intercity services. Its main contribution concerned freely organized road services (SLOs), which provide road links subject or not to regulation, in the form of regular intercity services, which are not public services. The logic pursued by the legislator echoed the law of opportunities. The increase in the supply of transport services outside the scope of public service agreements was supposed to lead to greater mobility and demand on the part of users. While the main part of the normative framework established in 2015 has remained unchanged during the five-year period, its implementation has been clarified in the sense of complementarity with other modes of transport and transparency of information.

1. A liberalized market based on relative freedom of access for transport operators

6. The regime for freely organized services was clarified by Decree No. 2015-1266 [24]. By amending the relevant provisions of the Transport Code, this text established the basis of the concepts as well as the applicable regime. According to Article L. 3111-17 of the Transport Code, "[l]he public road passenger transport companies established on national territory may provide regular intercity services." The content of this transport service is understood quite broadly, since it involves "an undertaking offering for sale, directly or indirectly, seats for the transport of persons between the point of origin and the point of destination of the route, with or without a connection, or the fact that a service including such transport is offered for sale" [25].

7. Built on the logic of free market access for transport operators, the liberalization introduced by the law in 2015 was framed in several ways.

8. First, a distinction has been made within freely organized road services between domestic road links that are "subject to regulation or not" [26]. With this formula, the Macron Law provides for two distinct forms of competition: either a completely free bus transport activity (except for minimal technical and administrative requirements), or a transport offer that requires prior declaration to the regulator. The divide between the regulated and unregulated markets is based on the existence of a mileage threshold, set at 100 km and unchanged since 2015.

9. The objective of this regulation is to allow the sectoral authority to intervene to assess, after an economic analysis, whether or not the proposed intercity bus service "substantially affects the economic equilibrium of the public transport service line or lines likely to be in competition or the economic equilibrium of the public transport service contract concerned" [27]. Through this intervention, the regulator, at the request of the public transport authorities, must ensure a balance between, on the one hand, the preservation of the transport offer that is the subject of an agreement with the organizing authorities (or henceforth the mobility organizing authorities) and, as a result, requires public financing and public service compensation mechanisms within the meaning of the Altmarkcase law [28]On the other hand, there is the need to ensure a competitive opening of the market. As will be emphasized below, this regulatory regime has contributed to the emergence of a dual market: new entrants on routes of less than 100 km are significantly different from those who position themselves on freely organized services, which cover most of the traffic.

10. Second, regardless of these specific requirements related to regulation with contracted services, the new bus transport offer requires the new entrant operator to meet technical conditions relating to the rolling stock (pollutant limitation constraints) and to declare to the regulator (without prior authorization) the facilities accessible to the public to facilitate the pick-up or drop-off of passengers on road transport services. Here again, subject to the rules specific to the use of the public highway, a principle of freedom prevails: "any private or public person, within the limits of its powers, may freely create or develop a bus station or any other facility" [29].

2. The search for coherence and effectiveness of the bus transport market

11. During the five-year period, the normative framework just presented remained largely unchanged. Its implementation was clarified and completed on the occasion of two important reforms, which did not specifically concern the liberalization of bus transport.

12. First, the opening of passenger rail transport to competition, spurred on by the law of June 27, 2018, known as the "Rail Pact", and resulting from the transposition of the fourth rail package, has generalized the control of the economic equilibrium of public service contracts: a rail operator wishing to offer a freely organized rail service may also be subject to a control of the economic equilibrium of the public service contract, regardless of any mileage threshold, in the event that the route covered by the freely organized service interferes with a contracted rail link, such as the TER. The generalization of checks on the economic equilibrium of contracts therefore poses a methodological challenge for the regulator, in order to establish, according to the different modes of transport, the criteria for determining whether the equilibrium of contracts has been affected. This strengthens the interface between rail and bus transport within the scope of regulation.

13. Second, the important Loi no 2019-1428 d’orientation des mobilités (known as the "LOM") of December 24, 2019, has also had a significant impact on the implementation of this mode of transport. First, on technical and accessibility aspects: from now on, since July 1, 2021, all new coaches used for its regular transport services must be able to accommodate a minimum of five undismantled bicycles. Similarly, carriers are required to provide information to passengers on on-board safety rules and evacuation instructions. But the most significant development concerns the transparency of transport and mobility data, with the recognition of a digital multimodal service (DMS), considered as a digital service that allows the sale of mobility services, parking or services provided by a central reservation office [30]. This service, which is similar to a "MaaS"(Mobility as a Service), is based on a conception of mobility as an individualized service, which allows the user to be informed about possible travel options, to pay for them, but also to learn about other services associated with his or her trip. The LOM law facilitates the use of these information platforms by requiring mobility organizing authorities to open up travel and traffic data. Above all, the LOM law facilitates the possibility for bus operators to offer SNMs, including not only their own transport services, but also an opening to other services (bicycle, connection to other modes of transport). From the point of view of competition law, the use of MNS may raise many questions in the future. These include, for example, issues related to the identification of the relevant market (transport market, distribution market), issues related to Article 101 TFEU (exchange of information, exchange of data with other competitors), or behavior falling within the scope of Article 102 TFEU (limitation or refusal of access to competing mobility information services, which would constitute an abuse of a dominant position)

II. The structuring of the market in the form of a segmented duopoly

14. The annual study conducted by ART [31] on coach transport provides valuable information on the structure of this market over the last few years. Two characteristics can be highlighted. First, the number of players in this market has been rapidly reduced: after a short-lived period characterized by a plurality of companies in this sector, a duopoly organization now prevails (1.). On the other hand, the regulatory system introduced by the 2015 law leads to a strong differentiation according to the length of the routes: below the 100 km threshold, the ART is regularly called upon to conduct an analysis of the harm to the economic equilibrium of the contracts, and the intensity of competition remains low (2.).

1. The tightening of freely organized services in the form of a duopoly

15. The first years of liberalization were characterized by a diversification of market players and a search for lower costs. By 2016, several operators had positioned themselves on this market, including Eurolines, Isilines (Transdev group), FlixBus (Flix group), Ouibus (SNCF), Megabus, Starshipper and Keolis.

16. However, from the very first months of operation of the "Macron buses", the occupancy rate of the buses was often lower than expected: in its 2016 annual review, the ART noted a 22% drop in the number of passengers carried and a 25% drop in the number of passenger-kilometers compared to the end of 2015 [32]. This significant decline was accompanied, from the very first months of operation of the "Macron buses", by the fragility of certain routes. For example, sub-regional routes and national routes of more than 350 km quickly experienced a sharp decline in ridership. User demand gradually concentrated on a few segments, generally routes corresponding to medium-sized trips (around 150 km) and serving the major cities in the region, to the detriment of small cities, some of which quickly ceased to be served by these buses (Sedan, Montluçon, Guéret). The first few months of operation were instructive in terms of the structure of this nascent market: far from offering a new territorial network, the bus routes quickly became substitutes for rail links between the main cities, on routes with relatively continuous travel times. Low-cost rail competition, embodied by the development of the SNCF’s Ouigo service, also favored this structuring: on relatively long routes (Paris-Marseille, Paris-Bordeaux), buses quickly became a second-rate choice for users. Conversely, radial services, i.e., between the main provincial cities (Lyon-Bordeaux, Caen-Rennes) have emerged as a viable segment that is gradually finding its own market.

17. This tightening of the coach market has led to the departure of several operators (Megabus, Starshipper) and contributed to a movement of concentration among the others (takeover of Eurolines, belonging to Transdev, by FlixBus, followed by the judicial liquidation in June 2020 of Eurolines; takeover of Ouibus by the BlaBlaCar group with a minority stake from SNCF).

18. Now, in the segment of freely organized services operating on routes longer than 100 km, the market has taken the form of a duopoly consisting of two companies: FlixBus and BlaBlaBus [33]. This reduction has been amplified by the health crisis, with an unprecedented situation in 2021 linked to the existence of a single operator with national scope (FlixBus). With the resumption of BlaBlaBus operations in May 2021, the duopoly is unbalanced, with FlixBus capturing two-thirds of the market. In this market, it is once again the radial routes, for which there are few or no substitute train journeys, that dominate the distribution of passengers. The shape of the liberalized transport market in the next few years is still uncertain, especially as new entrant rail operators (Flixtrain, Railcoop) plan to offer freely organized rail services on radial routes. The substitution of rail for bus transport will undoubtedly increase, as this mode of transport is preferred by users for its comfort and greater speed.

2. A cautious opening of public transport services under agreement

19. On routes of less than 100 km, for which the regulator’s intervention remains important in assessing whether the economic equilibrium of the contract has been affected, the opening up to competition has its own specificities and cannot be compared with freely organized services outside regulation [34]. Here the regulator must conduct an analysis in terms of substitutability.

20. This analysis is conducted in accordance with guidelines adopted in May 2017 [35]. It focuses, on the one hand, on examining the alternative nature of the new transport offer in relation to a contracted service (an existing TER route) and, on the other hand, on the quantitative nature of the infringement of the public service contract. The analysis requires a detailed examination of the relevant market in terms of the route’s departure and arrival points, travel time, proximity of timetables to the contracted service, and daily frequency. Largely inspired by the instruments introduced in rail regulation (the criterion of impairment of economic equilibrium was introduced in the third rail package, which allowed new entrants to offer domestic routes within the framework of international routes), the examination of impairment of economic equilibrium enables the regulator to validate the decision, which is the responsibility of the transport organizing authority, to prohibit a route or to require modification of its scope (timetables, stops served). The methodology implemented by the regulator was quickly challenged in the courts: after the Council of State rejected a ban on bus services, the Council of State expressly validated the criteria and the substitutability analysis used by the regulator [36].

21. The practice of this regulation shows a clear desire on the part of the transport authorities to block or limit the arrival of new entrants: most of the competitive services proposed by the new operators have been opposed by the regional executives throughout the country [37]. This practice certainly acts as a disincentive to new entrants, as their access to the market is neither certain nor guaranteed. In return, the choice of the regions can also be justified: the agreements between them and the SNCF (and now certain new entrants in the context of rail competition) are extremely costly and correspond to long-term planning for public finances.

22. In this context, the regulator has conducted balanced market analyses, generally favoring new operators. Although there are still very few compliant opinions validating a refusal of free service, they are nevertheless significant in certain situations. This is particularly true of the dispute over service to Beauvais airport. In this particular case, the economic balance of the concession contract for the airport - whose business is focused on low-cost travel - is largely based on revenue from bus services from Paris. However, most of the requests for free bus services have been rejected by the airport operator and then often validated by the regulator in the context of the examination of the economic equilibrium. On the other hand, services from other locations in the Paris region were considered to be substitutable for the link from Porte Maillot. The admission of a new entrant is achieved at the cost of distancing the points of departure: in order to avoid undermining the economic equilibrium of the contract, the new operator must be sufficiently distant, by more than 10 km, from the point of departure of the contracted route [38]. The opening up of bus transport to competition thus becomes an issue of spatial distribution between market players. Experience shows that opening up the market to competition alone does not solve the problem of access to transport without an overall vision of the various forms of mobility

The opening of the railway sector to competition: Between political will and market realities

Franck Audran
Partner, Gide Loyrette Nouel, Paris
Antoine Choffel
Partner, Gide Loyrette Nouel, Paris

1. In the face of ecological concerns, rail transport naturally presents itself as a green alternative to road and air transport. With this in mind, Mr. Emmanuel Macron has stated that he wants to "massively redevelop" rail freight, night trains and fine rail lines and announced a €4.7 billion stimulus plan in September 2020 [39].

2. This political initiative is also in line with a new movement to open up the French rail system to competition, which is intended to reform and revitalize it. The system’s performance has been judged insufficient, in particular because of an "unbalanced" public financing system, an aging infrastructure, and the high cost of access to the network [40].

3. That being said, the liberalization of the rail sector is above all the result of an initiative taken at the European level. Like other regulated sectors such as energy, the European Union has gradually opened up rail transport in Europe to competition through the four "railway packages" adopted between 1991 and 2016 [41]. The first steps were taken to liberalize national rail freight services. Effective in France since March 31, 2006, this led to the intervention of the Competition Authority, which condemned the incumbent operator for practices that impeded the entry of new entrants [42]. For passenger transport, liberalization began with international services within the EU in December 2009 [43].

4. With the opening of national passenger rail services to competition and the promised arrival of alternative operators, the end of the state monopoly is now becoming a reality in France (I.). Nevertheless, the materialization of the expected effects on competition (diversification of offers, price competitiveness, improvement of service quality, modal shift, etc.) remains uncertain to date. Indeed, both the increased intermodal competition and the highly capital-intensive nature of the rail sector could act as a brake on the arrival of new operators on the market (II.).

I. A competition policy in favor of the liberalization of the railway sector

5. The completion of the liberalization of the railway sector through targeted legislative measures (1.) was accompanied by a strengthening of the powers of the sectoral regulatory authority and the intervention of the Competition Authority (2.).

1. Opening up passenger transport services to competition: Towards a gradual liberalization of the entire rail sector in France

6. . The fourth "railway package" adopted at the end of 2016 is the culmination of the liberalization process with the opening up to competition of the market for national rail passenger services. It is based on two pillars: a "technical" pillar [44] aimed at ensuring the interoperability and safety of rail networks in Europe, in particular by harmonizing the procedures for authorizing operators and rolling stock, and a "political" pillar [45] governing the governance of rail operators and the rules for opening up national rail services to competition.

7. In France, the five-year term of Emmanuel Macron was marked in particular by the adaptation of French legislation to the new European railway package, which was carried out by Law No. 2018-515 of June 27, 2018 for a new railway pact, which also empowered the government to legislate by ordinance on the basis of Article 38 of the Constitution [46].

8. The opening up of national and regional lines (TER and Intercités) to competition has been effective since December 2019. Applicable on a voluntary basis until December 2023, the State and the regions as transport organizing authorities ("AOT") will from that date be obliged to issue transparent and non-discriminatory invitations to tender for regional or national transport public service contracts [47]. The Marseille-Toulon-Nice line will thus be operated by the French private operator Transdev from 2025. Other French regions (Île-de-France, Grand-Est, Hauts-de-France, Pays de la Loire) have also decided to issue invitations to tender for certain lines. For their part, a number of operators have already expressed their interest in responding to the calls for tenders organized [48].

9. For national lines that are not subject to a contract, in particular high-speed lines, the principle of "open access" has officially been in force in France since December 2020. Any railway company that meets the necessary conditions, particularly in terms of safety, can operate a rail service on the lines concerned. In December 2021, the transalpine operator Trenitalia France, a subsidiary of the Italian historical operator, became the first competitor of the SNCF on the Paris-Lyon-Milan line.

10. As was the case with the liberalization of rail freight transport, the government has accompanied the protection movement in terms of transparent and non-discriminatory access to rail infrastructure, which will be guaranteed by the Transport Regulation Authority (ART) and the Competition Authority.

2. Strengthening the powers of the sector regulator to support the opening of the rail sector to competition

11. In France, the role of the ART [49] has been progressively strengthened with the aim of increasing the independence of the railway infrastructure manager and guaranteeing all railway undertakings fair access to the national rail network.

12. First, the guarantees of independence of the railway infrastructure manager [50] (SNCF Réseau or the holders of public service delegations mentioned in Articles L. 2111-11 and L. 2111-12 of the Transport Code) are expressed through, on the one hand, ex ante rules of incompatibility and voting codified in the Transport Code [51] and, on the other hand, mechanisms for the ex post prohibition of potential conflicts of interest that might arise in the decision-making by the latter in matters of traffic management and the railway network [52].

13. Second, the French legislator has extended the scope of ART’s control to guaranteeing the economic equilibrium of public service contracts, particularly in the case of regional transport under contract [53]. As of January 2020, the ART granted the German operator Flixtrain the right to operate two regional rail lines as of January 2021 [54].

14. Third, Article L. 2133-4 of the Transport Code gives the ART the power to approve, via an assent procedure, the rules for separating the accounts of railway undertakings in order to ensure that there is no discrimination, cross-subsidization or distortion of competition.

15. This procedure also gives a role to the French Competition Authority, which, upon referral by the ART, may issue opinions on the proposed accounting separation rules [55]. In this context, the Authority has had occasion to recall the complementary but distinct role played by competition law in this area [56]. As in other regulated sectors, and in application of European case law [57], the existence of a specific regulatory framework for the regulation of a sector does not prevent the application of competition law. In particular, the Authority recalls that the accounting separation and sector-specific rules for setting the tariffs of an incumbent operator "do not determine what the costs actually incurred in constructing these unregulated offers are and do not reduce the autonomy of conduct of the company concerned" [58]. In other words, the Competition Authority has already reiterated the position it took at the time of the liberalization of rail freight, according to which the incumbent operator that enjoys a dominant position originating in a former legal monopoly is subject to a special responsibility [59].

II. Challenges to effective competition in the rail mode

16. Based on the German and Italian precedents [60], the ART had already in 2018 emphasized the benefits of competition as a powerful lever for improving and developing the rail transport system for the benefit of all stakeholders [61]. However, the improvement of competition in passenger transport still faces certain obstacles. On the one hand, the liberalization of passenger transport is confronted with the development of other modes of transport, thus limiting the modal shift induced (1); on the other hand, the effective capacity of new entrants to penetrate the market does not seem to have been fully achieved yet (2).

1. Intermodal substitutability: What competitive impact on the market?

17. In addition to the expected improvement in service quality and lower prices, modal shift (from road or air to rail) is one of the hoped-for effects of liberalization. With the second largest rail network in Europe [62], rail passenger transport accounted for 10% of national passenger traffic in 2019 [63] and plays an important role in French mobility [64]. Such a modal shift to rail would undeniably be an efficiency gain for the community. An efficient transportation network "allows workers to access a wider labor market (and vice versa for companies) and thus creates a better job/skills match, which promotes productivity. It also gives consumers access to more offerings (commercial, leisure, etc.). These gains in accessibility are partly reflected in land values. Rail transportation also reduces the negative externalities of other modes: less road congestion, fewer traffic accidents, less pollution, etc." [65].

18. This being the case, even though they are not always perfectly substitutable, we can only note that rail transport is facing the development of new or existing alternative offers (car, coach, air) that can have a significant impact on its competitiveness. In this respect, it is clear that Emmanuel Macron has encouraged the development of alternative modes of transport to rail in the past. This is notably the case for regular intercity passenger transport by coach, which was liberalized in August 2015 by Law 2015-990 [66]. As a low-cost alternative, the "Macron coaches" were intended to exert competitive pressure on SNCF rail transport services between cities directly linked by train and eventually lead to lower prices.

19. In this case, the political will does not match the competitive analysis of modal shift. On the face of it, the road mode is at least partially a substitute for the rail mode. However, while the ART has observed intermodal competition between road transport by coach (as well as carpooling) and rail [67], the French Competition Authority considers that there is "very little substitutability" between these two modes (particularly with regard to high-speed rail), given the difference in travel time [68]. Two years after the Macron law, the Authority reaffirmed that competition from intercity bus transport on long-distance or regional passenger rail transport remains limited [69] and therefore considers two distinct markets. A similar approach was adopted by the Authority in the neighboring rail freight market in its 2012 Fret SNCF decision: although a form of intermodal competition existed between road and rail freight, it was insufficient to include them in the same relevant market [70].

20. Still with a view to intermodality, the government wanted to encourage the modal shift from air to rail in order to contribute to the reduction of greenhouse gas emissions. Law 2021-1104, known as the "Climate and Resilience" law, has thus initiated the elimination, as of March 27, 2022, of domestic air routes that are also served by several daily rail connections without connections and lasting less than two and a half hours [71].

21. Indeed, political action in recent years has initially consisted of liberalizing coach transport to develop a low-cost alternative to rail and then favoring rail over air for environmental reasons. At the same time, and despite these political initiatives, the Competition Authority seems to continue to reject the existence of substitutability between different modes of transport, except in certain specific cases [72].

2. What are the prospects for new entrants to enter a highly capital-intensive market?

22. The rail sector is characterized by specific structural barriers to entry of a technical and financial nature [73]. Passenger rail transport, especially long distance and high speed, is characterized by very high fixed costs. On the one hand, railway equipment (train sets, etc.) is very expensive and has a very long life span (20 to 30 years) [74]. On the other hand, the costs and in particular the prices of train paths can be significant. In addition, there are the technical requirements of performance and quality of service imposed by the AOT for the operation of the network.

23. The need, in view of these constraints, to amortize the investments made over a relatively long operating period may sometimes seem contradictory to the periodic competitive bidding that results from liberalization. For a new entrant in an "open access" market, the capital intensity of the sector therefore translates into a considerable financial risk, which constitutes a real brake on the entry of new operators. Even if liberalization can have its benefits, European experience also shows the low level of competition observed in passenger transport markets opened to competition: the market shares of new entrants competing with the incumbent operator have often remained low on certain markets, with the exception of a few specific lines [75].

24. If the time for liberalization has come, we may still have to wait for new operators to establish themselves on the French market. That said, the political prism may be different. In view of its positive impact on the ecological transition, it is quite possible that a successful opening of the rail sector to competition will remain a priority during the next five years.

Cabs vs VTC : Has the competitive war begun?

Walid Chaiehloudj
Professor, University of Perpignan
Associate researcher, GREDEG, University of Côte d’Azur
Member of the College of the Competition Authority of New Caledonia

1. Encourage mobility through competition. Five years ago, when asked "What is your assessment of the Macron law?", the President of the Republic replied with a very satisfied tone "a positive assessment, of course! This law has unlocked the French economy, encouraging mobility in all its aspects" [76]. Although the candidate at the time did not specifically target the private passenger transport sector (hereinafter TPPP), there is no doubt that encouraging mobility "in all its aspects" necessarily means making cabs and chauffeur-driven vehicles (VTC) more accessible to consumers. But what better way to achieve this objective than through competition? Isn’t competition the ideal way to diversify supply and bring down prices?

2. Privileged cabs. It must be said that the challenge in this area is immense. Historically, competition in this sector has always been weak. Corporatism has often got the better of the intentions of successive legislators. Attacking the sacrosanct cab monopoly was seen as a crime of lèse-majesté! And for good reason... Originally, a clear line was drawn between the local cars (ancestors of cabs) and the large and small hauliers (ancestors of VTC) [77]. The two activities were regulated separately: the local cars benefited from an eminently protective regime, while the "remises" enjoyed fairly flexible and liberal rules. It therefore took a great deal of determination, not to say political courage, to open up this market to much stronger competition. For cabs have always benefited from fabulous advantages such as the "privilege" of marauding. The legislator’s boldness has never gone so far as to abolish this cab privilegium. As proof, article L. 3121-11 of the transport code currently in force states that cabs have the power to "stop their vehicle, to park it or to make it circulate on the road open to public traffic in search of customers within the scope of the authorization defined by the competent authority". This means that VTCs and cabs are not fighting on equal terms in the competitive war that they are trying to wage against each other. What’s more, the European courts don’t seem to want total competition between cabs and VTCs. In a preliminary ruling, the Court of Justice held that the advantage granted to London cabs to use bus lanes did not meet the conditions for state aid [78]? In the same vein, didn’t the French judge validate decrees prohibiting VTCs from using freeway lanes reserved exclusively for cabs [79]?

3. Liberating the market. Although the judge is resisting, the French legislator has not taken refuge in inertia. On the contrary, it has taken vigorous action to "free" the market. The first competitive breach, at least the most salient one [80], was opened in 2014. The Thévenoud law [81] sought to take account of the technological advances underway and the irresistible rise of digital platforms such as Uber. Despite their activism, cabs were under siege, so a need for regulation was felt. Without legislative intervention, there was a great risk that the TPPP sector would be completely swallowed up by VTCs. Regulation was needed to protect. The strength of digital platforms was so powerful that it made the "old world" model obsolete... The marauding privilege was no longer sufficient to maintain a monopoly that had been weakened by the emergence of digital platforms. No doubt this privilege allowed to defend itself against the repeated assaults of the VTC. But in reality, consumers were turning massively to the latter to the detriment of cabs, some of whom had paid a high price for their license...

The second competitive breach was opened by the Grandguillaume law of 2016 [82]. One of the most noteworthy aspects of this law is the introduction of a new anti-competitive practice in the Commercial Code in Article L. 420-2-2 [83]. This text prohibits agreements that prohibit drivers from using both digital platforms and other distribution channels offered by different intermediaries. This means that much had been done to move the market into the age of competition. Have the last five years continued the work begun by the Thévenoud and Grandguillaume laws? Has a third competitive gap been opened? Has the 2017-2022 period led to the reconfiguration and restructuring of competition in this highly regulated market?

4. The data of the problem. Before sketching out an attempt at an answer, it is necessary to agree on the data of the problem. Two points deserve particular attention. Firstly, the TPPP sector has changed profoundly since the first legislative stones were laid. On the one hand, the ecological and climatic emergency now requires more energetic responses and more virtuous, not to say greener, competition. Therefore, the legislator cannot conceive texts without taking into account the environmental stakes, the activity in question being excessively polluting. On the other hand, digital platforms have seen their market power increase, so legislative initiatives cannot ignore this fact. Second, the term "liberalization" should not be misunderstood. Some have argued that the legislature has liberalized the cab market. Is this really the case? Strictly speaking, it is not true liberalization. As one member of the Competition Authority has pointed out, it is more accurate to speak of "aboom in an old market, brought about by the relaxation of rules as well as by a technological revolution" [84]. In other words, the TPPP market has simply expanded and has become almost obese of the providers operating in it. By removing some barriers to entry, the legislature has allowed VTC to enter a pre-existing market, but has not created a new market. It should be noted here that competition is only present in one segment of the market, as marauding remains the monopoly of cabs.

5. Plan. In this context, what can we learn from the past five years? First of all, there has been a flurry of legislation (I.). The effervescence is there and then. The legislator has hardly dealt with his bulimia of texts and has continued his unbridled reformist march. Secondly, this legislative ferment has been accompanied by an inflation of case law (II.). The proliferation of legislation has created opportunities for litigation both for cabs and VTCs and for the public authorities.

I. A legislative bubble

6. Two verbs. This legislative ferment can be summarized in two verbs. The legislature has sought not only to make digital platforms more accountable (1.), but also to green the TPPP market (2.).

1. Empower

7. Mobility Orientation Law. If there is only one law to remember, perhaps it is the Loi d’orientation des mobilités (LOM) adopted during the Christmas break in 2019 [85]. This law raises mobility to a high level in the republican pact. A reading of its explanatory memorandum is not misleading. Indeed, the legislator’s ambition is very high, as he believes that "[] mobility is at the heart of the challenges facing our society, [that]it is the primary factor in individual emancipation and social and territorial cohesion. Because physical mobility is what makes all the others possible (social, professional, etc.), it must be at the heart of the Republican promise. How can we avoid disappointing this promise? By making people responsible, the text says!

8. (Optional) accountability of intermediation platforms. This law has chosen to make intermediation platforms accountable without going too far... Because this accountability is quite modest, even minimalist. It has been known for some years that cabs complain about the social charges imposed on them and that digital platforms have for a long time been able to navigate in the silence of the laws in order to escape them, a sign that they have become true "digital private powers" [86]. But since the Take Eat Easy [87] and Uber [88]the sky has become somewhat darker for the platforms, as the French Supreme Court has decided to reclassify the contractual relationship between certain digital platforms and drivers as an employment contract [89]. In this respect, the LOM is very interesting, albeit insufficient. On an optional basis, this law allows intermediation platforms to establish a charter specifying the contours of their social responsibility, so as to offer additional social rights to self-employed workers who use their services. The new Article L. 7342-9 of the Labor Code provides that "the platform may establish a charter determining the terms and conditions for exercising its social responsibility, defining its rights and obligations as well as those of the workers with whom it is in contact. This charter, if drafted, must be published on the platform’s website and attached to the contracts or general terms of use that bind it to the drivers. It is also possible to have it approved by an administrative authority after consultation with the self-employed. This means that the accountability of platforms is very weak. It is a voluntary accountability that can only be imposed at the initiative of the platforms... Moreover, following the decision of the Constitutional Council of December 20, 2019 [90], the charter, although approved, can never characterize the existence of a subordination link between the platform and the drivers. This power of requalification belongs to the judge. Therefore, the competitive advantage enjoyed by digital platforms in terms of social charges remains, notwithstanding the adoption of this law.

2. Greening

9. Labeling and quality competition. Will competition between cabs and VTCs help to strengthen the protection of the environment [91]? On the face of it, one might doubt it. By opening up competition in this market, have we not mechanically caused an increase in the number of vehicles on our roads and highways? Therefore, the legislator can no longer be satisfied with adopting texts without taking into consideration the environmental impact of their application. In other words, the texts must be greened. And the legislator has become aware of this. Of course, not all texts are green. Consider, for example, the decree of January 11, 2019 [92], which calls for the introduction of competition through quality, but without integrating environmental criteria into this quality. The text creates a quality label called "chauffeur-driven transport car - limousine". However, the criteria for awarding the label only concern the quality of the welcome, the driver’s know-how and interpersonal skills, his or her command of foreign languages, the comfort and cleanliness of the vehicle and the quality of the information provided to tourist clients. In other words, no criterion takes into account CO2 emissions, the use of a vehicle that does not pollute or pollutes little... In short, there is hardly any trace of attention to the environment.

10. Environmentally friendly competition. Fortunately, the LOM has rectified this situation by increasing the obligations of central reservation offices, in particular by imposing a so-called "greening" obligation on them. Thus, the new article L. 224-11 of the Environmental Code, introduced by this law, requires that reservation centers with a minimum number of drivers include a minimum percentage of low-emission vehicles among the vehicles they put together. The implementing decree of December 9, 2021, recently provided valuable clarifications. First of all, the decree determines the vehicles concerned by Article L. 224-11 of the Environmental Code: these are passenger cars [93]. Second, it sets the minimum number of drivers for booking centers to be subject to the greening obligation (it is set at 100 drivers). Finally, it details the low-emission vehicle rates to be met, which will be gradually increased over the years [94]. In this way, in the years to come, competition between cabs and VTCs will no longer be a competition dominated by fossil fuels. It will be a hybrid competition combining fossil fuel and green energy. Of course, digital platforms did not wait for this law to offer consumers green vehicles. Nevertheless, we should be happy about the coming constraint, as it will allow us to renew a fleet of cars that is currently drowned by polluting vehicles.

II. Jurisprudential inflation

11. Loyalty and agreement. In recent years, the maze of legislation in which VTCs and cabs must now operate has stimulated the imagination of litigants. Unquestionably, the new laws adopted have had an immense impact on litigation. It is mainly unfair competition that is being denounced. And when the market is affected by a cartel, it is the Competition Authority that is on the horizon, which does not hesitate to sanction it. This means that the competition judge supports fair competition (1.) and no cartel on the market (2.).

1. Competing fairly

12. A wealth of decisions. It is not possible to report on all the decisions rendered in recent years [95]. It is simply a matter of outlining a trend. What is the trend? We can see that the defenders of cabs are increasingly using the unfair competition action to hold VTCs and digital platforms liable. Thus, article 1240 of the civil code appears to be a formidable shelter against the "wild" competition of certain digital platforms that try to circumvent the laws.

13. What disloyalty? The first disloyalty identified consists in competing with cabs in the marauding market. However, the marauding monopoly, a legal monopoly if ever there was one, belongs to cabs. The Constitutional Council itself made this clear when it ruled that the activity of parking and driving on the public highway in search of customers for transport is reserved for cabs for reasons of public order, in particular the traffic and parking police [96]. VTCs can therefore only compete with cabs on the pre-booking market. However, certain practices implemented by the platforms have been aimed at circumventing this ban on marauding, which has also had significant effects on competition between the platforms. But the judge did not tolerate them. This is the case of the Paris Court of Appeal [97], which recently condemned Uber for unfair competition with other digital platforms. Uber was accused of not respecting the provisions of the transport code insofar as the company authorized drivers to inform customers, prior to booking, of both their location and the availability of their vehicle. In other words, the court ruled that electronic marauding constituted an act of unfair competition that had to be punished. It is true that failure to comply with legal regulations necessarily leads to a break in the equality of means to compete, so that by violating the regulations, the Uber company had put itself in an "abnormally favorable situation" [98]. In other words, such behavior distorts competition by giving the unfair operator an unfair competitive advantage. Let us hope that the adoption of the ordinance of April 21, 2021 [99], which intends to better regulate the activity of intermediation platforms in the TPPP sector, will put an end to these highly questionable practices.

A second form of unfairness consists in breaking the rules of labor law. This time, the Cour de cassation confirmed that by adopting such a behavior a digital platform was indeed committing acts constituting unfair competition against a central booking office for cab drivers [100]. The resources of unfair competition law are therefore currently, if not inexhaustible, at least formidable. They are used by cabs to protect a competitive advantage that is shrinking. What about anti-competitive practices?

2. Competing without getting along

14. Competition Authority and advocacy. Before 2017, the Competition Authority was mainly mobilized for consultation purposes. The aim was to inform the government about the competitive impact of texts being adopted. In this respect, the Authority has always been very much in favor of stimulating competition on the TPPP market, which has been subject to competitive sclerosis for too long. In particular, we recall a 2015 opinion in which the Authority approved the implementation of a pricing system that led to the flattening of cab fares between Paris airports and Paris [101]. Consumers are grateful to the Authority since the decree of October 7, 2015 [102] has increased price transparency and thus enabled customers to know in advance the amount of the fares in relation to the Paris-Airport trip. We can also cite an older opinion of December 9, 2014 where the Authority revealed a pro-VTC stance since it considered that the VTC profession should be treated on an equal footing [103]. But since then, the market has changed; competition has intensified. And this intensification has not necessarily pleased cabs, who have tried to organize themselves to stem the loss of revenue that they continue to suffer.

15. Cab cartel. The Authority wished to react to behaviour that went beyond the bounds of legality. Thus, it sanctioned an EIG for cartel [104]. What exactly was the practice in question? In this case, the GIE cab Antibes Juan-les-Pins had made a cab’s membership of the GIE conditional on the sponsorship of two members and a unanimous vote. Moreover, the GIE contractually prohibited its members from developing a personal clientele or a complementary activity. In other words, the drivers were limited and locked into their activity. They could hardly develop a LOTI and VTC activity at the same time. Crossing the Rubicon was a real risk since the EIG strictly enforced the exclusion clauses. The decision notes in this respect that one of the cab drivers was expelled from the group. Therefore, the Competition Authority qualified this practice as a cartel, considering, on the one hand, that the conditions of access to the EIG were non-objective, non-transparent and discriminatory and, on the other hand, that the reasons for exclusion could have dissuaded the members from developing and differentiating themselves in terms of variety or quality of service. In sum, the system devised by the EIG prevented the development of new modes of transport in the municipality and its surroundings, to the detriment of consumers. The message to the sector seems to have been well received. Since this decision, no infringement proceedings have been initiated, to our knowledge. The decision seems to have had a comminatory effect. Does this mean that the market is functioning without fail? Are other micro-markets, such as the one in Antibes, not affected by practices that foreclose competition?

Conclusion

16. Assessment. What can we learn from the last five years? First, competition has intensified. The profusion of unfair competition lawsuits shows that cabs are increasingly afraid of VTCs and consider them dangerous rivals. The marauding privilege is no longer as reliable a protection as it once was, as consumers have become accustomed to using digital platforms to book their rides. Secondly, the legislative advances are too modest, even timid. The texts adopted have neither strengthened competition in the market nor made it greener. On the other hand, cabs and VTCs are now faced with a patchwork of legislation that is difficult to understand. This means that the next challenge to be taken up, in addition to the imperative of greening, is that of simplification. For, as Savatier warned us, when "oneadds more texts than one abolishes ( ...) one complicates more easily their content of commands and defenses than one simplifies it. A valid simplification requires a greater effort than addition and subdivision. Also, the inclination of the legislator is hostile to this simplification!" [105]. Let’s hope that this hostility does not guide the legislator over the next five years...

The effects of the Macron law on the profession of notary: Some elements of assessment

Sophie Harnay
Professor of Economics, University of Paris Nanterre, EconomiX, UPL, CNRS
Former member of the College of the French Competition Authority (Autorité de la Concurrence) as a qualified person

1. As part of an overall dynamic of structural reforms of the French economy, the law for growth, activity and equal economic opportunities of August 6, 2015, known as the "Macron Law", calls into question various regulations of the regulated legal professions sector on the grounds of their economic inefficiency. The objective of the reform is to fight against the rents of professionals and to boost growth and employment through measures of liberalization and opening to competition which apply, in particular, to the profession of notary. What is the current status of the notary profession in relation to these objectives?

2. After recalling the ambitious positive effects expected from the reform and underlining the absence of an overall evaluation of its measures to date (I.), we present the main effects of the new access to the profession and the reform of fees (II.), before noting the ambiguous nature of certain effects of the law (III.) and the pragmatism that has governed its implementation (IV.).

I. Important positive effects expected from the law, but not yet sufficiently evaluated

3. The debates surrounding the adoption of the law emphasized, as early as 2015, the many positive effects expected from the reform of the notary profession. In general, the broadening of access to the profession and the deregulation of fees and practice structures should lead to a decrease in prices and an increase in the quantity and quality of services offered. These effects are anticipated by reference to numerous economic studies and several foreign experiences with the liberalization of professional services markets. Compared to many OECD countries, France in 2015 is characterized by a high level of regulation of professional services [106].

4. The intensification of competition in price, quantity and quality should in this context make it possible to reduce the notaries’ rent, which is considered excessive [107]. Furthermore, it is expected that not only the consumers of notarial services will benefit from the positive effects of the reform, but also that these effects will be spread to the whole of society [108].

5. To date, even though they were the main motivation for the law, these positive effects expected from the law have not, to our knowledge, been the subject of an exhaustive and systematic evaluation, on both a macro- and microeconomic level. The overall effect of the provisions applying to notaries on growth, the creation of activity and jobs, as well as on the level of professional income, is therefore not precisely known [109]. The lack of evaluation also makes it impossible to rigorously measure the results obtained since 2015 against the law’s objectives - in 2019, the OECD thus pointed out that "[p]or notaries’ services (...), France continues to have some of the highest barriers to entry and practice controls in the OECD area" [110].

II. Significant effects on the supply and pricing of the profession

6. While the effects of the measures reforming the notary profession on the French macroeconomic situation and on the income of the profession are incompletely assessed, several elements corroborate the profound impact of the law on the notary profession.

1. The new route to the profession has led to a certain demographic renewal

7. First of all, the law modifies the rules for entry into the profession. In accordance with the principle of regulated freedom of establishment, the Competition Authority now issues, every two years and after public consultation, an opinion on the freedom of establishment of notaries and proposes to the Ministers of Justice and of the Economy maps of the areas of establishment and recommendations on the rate of creation of new offices [111]. These maps distinguish between zones of free installation, where installation is carried out within the limits of the recommended rate of creation, and zones of controlled installation, for which the Minister of Justice may or may not accept installation after a public opinion issued by the Authority [112].

8. The results of this new access route to the profession of notary appear to be generally positive in relation to the law’s objective of increasing the number of notaries in the profession. According to the Ministry of Justice [113], the number of notary offices has increased from 4,589 on January 1, 2016 to 6,851 on January 1, 2021, with 1,600 new notaries appointed to an office created between the spring of 2017 and the summer of 2018 and 699 additional notaries between the summer of 2019 and the fall of 2020. The Competition Authority notes that the objectives of the 2016-2018 and 2018-2020 maps, which set a target of 1,650 and 733 new notaries appointed to offices created, respectively, have been almost achieved, with the Direction des affaires civiles et du sceau (DACS) reporting only 33 unfilled appointments under the first map and 87 under the second [114].

9. On the face of it, therefore, the law appears to have increased the number of providers, thereby stimulating competition in the market for notarial services. However, there is no guarantee that this increase in the number of providers will result in increased competition in practice. All other things being equal, the latter would only be observed under the assumption that suppliers actually adopt pro-competitive behavior [115]. However, although not fully documented, a certain amount of anti-competitive behavior on the part of established professionals (barriers to entry, etc.) has been reported from time to time [116]. Under these conditions, it is therefore not strictly certain that the increase in the number of suppliers will result in an increased level of competition.

10. The increase in the number of notaries and offices is accompanied by notable demographic changes in the notarial population. According to the Ministry of Justice [117], the new notaries appointed to the offices created under the two maps 2016-2018 and 2018-2020 are younger (with an average age of 39) and predominantly female (67% for the 2018-2020 map, 58% in 2016-2018). While the Macron law did not explicitly aim to rejuvenate and feminize the notary profession, we can obviously welcome developments that bring the demographic structure of the profession closer to that of the French population.

11. However, there is no indication that this evolution concerns all the demographic, social and economic dimensions characterizing the notarial population. From the perspective of a socio-economic evaluation of the law, access to more complete data on the profiles of new entrants would be desirable in order to examine whether the effects of the reform are limited to a greater economic (competitive) opening of the profession, linked to the entry of new suppliers, or whether they also result in an increased social opening and an effective renewal of its composition.

2. A moderate decrease in rates

12. The Macron Law also took the form of a decrease in notary fees (- 2.5% in 2016). This limited decrease is explained by the extension in 2018 of the 2016 tariffs until 2020, then the postponement to 2021 of the entry into force of the new updated tariffs in 2020, due to the health crisis linked to Covid-19. More structurally, it can be explained by the fact that price competition mechanisms in the market for notarial services are not very effective. Thus, few notaries, including those in offices newly created by the law, have taken advantage of the possibility opened up by the law to grant a 10% discount to their clients [118], thereby limiting the expected downward effects on prices of the increase in the number of suppliers. Under these circumstances, it is questionable whether the measures of the law intended to stimulate price competition are sufficient to reduce the notarial rent.

III. Some effects of the law are ambiguous or uncertain

13. With respect to the geographical distribution of offices, according to the French Competition Authority, the creation of new offices would have improved the territorial network [119]. According to the CSN, on the contrary, the law has led to a relocation of supply to urban areas, to the detriment of rural areas, at the risk of accentuating the phenomena of spatial segregation and inequalities of access to notarial services [120]. While the differences in the interpretation of the effects of the law can be explained by the choice of different levels of analysis [121], the data do not in any case make it possible to exclude possible perverse effects of the law, in contradiction with its initial objectives.

14. In terms of organizational innovation of the offices - which was an important issue of the law - the effects are also ambiguous. On the one hand, the possibility of developing capital-based structures, whether single or multi-professional, appears to be little used. On the other hand, the law favors the regrouping of offices in the form of multi-office companies [122], which is on the increase, while at the same time the creations are mainly based on the model of individual practice, in contrast to the dynamic of structuring the offer around large operators that has prevailed for twenty years and with possible negative consequences on the quality of the services offered [123].

15. The consequences of these dual developments remain uncertain. Should we expect a strengthening of competitive intensity in the coming years or an increase in concentration and market power of certain operators, in contradiction with the initial pro-competitive spirit of the law? The answer will depend to a large extent on the nature - competitive or cooperative - of the relationships between the different types of structures [124] and the distribution of market segments between them. For consumers, the effects of organizational change will also depend on how well the agencies pass on any cost reductions associated with economies of scale and scope to prices.

16. Finally, one may wonder about the lasting nature of the positive effects of the law observed today. The newly created offices are characterized by their economic fragility [125]. This raises the question of their survival in the medium term and the durability of the effects of the reform. In particular, if the difficulties of the new offices were to lead to their massive takeover by older structures and to an increased concentration of the notarial offer, this would result in a deviation from the initial objectives of the law.

IV. Effectiveness and pragmatism in the implementation of the law

17. A reform that is far removed from the needs and practices of economic actors runs the risk of being ineffective because of possible circumvention strategies. In this respect, several of the initial provisions of the law have been pragmatically adjusted to ensure their acceptability to the notarial profession.

18. With regard to the installation of new notaries, for example, the 2021-2023 map of the Competition Authority shows a concern to take into account the economic context of the Covid-19 pandemic. In line with the concerns of the profession, the new map therefore provides for a slowdown in the rate of installation (250 new notaries by 2023, compared to 1,650 for the period 2016-2018 and 733 for 2018-2020), the exceptional abandonment of the carry-over to the next map of the remainder of unfilled appointments, and the postponement of the horizon for assessing the need for new installations to 2029.

19. With regard to tariffs, the law initially provided for a method of setting tariffs on a document-by-document basis, consisting of determining the fee received for each service on the basis of the costs actually incurred. This method was revised in line with the demands of the profession, to take account of the difficulties of using cost accounting in the offices, and replaced by an approach based on overall profitability, which is more practicable and has the advantage for notaries of guaranteeing the coverage of all costs incurred and a reasonable remuneration for their regulated activity [126]. The original provisions of the law concerning authorized discounts were also adapted to incorporate certain requests from notaries.

20. These adaptations can be interpreted as the result of a process of co-production of professional regulations by the public authorities and the notarial profession, making it possible in particular to reduce the informational asymmetry to the disadvantage of the former through information transfers from the latter. They can also be analyzed as a sign of the notary’s power of persuasion. Today, the absence of an exhaustive evaluation of the effects of the Macron Law on the notarial profession does not allow us to distinguish between these two theses, nor to conclude definitively on the capacity or incapacity of the law to modify the institutional, economic and social equilibrium of the notarial profession in a lasting and profound way.

The health sector under the presidency of Emmanuel Macron: Retrospective and perspectives

Sophie Pelé
Partner, Dechert, Paris
Marion Provost
Partner, Dechert, Paris
Mélanie Thill-Tayara
Partner, Dechert, Paris

1. President Emmanuel Macron’s five-year term will most certainly have been marked by the Covid-19 pandemic, which hit France and the world hard in early 2020, and plunged the country into an unprecedented health crisis. This crisis, which highlighted the strengths and weaknesses of our healthcare system, and in particular the importance of autonomy and self-sufficiency in pharmaceuticals, should not, however, justify forgetting the reforms undertaken over the last five years, with the aim of encouraging innovation and promoting access to care in a sector marked by profound and rapid change.

2.[]This is also the objective of the European Commission (the "Commission"), whose pharmaceutical strategy for Europe, including the creation of the European equivalent of BARDA [127], is consistent with the objectives set by the President of the Republic on June 29, 2021, at the end of a Strategic Council for the Health Industries ("CSIS"): Emmanuel Macron’s goal is to makeFrance the leading European nation in terms of innovation and sovereignty in healthcareby 2030 [128]. 7 billion, half of which would be invested in research and development, particularly in biotherapies, and the other half would be devoted to improving France’s image in order to attract investment and the relocation of healthcare product production to France.

3. The goal is certainly ambitious, and achieving it is probably a challenge. This is evidenced by the regulatory reforms undertaken since 2018 in favor of the sector, following the previous CSIS: even though they were intended to encourage investment, better remunerate innovation and allow real progress in terms of access to care, many of them have not had the desired effect (I.).

4. In this context, we are entitled to wonder about the place of competition law and the role that the regulatory authorities can play in achieving the objectives that the government and the pharmaceutical industry have jointly set. On this point, while competition law can undoubtedly serve as an instrument to support health policy, the authorities responsible for applying it, first and foremost the French Competition Authority ("Autorité de la concurrence"), must take the measure of the stakes and challenges of the sector in order to orient their actions accordingly.

5. An alignment of regulatory policy with the policy of combating anti-competitive practices (II.) and the policy of controlling investments and acquisitions (III.) seems essential to keep the course set by the President of the Republic.

I. A mixed record on the regulatory front

6. The organization of the 8th CSIS in July 2018 was intended to send a strong signal to the sector, both of a willingness to commit to far-reaching reforms for the sector, and of a willingness to involve all stakeholders. And indeed, this edition has resulted in a number of commitments that have been followed up.

7. To cite just one example, the acceleration of early access to innovation resulted in the overhaul of the temporary use authorization ("ATU") system, which ultimately led to a major overhaul of the regulatory framework, ratified in the French Social Security Financing Act ("LFSS").

8. The ATUs, created in 1992, make available to patients, even before the granting of a marketing authorization ("MA"), drugs without therapeutic alternatives, intended to treat serious diseases. Pioneering when they were created, they had become, by way of successive reforms (no less than four reforms between 2014 and 2020), disincentives because they were illegible. In particular, the succession of different regimes created a high degree of uncertainty about the financial risk that could lead a laboratory to have to pay back the difference between the price of the innovative drug finally decided by the Comité économique des produits de santé ("CEPS") and the price it had initially charged. These situations have tended to multiply insofar as, while the ATU were in principle reserved for innovative specialties intended to provide a response to serious diseases, it was not uncommon for the innovation provided to receive little or insufficient recognition by the Haute Autorité de santé ("HAS").

9. Since July 1, 2021, the regulatory framework has referred to internationally recognized concepts: on the one hand, early access, intended to anticipate by a few months access to treatments in the process of obtaining marketing authorization; on the other hand, compassionate access, the objective of which is to provide access to treatments that are not intended to be authorized in France.

10. The LFSS for 2022 even went so far as to complete this system by creating, for the first time in France, a true direct access mechanism, allowing drugs to be marketed as soon as they obtain marketing authorization, without waiting for the outcome of price negotiations, which can last on average nearly a year, during which time the drugs are not accessible to patients.

11. In the meantime, a new CSIS was convened in 2021, this time under the aegis of the President of the Republic (the pandemic having passed through), one of the pillars of which naturally focused on strengthening French industrial capabilities.

12. But at a deeper level, in order to create fertile ground for innovation and a favourable - and attractive - framework for investment, these two editions have highlighted the need to simplify the rules for regulating the drug market. However, on this point, it is clear that the various reforms carried out in the sector during the five-year period have been marked by two major pitfalls.

13. On the one hand, the desire for simplification seems to have been overshadowed by an excessive technicalization of the texts. The best example of this is undoubtedly the reform of early access, the complexity of which does not even allow for the coverage of all cases, particularly transitions with the ATU and post-ATU regime.

14. On the other hand, far from the collaborative spirit of the CSIS and even the price agreements concluded between laboratories and public authorities, these reforms have led to a revival of the powers conferred on the administration.

15. Thus, for example, the counterpart of direct access is the obligation for the laboratory to conclude a price agreement within ten months, failing which the price will be set unilaterally, since direct access is only granted for a non-renewable one-year period.

16. Efforts to promote innovation thus tend to be overshadowed by budgetary imperatives. Although the mechanism for the laboratory to pay back the price charged during the early access period is provided for, in the event that the price charged during the early access period is higher than the price finally agreed with the CEPS, the reciprocal is not guaranteed: a laboratory that is granted a final price higher than the price it chose to charge during the early access period can only recover the difference to the extent of the rebates it has already paid, so that it does not cost the health insurance system a cent.

17. The encouragement of innovation, which is so essential in the health sector - as these reforms seem to recognize - should not ultimately take second place to budgetary issues. On the contrary, it is pragmatism and voluntarism that should be the order of the day, a conclusion that also applies to the application of competition rules in the health sector.

II. A counter-current use of competition law

18. Encouraging innovation and promoting access to care is indeed at the heart of the concerns of competition law in the health sector. This is demonstrated by the numerous statements on this subject made by Mrs. Margrethe Vestager, Vice-President of the Commission in charge of competition issues, who has repeatedly stressed the importance of preserving effective competition in the pharmaceutical markets.

19. In practical terms, this competition takes place in several ways.

– First, upstream, through innovation: this is currently focused on biotherapies, immunotherapy, gene therapy and personalized medicine, and more generally on research into treatments designed to improve life expectancy or, at the very least, the quality of life of patients. However, while health is priceless, these innovative treatments have a significant cost - a fair remuneration for the research and development efforts of laboratories - which, in France, is largely borne by the social security system.

– Secondly, downstream, by the arrival of generic or biosimilar drugs on the market, which create real price competition between laboratories and thus contribute to reducing the bill somewhat. Faced with a system that has run out of steam, the control of healthcare expenditure has become, as we have just recalled, an essential aspect of the policy pursued by successive governments.

This is a real balancing act, in which the competition authorities, and the Autorité in particular, are also trying to find their place.

20. In this respect, the Commission and the Authority have demonstrated their ability to adapt and be flexible in the midst of the Covid-19 crisis. The day after the declaration of a state of emergency throughout Europe, the Commission published a temporary framework to facilitate cooperation between companies in the fight against the pandemic, which included two major components: on the one hand, a kind of relaxation of the rules on information exchange between companies to allow a rapid response to the emergency caused by the crisis; on the other hand, the exceptional return of comfort letters, allowing companies to notify their cooperation projects to the Commission in order to obtain a blank check before their implementation [129].

21. The Authority naturally associated itself with this initiative and announced, in a communication dated March 23, 2020 [130], that it did not intend to actively intervene against necessary and temporary measures put in place to avoid a shortage of products considered essential in the fight against Covid-19 , insofar as such measures, even if they entailed restrictions on competition, could generate efficiency gains that would counterbalance their potential negative effects.

22. But beyond the Authority’s commendable reaction to a situation that is, to say the least, extraordinary, it is regrettable that the Authority’s action in the health sector, which it had made one of its priorities under Isabelle de Silva’s term of office, has been focused on the repression and prevention of anti-competitive behavior, The pharmaceutical industry could have benefited from another use of competition law as a tool for health policy, notably through the Authority’s consultative function.

23. The abortion in secret of the opinion on drug pricing in France is a perfect illustration. On November 20, 2017, the Authority announced that it was opening a new sectoral investigation in the health sector, which was to focus more specifically on the conditions of distribution of medicines, on the one hand, and on the mechanisms for regulating their prices, on the other [131]. On this second aspect, the Authority aimed to "analyze the legal and factual framework surrounding the setting of prices for reimbursable medicines in France" [132] and reserved the possibility of proposing a modernization of the current system. In this context, the Authority was also supposed to look into related issues such as the negotiating power of hospitals vis-à-vis pharmaceutical companies. However, after the publication of a first opinion in April 2019 [133] dedicated to the distribution of medicines, the second, expected in the summer of the same year, never came. It would have been interesting, however, to see what avenues of reflection the Authority would have proposed to make the price-setting system in France more efficient and thus make the country more competitive and attractive to foreign investment.

24. Unfortunately, the Authority did not really explain why it decided not to explore the question of possible improvements to the mechanism for setting the prices of reimbursable drugs in France. Perhaps it felt overwhelmed by this highly complex subject, which does not, at first glance, fall specifically within its field of competence.

25. However, this did not prevent the Authority from indirectly addressing the issue, in its decision of September 9, 2020 [134], in which it imposed a record fine of nearly 445 million euros on the laboratories Novartis and Roche for abuse of a collective dominant position on the market for the treatment of age-related macular degeneration ("AMD"). Indeed, the Authority sanctioned a discourse qualified as alarmist, even misleading, on the risks associated with the use of the drug Avastin® outside of its marketing authorization to treat AMD, with the alleged aim of favoring the use of Lucentis®, a drug expressly developed and indicated for the treatment of this ocular condition. However, behind his intervention, there is a subtle desire to intervene in the price of Lucentis®, which at the time of the facts in France was one of the most innovative and therefore most expensive drugs, weighing significantly on health insurance expenditure.

26. However, this financial burden was justified, as the innovation provided by this drug has revolutionized the treatment of AMD, justifying the granting of a level II ASMR (Amélioration du Service Médical Rendu [135]). As a result, its price was set by the CEPS at a level that is certainly high, but which merely reflects the benefit provided to patients. However, by insinuating that the price of Lucentis® was too high, the Authority is relegating to second place the research and development efforts that led to the marketing of this drug. Here again, this position is clearly contradictory to the government’s objective of encouraging and rewarding innovation.

III. Controlling investments and acquisitions: Next challenge?

27. The last essential point on this issue of innovation in healthcare is the possibility for major players in this field, particularly foreign ones, to invest in France. Indeed, innovative companies have extremely important financing needs when it comes to developing a health product.

28. However, the latest reforms in this area have led to a tightening of the rules, which raises questions. On the one hand, the tightening of controls on foreign investment in the health sector is noteworthy: while the pandemic raised fears of an assault on companies weakened by the economic situation, the health sector has systematically been concerned by the latest reforms, which have added research and development activities in artificial intelligence and biotechnology to the list of sensitive sectors. This does not mean that international investment is not allowed in these sectors. However, foreign investors, whose financing needs the sector cannot do without, run the risk of not being able to carry out the planned investment, or of having to do so under certain conditions imposed by the Minister of the Economy, which may dissuade some of them from supporting French innovation.

29. On the other hand, and in the same way, the announcement by the Commission at the end of 2020, concretized by guidelines published in March 2021 [136], of its intention to review certain mergers, notably in the pharmaceutical sector, that do not cross the Community thresholds through the referral mechanism provided for in article 22 of the European Merger Regulation, is another example of the intervention of competition authorities in the health sector. In France, the Authority, which was also looking for an instrument to apprehend "killer acquisitions", hastened, at the invitation of the Commission, to refer the Illumina/Grail transaction, i.e. the acquisition of an innovative biotech company by a more established laboratory, to the latter for examination on the basis of Article 22.

30. It is probably still too early to take the concrete measure of the consequences of this interventionism on foreign investment in France and in Europe. Nevertheless, we can already question the appropriateness of the measure: while it will certainly prevent certain operations that are harmful to competition, it could also have the boomerang effect of slowing down innovation, as does the control of foreign investments. Faced with this new threat represented by competition law, some investors could indeed be more cautious. Many research and development projects cannot succeed without financial support and may well be abandoned in the future for lack of sufficient resources. Once again, while it should be a driver of innovation, competition law could be a brake on the ability of our French biotechs and, more broadly, our pharmaceutical industry, to meet the challenges of tomorrow.

Conclusion

31. On the eve of a new presidential election, it is surprising, to say the least, given the issues and challenges facing the healthcare sector, that it seems to be relatively absent from the programs of the various candidates. A strong and innovative pharmaceutical industry is essential in France and in Europe, as the pandemic has shown.

32. Regulatory law, competition law and foreign investment control are all tools that can enable public authorities to promote innovation and help strengthen the life sciences sector in France and Europe. However, this would require giving greater flexibility to companies, both large and small, and valuing this innovation at its true value. It is time for the public authorities to take the measure of the stakes and to provide concrete answers. In particular, we must put an end to the tension that exists today, both at the regulatory level and in the Authority’s decisions, between the remuneration of the considerable research and development efforts made by laboratories and other companies in the health sector on the one hand, and the protection of public finances on the other. It is indeed sterile to continue to systematically oppose the interests of laboratories and the interests of patients, even though the health crisis has shown that they are often aligned. Nevertheless, France cannot revolutionize everything on its own. The major orientations for promoting innovation, supporting investment and guaranteeing access to care for everyone should instead be dictated by the European Union itself - in consultation with the Member States so that it has the means to do so - for greater integration and cohesion in the field of health at the European level.

33. With the presidential election in April 2022, the very recent arrival at the head of the Authority of a new president who is a priori familiar with business life, and the French presidency of the European Union, the health sector seems entitled to hope for a more positive and less defensive vision of innovation in this field.

The Macron years in distribution law

Frédéric Buy
Professor, University of Aix-Marseille

1. We know the joke: Emmanuel Macron is not "of the left or the right", he is "neither of the left nor the left"! No one has ever asked the specialist in distribution law, who is not a priori a political scientist, what he could think of this. Well, it is a pity, because the law of distribution, and more exactly of the large-scale distribution, is, behind its very technical varnish, undergirded by stakes which are eminently political. Let us recall that the French food industry is crossed by great structural imbalances which give it, in many respects, the appearance of a textbook case: a concentrated downstream, with a handful of operators who share almost the entire retail market and who reign even more powerfully, thanks to alliance strategies, over the supply market, an intermediate link (that of the processors) with a more disparate face, made up of multinationals, SMEs and VSEs, and an atomized upstream, made up of agricultural producers in pain, who are insufficiently structured and who have all the trouble in the world to make a decent living from the product of their work [137]. At the last Salon de l’Agriculture, which was held as it is every year at the same time as the "commercial negotiations", i.e. discussions on the purchase prices of products, the President of the Republic declared that "pressure will continue to be put on the processors and distributors, and until the last minute we will not give up" [138]. So, left-wing rather than right-wing?

I. The results of the Bercy years

2. If we go back in time, we remember that François Hollande’s Minister of the Economy had already tried to contain the "buyer power", by developing the technique known as "structural injunction" . In short, it was a matter of giving the Competition Authority the power to force distribution groups to sell some of their stores, not because they had abused a dominant position, but simply because they had become too big. Article 39 of Law No. 2015-990 of August 6, 2015 (which was part of the initial draft tabled by the Minister himself) [139] was, however, censured by the Constitutional Council, on the grounds of excessive infringement of entrepreneurial freedom and property rights [140]. We should not jump to conclusions about the former minister’s sense of solidarity: the text was not so much driven by a concern to protect small suppliers as by a concern to preserve effective competition and avoid pricing practices unfavorable to consumers [141].

3. It is this same competitive spring that was at work in the framework for commercial distribution networks, also created by the Macron law, but not retested by the Council (articles L. 341-1 and L. 341-2 C. com.). To put it simply, this is the counterpart of the structural injunction for networks of independent stores, operated for example by franchisees or tenant managers: the texts encourage changes of name by removing certain contractual obstacles. The system is very (too?) restrictive (one thinks of the radical prohibition of non-reaffiliation clauses, which have nevertheless a real legitimacy recognized by the jurisprudence). But the strong-weak relationship is still not in question. In any case, the aim is not to protect suppliers but, at best, to ensure a better balance in the relationship between the operator and the network [142].

4. In any case, Emmanuel Macron cannot be blamed for having lost interest in the crucial issue of distribution structures, which was neglected in France for too long. The Macron law, still it, is moreover at the origin of another device which was, subsequently, reinforced by the EGalim law of October 30, 2018, and which specifically targets purchasing alliances (art. L. 462-10 C. com.). Thanks to this tool, the Competition Authority can now control transactions that, for most of them, could never have been controlled under merger law (the famous "holes in the racket"). This is important from a technical point of view, but it is also important from a symbolic point of view, because liberal economic theories traditionally considered that buying power, far from being harmful, on the contrary favored low prices on the shelves [143]. By finding, in its first decisions relating to the application of article L. 462-10, that the cooperation agreements concluded by several giants (Metro, Casino, Auchan and Schiever in a first case [144], and Carrefour and Tesco in a second case [145]) created "competition concerns", the Authority very officially confirmed that purchasing alliances could be harmful: for the consumer, obviously, but also for certain suppliers, in particular suppliers of private label products (i.e. under the distributor’s brand).(i.e., private label), those smaller companies (SMEs, VSEs) that are too often subject to unfavorable contractual conditions.

II. The results of the five-year period

5. But let’s go back to the Salon de l’agriculture and the trade negotiations. The President of the Republic called on the players in the sectors "to be responsible" and expressed the hope that the negotiations would lead to "fair remuneration" for agricultural producers [146]. No one was surprised. In the explanatory memorandum of the proposed law to protect farmers’ remuneration (the future EGalim 2 law), we already read that: "For three years, France has adopted strong measures to support its agriculture, notably with the ’Etats Généraux de l’Alimentation’ (General States of Food) supported by the President of the Republic, and then the EGalim law ( ...). The Government has taken the issue of value distribution between those who produce, those who process and those who distribute agricultural and food products head on."

6. It is a fact: the question of farmers’ remuneration and the rebalancing of trade relations has been the "red thread"of the five-year period. [147] of the five-year term. Its great emblem was Law No. 2018-938 of October 30, 2018 for the balance of commercial relations in the agricultural and food sector and a healthy, sustainable and accessible food for all, known as "EGalim". Abandoning previous economic policies to protect purchasing power in favor of the objective of social justice and food sovereignty [148], this text adopted a series of measures designed to "consolidate the position of producers in the negotiation" [149]. This took the form, upstream, of an inversion of the price construction (the proposal must come from the producer, and no longer from the buyer), by taking into account indicators relating to production costs and by encouraging the structuring of the sectors, and downstream, by two media measures that were adopted in the wake of the ordinance [150]: on the one hand, an increase in the threshold of resale at a loss, with the idea that large distributors should be obliged to resell national brand products with a minimum margin in order to reduce the larger margin they were making on the backs of other suppliers, and on the other hand, a framework for the promotions practiced by distributors, promotions which, as we know, have the effect of reducing the selling price to the consumer, and whose weight weighs excessively on small suppliers

7. As far as reforms are concerned, we have seen more liberal... And yet, we had not yet seen anything, because very quickly the legislator was obliged to put the work back on the job. In fact, it was noted, against the backdrop of the crisis and the "price war" between brands, that trade negotiations continued to take place in a "very tense" climate [151], that the EGalim system was frequently circumvented and that farmers were not the beneficiaries of the 2018 reform. In truth, specialists were hardly surprised, as the reform seemed naive on a number of points (who could seriously believe that margins would trickle downstream?). The fact remains that Law 2021-1357 to protect farmers’ remuneration, known as "EGalim 2", was adopted on 18 October 2021 and was the occasion for a major turn of the screw [152]. Upstream, the "contractualization" regime is now applied to all (and not only, as before, to those who agreed to put their contracts in writing) and automatic price revision clauses are imposed. Downstream, negotiation of the share of the supplier’s price represented by agricultural raw materials is forbidden (this has been called "sanctuarization"), old recipes are used to channel the negotiation that may still concern the negotiable share (return of "line by line", prohibition of discrimination), and the result of the negotiation is formalized in an ad hoc agreement. We are also developing the system for combating "logistical penalties", which have too often served as disguised remuneration. In short, a real old-fashioned dirigisme.

8. Last but not least, we should not forget all the measures that, without having the immediate objective of protecting farmers, have been aimed at fighting against unfair commercial practices of distributors . The high point of the five-year period was, from this point of view, Ordinance No. 2019-359 of April 24, 2019 recasting Title IV of Book IV of the Commercial Code on transparency, restrictive practices of competition and other prohibited practices [153]. This had been announced by EGalim 1: the government also had the mission to overhaul this law tailored to channel the deviant practices of large-scale distribution, and which is called, somewhat strangely, the law of transparency and restrictive practices of competition. The ordinance of April 24, 2019, accompanied by a second, more discreet ordinance of the same date on liability for unfairly low prices, was not the great text we were expecting, notably because it did not know how to renounce the temptation of a bureaucratic law. But it had the immense merit, on a formal level, of rearranging a title of the code which had neither head nor tail, and of rearranging, in particular, its atomic nucleus, the famous article L. 442-6 of the Commercial Code, now L. 442-1, which contained the list of distribution abuses. One would have liked the memory of a bloated and unreadable text to be erased forever, and the 2019 reform had, from that point of view, rather succeeded. But the Macron years are part of a great French tradition of chronic legislative instability and "ephemeral laws" [154]. And it was no great surprise that Article L. 442-1 was quickly amended and amended three times: by Law No. 2020-1508 of December 3, 2020 containing various provisions for adapting to European Union law in economic and financial matters, known as the "DDADUE", by Law No. 2020-1525 of December 7, 2020 on the acceleration and simplification of public action, known as the "ASAP", and by the EGalim 2 law, which is now known [155]. The basket of reforms also includes Ordinance No. 2021-859 of 30 June 2021. But we should not overwhelm the government here: the European authorities having been impressed by the French experience in this area, a directive was adopted, on April 17, 2019, on unfair commercial practices in business-to-business relations within the agricultural and food supply chain [156]. And it was therefore necessary to ensure its transposition. Without major problems, of course.

9. But it is not only by counting the texts that we can make an assessment. If we were to retain one thing, it would perhaps be, above all, that this five-year term will have been at the origin of the most dirigiste texts that France has known for a long time. We will not neglect the Covid effect, of course, especially since it was observed that large-scale distribution had been the big winner of the first crisis of 2020. But apart from the installation of a crisis committee on payment terms, no exceptional measures have been adopted in this area. While the crisis may have been one of the driving forces behind public action over the past two years, it has not been the main determinant [157]. We mentioned a few lines above the EGalim 2 law and its strong prohibition on negotiation. But there is something even better: the administration has been given full powers to police trade relations. We already knew, of course, that the Minister of the Economy was entitled to act before the civil courts to have a restrictive practice sanctioned when the victim did not dare to complain about it (art. L. 442-4 C. com.). All governments combined, the Minister had never shied away from using his powers to ensure that central purchasing agencies were ordered to pay civil fines and to return tens of millions of undue advantages to suppliers. We also knew the role that could be, since the Hamon law of March 17, 2014, that of the DGCCRF agents, who could enjoin any company to comply with its obligations. But here’s the thing: faced with recalcitrant companies, the administration had never had, until then, any other possibility than to refer the matter to the judge. However, the DDADUE law now allows it to avoid going to court and to impose a penalty itself: in this case, a daily fine of up to 0.1% of worldwide sales excluding taxes. With the luxury, moreover, of being able to liquidate the penalty itself (art. L. 470-1 C. com.).

We would have liked, for the beauty of the exercise and to answer the question we asked ourselves at the beginning, to be able to draw some political lessons from it. But honesty obliges us to recognize that, from that point of view, the inclination to economic dirigisme is not (and perhaps never has been) significant. The jurist will therefore pass the buck to the political scientist.

Table of contents :

Introduction

I. A reforming voluntarism in competition and distribution law

II. Contrasting results

The liberalization of bus transport: A mixed record

I. The stability and depth of the normative framework

II. The structuring of the market in the form of a segmented duopoly

The opening of the railway sector to competition: Between political will and market realities

I. A competition policy in favor of the liberalization of the railway sector

II. Challenges to effective competition in the rail mode

Cabs vs VTC : Has the competitive war begun?

I. A legislative bubble

II. Jurisprudential inflation

Conclusion

The effects of the Macron law on the profession of notary: Some elements of assessment

I. Important positive effects expected from the law, but not yet sufficiently evaluated

II. Significant effects on the supply and pricing of the profession

III. Some effects of the law are ambiguous or uncertain

IV. Effectiveness and pragmatism in the implementation of the law

The health sector under the presidency of Emmanuel Macron: Retrospective and perspectives

I. A mixed record on the regulatory front

II. A counter-current use of competition law

III. Controlling investments and acquisitions: Next challenge?

Conclusion

The Macron years in distribution law

I. The results of the Bercy years

II. The results of the five-year period