2014 Mid-Year French Law Update

July 22, 2014

While the first year of President Hollande’s mandate has been focused on societal reforms (same-sex marriage, immigration, justice, reform of school timetables), his New Year’s Address confirmed that the Government’s efforts should concentrate on employment and growth for 2014.  Pledges to cut public spending, reduce labor costs for businesses and lower taxes have been made.

The current Administration is trying to place greater emphasis on social negotiation, which has been the case notably with the "responsibility pact" for business, entered into with French employers’ associations.  At the same time, faced with the duty to deal with certain controversial public debates, the French Administration has been pressed, in certain circumstances, to take urgent legislation (as opposed to legislation deliberated and voted by Parliament).  While this process offers the advantage of speediness, it may result in recent legislation being affected by a lack of consistency and hindsight as it aims at coping with specific situations.

In this article, we aim at giving you a brief overview of some major legal changes at the beginning of 2014.  Some entail future developments that both French companies and potential investors in France should take into account with respect to their French operations in the coming months.


Table of Contents

1.  Corporate, M&A

2.  Insolvency and Restructuring

3.  Contracts

4.  Tax

5.  Real Estate

6.  Labor and Employment

7.  Data Protection

8.  Public Law

9.  Antitrust


1.                 Corporate, M&A

1.1              Corporate, M&A – Impacts of the law aimed at recovering control over the real economy dated March 29, 2014 on listed companies

The recent law aimed at "recovering control over the real economy" dated March 29, 2014 (the "Statute") contains a chapter devoted to listed companies, which notably impacts the rules governing double voting rights, takeovers and grants of free shares. 

Double voting rights

The Statute expands the scope of double voting rights, which were a mere option before, and shall now automatically apply (as from April 1, 2016) to listed companies’ shares provided they are entirely subscribed and held in the shareholders’ name for at least two years. 

However, it will still be possible for companies to avoid automatic double voting rights by amending their bylaws prior to April 1, 2016. 


The Statute introduces a waiver threshold which renders the public offering null and void if it has not been reached by the offeror.

Indeed, a voluntary or mandatory public offering shall be automatically null and void if, upon expiry of the offer, the offeror has not obtained a sufficient number of shares representing at least 50% of the share capital or voting rights of the target company.  In such a case, all shares that would have been brought to the offer would return to their initial holders.

With regard to mandatory public offerings triggered as soon as a shareholder exceeds certain thresholds set by the law (as a basic rule, 30% of the share capital), the Statute introduces an additional mechanism allowing to suspend voting rights associated with the portion of shares that exceeds the threshold set by law until the relevant shareholder acquires 50% of the share capital or sells its portion of shares held in excess of the threshold. 

This mechanism aims at preventing de facto takeovers where the offeror would not pay the entire price associated with taking over the control. 

The Statute also lowers from 2% to 1% of the share capital the possibility offered to a shareholder holding between 30% and 50% of the share capital or voting rights to increase its stake over 12 consecutive months. 

In addition, the prerogatives granted to workers’ councils have been reinforced by the Statute, as the target company’s workers’ council is now associated to the entire takeover process.  Indeed, whereas the workers’ council was only informed of a takeover before the entry into force of the Statute, it must now be consulted and issue an opinion on the contemplated offer, within a specific timeframe.  In addition, the Statute provides for so-called "rendezvous" clauses between the offeror and the workers’ council every 6, 12 and 24 months following takeover of the company, during which the offeror reports to the workers’ council about the implementation of its intentions in terms of employment and business activity. 

Finally, the Statute suppresses the neutrality duty imposed on the management of the company during a takeover.  From now on, the management is entitled to implement anti-takeover actions with no need for shareholders’ prior approval, within the limit of the company’s corporate interest.  However, it is possible for companies to maintain the management’s neutrality duty by inserting such duty into the company’s bylaws.

Grants of free shares

Last but not least, the Statute also raised the cap for the allocation of free shares to employees to 30% of the share capital, compared to 10% before. 

1.2              Corporate, M&A – French Decree requiring Government approval for foreign investments in strategic business sectors

On May 14, 2014, the French government extended the blocking power of the French Ministry of the Economy with respect to foreign investments, whether from EU or non-EU investors, regarding six new business sectors.  The new rules came into effect on May 15, 2014 and concern the energy, water, transport, communications, defense and health sectors.  These new rules supplement existing regulations requiring foreign investors, prior to making an investment in specified sectors, to obtain an authorization from the French Ministry of the Economy.

Extension of the protected sectors

The new rules extend the list of business sectors subject to this prior authorization.  Now covered are the activities related to goods, products or services, essential to preserve French interests in relation to public order, public security and national defense listed below:

  • Integrity, security and continuity of energy supply (electricity, gas, hydrocarbon or other sources of energy);
  • Integrity, security and continuity of water supply in compliance with the rules established in the interest of public health;
  • Integrity, security and continuity of the operations of transportation networks and services;
  • Integrity, security and continuity of the operations of electronic communication networks and services;
  • Integrity, security and continuity of operations which are essential for the defense, security or survival of the French nation and nuclear plants; and
  • Public health protection.

Authorization process

Any foreign investor contemplating investing in an entity or line of business which falls into one of the business sectors mentioned above, is required to seek an authorization from the French Ministry of the Economy, irrespective of the size of the investment.

The Ministry of the Economy has a two-month period of time to review the contemplated investment.  Failing an answer within this time-line, the investment is deemed to be authorized.  An authorization may be subject to the divestment of assets.  Please note, however, that the two-month period starts running only from the time the file is deemed complete by the Ministry.

Failure to comply with the procedure may lead the Ministry of the Economy to order the investor to withdraw from the investment, to modify the scope of its investment or to annul the investment.  Failure to comply with this order exposes the foreign investor to a fine in a maximum amount equal to twice the investment amount (in addition to the annulment of the investment).

Examination by the European Commission

The European Commission has already publicly indicated that the protection of strategic interests by an EU member state is essential but that the means put in place to achieve the protection must be proportionate to their goal.  The European Commission stated it will examine these new rules and decide whether they comply with EU rules.

For further details on this new Decree, please see the Gibson Dunn Client Alert of May 16, 2014:


1.3              Corporate, M&A – Introduction of class actions in France for consumer and competition infringements

After the French Constitutional Council (Conseil constitutionnel) approved the compatibility of the class action mechanism with the French Constitution, the French Statute on Consumer Protection n°2014-344 of March 17, 2014 has finally been enacted (hereinafter the "Statute"). 

French class actions must be differentiated from US class actions where all people meeting the criteria are automatically included in the class unless they "opt-out".  In France, the procedure is based on an "opt-in" system whereby consumers must express their consent to be part of the group and claim their individual compensation after a judgment on the professional’s liability has been handed down by a civil court. 

A limited scope

A class action can only be brought in case of consumer and competition infringements, excluding infringements of health and environmental laws at the moment.

In order to go to court, consumers must have been wronged by one or several professionals of the same category whether in the context of a sale of goods or a provision of services or as a result of an infringement of competition law.  At least two consumers must have been placed in an identical or similar situation due to the breach by a professional of its contractual or legal obligations. 

The class action only allows for financial or in kind compensation of individual economical damages; losses resulting from bodily or moral injuries are thus excluded.

Class actions can only be brought before the courts by a few nationally and accredited consumer associations as defined in Article L. 411-1 of the French Consumer Code (15 for the time being). 


The Statute distinguishes two types of procedure, the "regular" procedure and a "simplified" procedure.

With regard to the "regular" procedure, the court will determine, in a first judgment, whether the conditions required for the launching of a class action are met and will rule, should the case proceed, on the professional’s liability on the basis of individual cases presented by the association.

The court will thus also determine:

(i)           the group of consumers entitled to compensation or set the criteria for group inclusion;

(ii)          the damages that can be awarded to each  consumer or class of consumers forming the group and the amount of those damages;

(iii)        the practical means for consumers to join the group and obtain compensation;

(iv)        the timeframe for consumers to join the group (opt-in) and the timeframe for liquidation of the assessed damage; and

(v)          the measures needed to inform the consumers potentially concerned by the class action of the court decision.

At any stage of the procedure, the court may order any measures it deems necessary to preserve and produce evidence.

Once the consumers have opted in to participate in the class action, the damages will either be collected directly from the professional or through the association or legal professional assisting the association with the proceedings. 

Any difficulty that may arise during the liquidation of the losses will be solved by the same court in a second judgment.  Consumers who have not received compensation from the professional will be represented by the association in order to obtain the enforcement of this second judgment which will rule on the difficulty and order the professional to pay.

In cases where the identity and number of consumers are identified, a "simplified" procedure may be followed.  In such cases, the court may, in a single judgment, rule on the professional’s liability and order the person to directly and individually compensate the consumers under the terms and within the timeframe set by the court.  When the decision becomes final, all the consumers must be individually informed of the decision at the professional’s expense and each must then accept compensation as provided by the court.

Specific provisions regarding competition law

Class actions for anti-competitive practices can only be brought on the basis of a final violation decision from French or EU competition authorities, which can no longer be appealed as regards the findings of a violation.  The suit must be filed within five years from the date on which the final decision is no longer appealable.


The Statute allows negotiated settlements through mediation.  Only the association that brought the class action can participate in the mediation.  The agreement resulting from mediation must be endorsed by a court in order to be binding and enforceable on the parties. 

As the Statute introduces a new concept in the French legal system, it is difficult to anticipate its practical consequences.  However, it appears that the class action procedure is long and complex and is more in the hands of the accredited consumer associations than the courts.  In addition, the procedure requires human and financial resources that said associations do not necessarily have.  Despite this, it is likely that that the new Statute will have a significant impact, first in the fight against anti-competitive practices and second if the law is extended (as expected) to health, environment, discrimination and, later, to any type of damages suffered by consumers.

1.4              Corporate, M&A – Introduction in France of non-binding shareholder say-on-pay vote on executive corporate officers’ compensation

Despite Mr. Hollande’s campaign pledge to regulate the compensation of executives in large corporations, and after extensive and heated public debate on this topic, France finally decided to implement a softer approach by inserting an ex-post control by the shareholders of the compensation of corporate officers of listed companies.

The latest version of the AFEP-MEDEF Code of Corporate Governance for Publicly Traded Companies (which is the corporate governance code most commonly used by French listed companies) issued in June 2013 introduced non-binding shareholder say-on-pay vote on executive corporate officers’ compensation.  This recommendation is effective since January 2014 and requires the board to include advisory say-on-pay resolutions in every annual shareholders meeting.  Thus, the board should submit to the shareholders’ vote all elements of compensation of each executive corporate officer with respect to the fiscal year under review, whether they are stock options, performance shares or any long term incentives, termination or retirement benefits, or benefits of any kind.  The proposed resolution of the shareholders, which requires a simple majority vote for its approval, is purely advisory and non-binding.  Therefore, the compensation of corporate executive officers remains exclusively set by the board. 

In the event of a negative vote, the board after consultation of the compensation committee should call a subsequent special board meeting to reexamine the issue.  The board should thereafter publish a press release on the company’s website mentioning any actions taken in response to shareholders expectations that were expressed during the shareholders meeting.  It should be noted however, that negative vote decisions are extremely rare.  As mentioned the vote is not binding on the board of directors and the board still has the power to modify unilaterally the compensation of executive corporate officers.  However a negative say-on-pay vote may adversely affect the brand of a company and the repute of its board in the mind of investors and of the public at large.  A negative vote could even potentially lead to the resignation of the corporate executive officer concerned.

In practice, in France, for a large majority of companies, the resolution proposed to the shareholders does not provide the elements or amount of executive officers’ compensation, details of which are usually set forth in companies’ annual reports.  Therefore, the new system does not significantly increase shareholders’ rights of information.  In addition, for the first year of its application, we are not aware of any CAC 40 companies where the proposed say-on-pay resolution received a negative vote.  More specifically, for most CAC 40 companies say-on-pay resolutions have been approved with approximately the same percentages as other resolutions.  Only one say-on-pay resolution of CAC 40 companies was adopted with substantially less number of votes whereas the majority of other resolutions were adopted by more than 80%.

From a comparative standpoint, the French system is much less constraining than the one implemented in October 2013 in the United Kingdom which introduced a new obligation for all listed UK companies to put the remuneration policy to a binding shareholder resolution at least every three years, in addition to the pre-existing requirement to have, at each annual general meeting, an advisory shareholder vote on an implementation report on how the approved compensation policy has been implemented during the past year.

However, France’s say-on-pay regulations can be compared with those of the majority of countries which tend to choose advisory say-on-pay votes rather than binding ones.  This is for example the case in Germany, where parliament’s upper house voted in September 2013 against a proposed statute that would require a binding annual shareholder vote.

It is worth mentioning that the European Commission has recently published a proposal to review the Shareholders’ Rights Directive, whereby the Commission proposes to introduce a binding vote on remuneration policy every three years and an advisory annual vote on how the remuneration policy has been implemented.  Given the significant differences of European Union Member States’ company law, it will be set out in detail for Member States how these principles will be complied with and what procedures would need to be followed if shareholders reject the remuneration policy.

1.5              Corporate, M&A – Employee representatives appointed as members of the board of directors in large companies

Designed to increase collective expression of employees and greater consideration for employees’ collective interests, the June 14, 2013 statute on the securing of employment introduced new requirements for employee representation in large companies that employed more than 5,000 employees over the last two financial years.  These companies are now required to appoint employee representatives as members of their board of directors or supervisory board. 

From now on, at least one employee representative must be appointed in companies where the number of directors is less than or equal to twelve, while companies with more than twelve directors are required to appoint two employee representatives. 

These employee representatives holding a seat in the board of directors are granted similar rights and prerogatives as other directors.  Their eligibility is notably conditioned to the fact that they are hired under an employment agreement for at least two years.  Also, the duties of employee representative at the board of directors are incompatible with the mandate of member of the Workers’ Council.

1.6              Corporate, M&A – The creation of a specialized Public Prosecutor: the financial Public Prosecutor

The statute n° 2013-1117 on the fight against tax fraud and serious economic and financial crime and the organic statute n° 2013-1115 on the financial Public Prosecutor dated December 6, 2013 provide for the creation of a financial Public Prosecutor’s office headed by the financial Public Prosecutor under the authority of the General Prosecutor at the Paris Court of Appeal.  This new Public Prosecutor is specifically in charge of financial matters, with jurisdiction over offences committed over the entire national territory.

The financial Public Prosecutor has been granted several levels of competence:

(i)           he has an exclusive jurisdiction to investigate and pursue offences related to stock market activities (until now vested in the General Prosecutor of Paris), i.e., insider trading, dissemination of false or misleading information and market manipulation;

(ii)          he shares concurrent jurisdiction with that of the courts of first instance (tribunaux de grande instance) regarding bribery of foreign public officials (art. 435-1 to 435-10 of the French Criminal Code and private bribery and bribery regarding highly complex sports betting (art. 445-1 to 445-2-1 of the French Criminal Code); and with that of the Inter-regional Specialized Jurisdictions (Juridictions inter-régionales spécialisées or "JIRS") with regards to certain specific offences when such offences have a high degree of complexity due to the number of authors, accomplices or victims, or their geographical reach:

  • damages to probity including bribery in the public sector, influence peddling, unlawful taking of interest, pantouflage/revolving door (i.e., employment of former state officials in the private sector;
  • VAT fraud, tax fraud and organized tax fraud; and
  • Money laundering in connection to the aforementioned offences as well as any related offences. 

The creation of this new specialized Public Prosecutor has raised concerns as to the scope of its nationwide competence which overlaps with that of the JIRS.  Indeed, the "high degree of complexity" criterion appears in both the provisions on the JIRS and those regarding the financial Public Prosecutor.  To clarify the potential overlap of jurisdiction between that of the JIRS and that of the financial Public Prosecutor in said specific offences, the French Minister for Justice issued a circular on January 31, 2014 which notably indicates that the financial Public Prosecutor is intended to have jurisdiction over cases likely to have a major national or international impact. 

2.                 Insolvency and Restructuring – The Latest Reform of French Insolvency Proceedings

On March 12, 2014, ordinance n°2014-326 (the "Ordinance") introduced several significant changes in French insolvency law.  The contemplated purpose of this reform was to increase the creditors rights in French pre-insolvency and insolvency proceedings or, at least, to rebalance the powers between debtors and creditors in such proceedings.  The final reform is somehow less ambitious, since one of the main contemplated changes (the possibility for the commercial tribunal to force the majority shareholder to transfer its shares to certain creditors) was removed from the final version of the Ordinance.

This Ordinance came into force on July 1st, 2014, but will be applicable only to proceedings opened after this date (and not to pending proceedings).


One of the major changes brought by this reform is the introduction in the conciliation proceedings (procédure de conciliation) of the possibility for the debtor to prepare a so-called "pre-packaged" plan.  Thus a mission "aiming at the sale, in whole or in part, of the debtor’s business, which could be implemented, if necessary, within the frame of subsequent safeguard, recovery or liquidation proceedings" can now be vested in the conciliator.  This mission can only be vested in the conciliator at the request of the debtor, with creditors giving their advisory opinion. 

Financial contributions made during conciliation proceedings but prior to the execution of the conciliation agreement can now benefit from the so-called "conciliation privilege" (privilège de conciliation) (previously, only the contributions made pursuant to such an agreement and simultaneously with, or after, its execution could benefit from that privilege).  In case of subsequent safeguard, recovery or liquidation proceedings (procédures de sauvegarde, de redressement judiciaire et de liquidation judiciaire), claims benefiting from such a conciliation privilege (i) are paid by priority just after the super privileged wages claims and legal expenses arising from the proceedings, and (ii) cannot be subject to an extension of the payment term or a reduction of their amount under a subsequent plan approved by the commercial tribunal. 

Any provision of the conciliation agreement pursuant to which the debtor bears the costs for a creditor’s advisor is now deemed unenforceable.  Similarly to the legal provisions applicable in connection with safeguard, recovery and liquidation proceedings, any contractual provision triggered by the opening of an ad hoc mandate (mandat ad hoc) or conciliation proceedings and resulting in worsening the debtor’s situation (most of the time, by providing the early termination of the agreement) is deemed unenforceable.

Finally, the major change is the possibility now offered to the debtor subject to conciliation proceedings, who receives, "during the proceedings" a payment notice or is being sued by a creditor for payment, to request from the commercial tribunal an extension of the term of the relevant liabilities pursuant to the ordinary civil law provisions of Articles 1244-1 and seq. of the French civil code (i.e., for a maximum of two years).

Safeguard proceedings

Prior to the reform, only the debtor (and not the creditors), with the assistance of the court-appointed administrator could submit a draft safeguard plan, the members of the creditors’ committee being only allowed to make suggestions to the debtor for the drafting of this proposal and vote on this proposal.  Now, if the creditors’ committee (financial and/or suppliers’ committee) has been convened (i.e.,  only for companies reaching a certain size), any creditor, member of such a committee, can submit a draft safeguard plan for approval by the committees (and subsequently, if approved by the committees, by the commercial tribunal), on which the court-appointed administrator of the debtor’s business has to file a report.  The underlying idea of this change is to overcome a potential unwillingness to act from the debtor.

"Accelerated safeguard proceedings" (procédure de sauvegarde accélérée) have been created by the reform, following the introduction, in 2011, of accelerated financial safeguard proceedings (procédure de sauvegarde financière accélérée).  While the latter were opened only to financial creditors, the new one now also includes non-financial creditors.

The purpose of these new accelerated proceedings is to allow debtors to negotiate a "pre-packaged" plan, under conciliation, with the majority of their creditors, prior to the opening of safeguard proceedings and to adopt a safeguard plan, within a limited time period, based on this pre-package (see-above).  Accelerated financial safeguard has now become a specific category of accelerated safeguard proceedings.

Such proceedings shall not impact either the creditors whose claim would arise after the opening of the proceedings nor the employees of the business.

Accelerated safeguard proceedings can be opened only in case of failure of conciliation proceedings (conciliation must be pending), in case the debtor is not insolvent or has been insolvent for less than 45 days. 

Such proceedings are only opened to companies:

  • the financial statements of which have been certified by statutory auditors or drafted by a certified public accountant and which have reached one of the following thresholds in terms of employees (20), turnover (EUR 3,000,000 tax excluded) and aggregate amount of balance sheet (EUR 1,500,000); or

  • which have filed consolidated financial statements.

Accelerated safeguard proceedings can be opened for a maximum of 3 months (only 1 month for accelerated financial safeguard proceedings).

Recovery proceedings

The Ordinance removed the right for the commercial tribunal having jurisdiction over a debtor to examine ex officio the potential opening of recovery proceedings (procédure de redressement judiciaire) against a debtor.

Some provisions have been introduced aiming at facilitating the acquisition of share capital by a third-party (e.g., a creditor).  First, as in safeguard proceedings, creditors are allowed to submit to the creditors’ committees an alternative recovery plan.  This draft plan may provide for the acquisition by a third party of an equity share (or its participation to a share capital increase) and is, in that case, submitted to the shareholders’ meeting for approval. 

Creditors are now entitled to have a representative appointed by court to convene the shareholders of the debtor for such a general meeting.  The court-appointed representative can also vote in the place of reluctant shareholders, in order to overrule these shareholders and to vote a share capital increase in favor of one or more persons (e.g., certain creditors), as required, as the case may be, pursuant to the recovery plan (plan de redressement).  The purpose is to facilitate the transformation of liabilities into shares, which necessarily results in existing shareholders being diluted.  One limit has however been set: the court-appointed representative is authorized to vote only up to the amount required for the net assets to equal to half of the amount of the share capital (legal minimum requirement).

In addition, in case the draft recovery plan or the plan provides for a share capital increase or a share transfer, any provision (of the by-laws, notably) establishing a prior approval before a transfer of shares are deemed unenforceable.

Yet, as indicated hereabove, contrary to what was initially contemplated, the provision allowing courts to force the transfer of shares from an existing shareholder was set aside.  Therefore, despite the fact that the Ordinance is a step forward towards creditors, French insolvency law still significantly favors shareholders.

3.                  Contracts – Proposed reform of contract and quasi-contract law

After a decade of projects and reports as well as multiple debates and discussions with social and economic actors, the government’s proposed reform of contract and quasi-contract law was disclosed on October 23, 2013.  After discussions between the Senate and the government, senators are against a modification of the French Civil Code by the government by way of ordinance and would like the project to be subject to a parliamentary debate.  In the weeks to come, the National Assembly will have to decide whether the government should be entitled to adopt, by ordinance, the project.  At first glance, the project essentially aims at codifying general approved standards and principles set forth by French courts over the past years.  The project is organized in a chronological order and clarifies the rules of contract formation and performance.  Its major trends are to try and increase legal security but also, at the contract performance stage, to leave a wider intervention capacity to judges. 

Contract formation

The project proposes notably to codify French case law rules related to promises and pre-emption agreements.  The project provides that the revocation of a promise during the option period shall not prevent the conclusion of the contract.  Additionally, the conclusion of the contract in violation of a promise would be null.  Regarding pre-emption agreements one of the major French case law decisions would be partially codified: a contract concluded in violation of a pre-emption agreement by a third party knowing of the existence of such pre-emption agreement shall be vacated or the non-breaching party to the pre-emption agreement shall have the right to be substituted with the third party.  To allow such cancellation or substitution, the project does not take up the requirement (which existed in the French Supreme Court famous decision and has been continuously criticized by several authors because of the evidentiary difficulties it raises), according to which the third party had to have knowledge of the beneficiary party’s intent to implement the pre-emption agreement.

More importantly, the project proposes to clarify the well-known French case law solution of December 1995 related to framework contracts and contracts involving sequential performance.  After having refused to allow a party to unilaterally set the contract price on the ground that the price of a contract should be determined at the conclusion of the contract, the French Supreme Court ruled in 1995 that a framework contract or a contract involving sequential performance is valid even though the parties did not agree on the contract price.  However the Court did not expressly recognize the ability for the party to determine the price unilaterally.  The project proposes to explicitly introduce the ability for the parties to a framework contract or a contract involving sequential performance to decide that the price will be unilaterally determined by one of the parties.  In case of abuse, the judge would be able to interfere within the contract to review the contract price. 

Another important provision of the project is the ability for the judge to vacate a clause when it is significantly disproportionate between the parties’ rights and obligations (this ability, which is currently granted in consumer contracts through protection systems against unfair terms, would thus be extended to all contracts).  The project is silent on how judges will appreciate whether a clause is disproportionate. 

Finally, the project intends to remove the concept of cause.  This proposed change is explained by recent case law decisions toward a more business-oriented interpretation of the contract.  However, it shall be noted that the principal functions of the concept of "cause" would nevertheless be maintained.  Thus, for example, the project provides that a consideration must exist in all contracts concluded for a pecuniary interest; it also proposes to codify the famous Chronopost case law according to which a clause depriving the debtor’s essential obligation of its substance shall be deemed null and void.

Contract Performance

At the contract performance stage, the project proposes to enable judges to modify the contract and restore its financial equilibrium in the face of unexpected and uncontrollable events.  According to the project, when the performance of the contract would become excessively expensive for a party, such party would be entitled to request the renegotiation of the contract even though no renegotiation clause was initially set forth in the contract.  In the event of the parties’ failure to renegotiate the contract, they may agree by mutual consent to invite the judge to decide upon appropriate changes to the contract.  Failing such agreement, either party could ask the judge to terminate the contract, on the date and on such terms as it may decide. 

The project also proposes to introduce the anticipatory breach concept: a party would be entitled to suspend the performance of its obligation when it is unlikely that the other party would perform its obligations in time and provided that the consequences of the threatened breach would likely be significant for the non-breaching party. 

Finally, another crucial provision proposed by the project would be the ability for the judge to refuse specific performance of the contract when the costs of such performance would be manifestly unreasonable.  French courts generally entitle a party to request specific performance from the breaching party provided such specific performance is feasible.  By giving the judge the ability to exercise control over specific performance, the project would introduce a balance between the principle of the binding force of contracts and the power of judicial review.  However, the project is silent on how judges will appreciate the costs of specific performance. 

4.                  Tax

4.1              Tax – Can a company decide to not deduct an accounting depreciation (CE Foncière du Rond Point, December 23, 2013)?

A company had booked a depreciation in 1996 on real estate assets but had decided to not tax deduct it.  In 1998 and 1999, following the sale of the assets, the company had recaptured the depreciation from an accounting point of view but had considered that such recapture was not tax deductible (since the depreciation had not been tax deducted).  However, the Supreme Court held that since the 1996 depreciation was justified from an accounting and tax point of view, the company should have tax deducted such depreciation in 1996.  Thus, the Supreme Court decided that the recapture of the depreciation in 1998 and 1999 was taxable.  As a result of this decision, the company has been subject to a double taxation (no right to deduct the depreciation from a tax point of view in 1996 and taxation of the recapture of the depreciation in 1998 and 1999).

Prior to this decision, companies usually considered that they had the choice to not tax deduct accounting depreciations on buildings (as the tax authorities often challenged this tax deductibility in the 90’s).  Based on this new decision held by the French Supreme Court, companies will usually have no choice but to tax deduct accounting depreciation provisions, asserting the primacy of the inherent connection between tax and accounting rules.  This jurisprudence raises various adverse tax consequences which need to be carefully monitored.  In particular, the situation of companies having booked accounting depreciations in previous financial years which they have not tax deducted needs to be reviewed.  In addition, companies which have to book such depreciations have to consider the fact that the tax loss carried forward deriving from such depreciations may only be used to offset 50% of the recapture profit exceeding EUR 1 million.

4.2              Tax – Hybrid financing and interest deduction (2014 Finance Law)

Article 22 of the 2014 Finance Law introduced new rules affecting the tax deduction of interest accrued on advances among related companies.  Thus, such interest is tax deductible for the borrower company provided that the lender company is subject to corporate income tax on such interest.  Such tax must amount to at least 25% of the corporate income tax which would have been due, had the lender company been established in France.  These new provisions are applicable to financial years closed from September 25, 2013 on.

This provision addresses particularly the situation where the lender company is a transparent entity or a collective investment fund located abroad.  The "subject to tax" test is carried out at the level of the lender company.  According to the French tax authorities, such test is met if the gross interest income is taxed at a rate at least equal to 25% of the French corporate income tax rate.  In particular, the fact that such income is offset by various expenses at the lender’s level seems to be irrelevant.

4.3              Tax – Need to notify the assignment of a shareholders’ current account (CE SCI Immotel, June 11, 2014)

This decision confirms that in case of assignment of a shareholders’ current account, it is essential that such assignment is notified to the debtor by a bailiff in accordance with article 1690 of the French civil code.  If not, it is usually almost impossible for the debtor to evidence the existence of the assignment based on this jurisprudence.  As a result, the French tax authorities are entitled to tax the debtor on the amount of the shareholder’s current account amount assigned to the third party. 

It is thus highly recommended to comply with the formalities of article 1690 of the French civil code in case of assignment of a shareholder’s current account.

5.                  Real Estate – The "Pinel" Statute and its Impact on Leases

The "Pinel" Statute (the "Statute"), passed by the Senate on June 5, 2014 comprises a number of provisions in favour of local retailers.  Among these provisions, the first seven articles of the Statute bring important changes to the leases regime.  The Statute, with regard to leases, aims to "limit rent increases" and "balance the relationship between small commercial tenants and lessors".  The provisions related to leases are applicable to contracts entered into or renewed as of the first day of the third month following the publication of the Statute in the Official Journal.  Some of the provisions of the Statute, which may affect not only small local businesses, but also any company which enters, or has entered, into a commercial lease, are described hereafter.

Tenant’s Possibility to Terminate the Lease every Three Years

The lessor loses the possibility to ask the tenant to waive its right to terminate the lease at the expiry of every three-year period.  This modification of the Statute does not apply to lessors of leases exceeding nine years, office leases or single-use leases.

Furthermore, the Statute facilitates the terms of the notification of the termination of the lease and enables the parties to choose to notify the lease termination by "registered letter with acknowledgement of receipt" or by "extra-judicial act".

Modification to the Provisions relating to the Renewed or Adjusted Rents

The ICC is no longer the standard index of commercial leases.  After the entry into force of the Statute, the ILC and the ILAT indexes will replace the ICC with regard to lease renewal and rent adjustment.  However, the Statute is silent with regard to the index applicable to rent indexation clauses.

Article 4 of the Statute provides for a variation of the rent capped at 10% of the amount of the rent of the precedent year in case there is a significant modification of the elements determining the rental value or if there is an exception to the rent cap rules (article L. 145-34 of the Commercial Code).  This 10% cap also applies to triennial rent adjustments (article L. 145-38 of the Commercial Code) and to leases including a rent indexation clause (article L. 145-39 of the Commercial Code).

This statutory cap applies only to the leases which rent is contractually uncapped.  This statutory cap applies neither to the leases where of duration is longer than nine years, nor to the leases where parties have expressly waived the possibility to cap the rent, nor to "article L. 145-36 leases" (vacant lands, single-use premises and office premises).

Statutory Obligation to draw up Entry and Exit Inventories

Article 5 of the Statute provides for a new article in the Commercial Code, i.e., article L. 145-40-1 which makes compulsory the contradictory entry and exit inventories between the lessor and the tenant.  If appropriate, these inventories can also be drawn up by a bailiff.

Statutory Obligation to draw up a precise and exhaustive Inventory of all Expenses and Taxes related to the Lease

The same article 5 of the Statute provides for a new article L. 145-40-2 indicating that any lease shall include a schedule containing a precise and exhaustive inventory of all expenses and taxes related to the lease.  This inventory should also indicate the allocation of such expenses between the lessor and the tenant.

Furthermore, the lessor shall communicate, upon execution of the lease and every three years thereafter, an estimated budget of the works to be carried out for the next three years, as well as a statement of the works carried out during the previous three years.  A subsequent decree shall provide for the implementing measures.  Some lessors may be unable to recoup some expenses on their tenants, if these expenses were by their nature at the lessor’s mandatory charge.  Thus, there is a risk that these provisions challenge the performance of "triple net" leases.

As a general comment and although the Statue intends to help small commercial tenants, its provisions are likely to have a larger scope since they generally affect the French general commercial leases regime.

6.                  Labor and Employment

6.1              Labor and Employment – Key Elements of the Statute on the Securing of Employment and its Impact on French Labor Law

The entry into force of the June 14, 2013 Statute on the securing of employment (the "Statute") has reshuffled French labor law and practice quite significantly over the first six months of 2014, especially in terms of collective expression of employees. 

Extension of the scope of Workers’ Council consultation

The Statute increased the Workers’ Council’s prerogatives notably by expanding the scope of mandatory consultation. 

Under French law, the Workers’ Council is notably tasked with a general mission of conveying collective expression of employees to ensure that their collective interests are taken into consideration by the employer prior to making any significant decision that would notably impact the management or evolution of the economic and financial situation of the company, work organization, professional training or production technique. 

The Workers’ Council is also informed and consulted on numerous occasions, notably on issues relating to the organization, management and running of the enterprise, on projects resulting in a decrease in workforce or restructuring of the business and notably in case of takeover of an enterprise, or in the event of insolvency proceedings.

In addition to the above-mentioned situations where prior information and consultation of the Workers’ Council is traditionally required, the Statute increased the scope of the Workers’ Council’s prerogatives to include an annual consultation notably on the enterprise’s strategic orientations and their impact on business activity, on employment, on the evolution of positions and skills, on the organization of work, on the use of subcontractors, temporary work, temporary contracts and internships. 

A new consultation procedure for the Workers’ Council: nature of the information to be transmitted and applicable delays

Nature of the information to be transmitted

When consulted, the Workers’ Council must be in a position to issue an informed opinion on the decision to be made by the employer.  French labor law thus provides that the Workers’ Council must receive "precise and written information" from the employer, as well as the employer’s explanations to the Worker’s Council’s observations prior to being consulted on a contemplated decision. 

If the Workers’ Council considers that it did not receive sufficient information to issue an informed opinion, it can seize the competent jurisdiction to have it issue an order compelling the employer to communicate the missing information.  The court’s decision is rendered within eight days, yet such procedure does not result in extending the applicable consultation delays, determined as detailed below. 

Applicable delays

Prior to the enactment of the Statute, the Workers Council’s opinion (whether positive or negative) was legally required though no timetable was set to limit the consultation period, which often resulted in blocking prospected deals or similar operations.  This created potentially huge hurdles in France since such opinion could easily be delayed by several months if the Workers Council so decided. 

The Statute introduced a new consultation procedure which gives greater powers to the employer and the Workers’ Council to organize the consultation timetable, thus preventing potential blockage.  Subject to the minimum 15-day delay set by the Statute, the employer and the Workers’ Council are encouraged to enter into an agreement setting out the timeframe of the contemplated consultation taking into consideration the nature and complexity of the question subject to its consultation, provided the agreement is approved by the majority of the Workers’ Council’s members. 

In the event no agreement has been agreed upon on a given matter, the Workers’ Council is granted one month to issue its opinion.  This 1 month delay is however increased in case of expertise (2 months), in case of consultation of one or several hygiene, security and working conditions committee(s) ("CHSCT") (3 months) and in case an entity coordinating the various CHSCT is implemented (4 months). 

These delays start running as soon as the information necessary to support the consultation procedure is made available by the employer to the Workers’ Council.  Information is considered to be available as soon as it is communicated by the employer or uploaded on the new social data base that was also created by the Statute. 

Once the aforementioned consultation delays have been exceeded, the Workers’ Council is deemed to have been properly consulted and to have issued a negative opinion.  The employer is thus no longer at risk of committing a criminal offense of obstruction, sentenced by a EUR 3,750 criminal fine and a one-year jail sentence.

A new procedure applicable to collective dismissals on economic grounds

The Statute also modified the procedure applicable to collective dismissals on economic grounds (i.e., dismissals of ten or more employees over a period of 30 days) notably with regard to the consultation of the Workers’ Council. 

In companies with more than 50 employees, collective dismissals on economic grounds require implementing a Plan for the Safeguarding of Employment ("PSE").  The PSE includes provisions designed to reduce the number of dismissals or to ensure redeployment of impacted employees within the group.  It also includes provisions on the modalities of information and consultation of the Workers’ Council, on the weighting of the criteria selected to determine the orders of dismissals, on the dismissals’ timeline, on the number of prospected dismissals and the type of impacted professional categories, on the modalities pursuant to which the employer’s training, adaptation and redeployment obligations are to be implemented, etc.

Following the entry into force of the Statute, the employer is now required to consult the Workers’ Council on the rationale and the terms of the prospected dismissals during at least two meetings, held no sooner than 15 days apart. 

The employer must communicate to the Workers’ Council all relevant information concerning the contemplated restructuring of the company and related dismissals beforehand.  This information includes: economic, financial or technical rationale of the prospected dismissals, number of prospected dismissals, affected professional categories, etc.

The Workers’ Council issues two opinions: one on the restructuring of the company and another one on the PSE, within a delay that cannot exceed two months following the Workers’ Council first meeting when less than 100 dismissals are contemplated.  The Workers’ Council may decide to be assisted by an expert auditor. 

The Statute also changed the form of the PSE, which may either take the form of:

  • a majority collective agreement, negotiated between the employer and representative unions.  In such a case, the labor administration is granted a limited role: it is informed of the opening of negotiations and then only operates a light and limited control of the agreement during the certification process; or
  • a unilateral document issued by the employer alone.  In such a case, the PSE is subject to a more heavy control by the labor administration, which controls the relevance and proportionality of the measures proposed by the employer during the certification process.  If the proposed measures are deemed unsatisfactory, the labor administration may very well deny certification to the PSE, thus considerably delaying the dismissal process. 

6.2              Labor and Employment – Survival of the obligation to pay profit-sharing bonuses to employees in case of increase in dividends paid to shareholders

On April 8, 2014, the French Ministry of Labor, in a response to the Managing Director of the Association Française des Entreprises Privées (French Association of Private Sector Companies), took the view that French rules relating to profit-sharing bonuses (prime de partage des profits) resulting from article 1 of Statute n°2011-894 dated July 28, 2011 which amended the statute relating to social security for 2011 (the "Statute") are still in force.

The AFEP asked the French Ministry of Labor for clarifications because of the provisions of paragraph XIV of article 1 of the Statute according to which the aforesaid article 1 applies until the intervention of a law following the results of an inter-professional national bargaining, on December 31, 2013 at the latest, on value added sharing which may notably propose legislative adaptations in the field of participations and incentive provided for in the French Labor Code.

According to the French Ministry of Labor, only a law following an inter-professional national bargaining on value added sharing is limited in time and not the profit sharing bonus itself: therefore, given that no law has been adopted prior to January 1, 2014, the provisions of the statute relating to profit sharing bonuses remain in force, including the provisions relating to social security exemptions.

As a reminder, according to Article 1 of the Statute, commercial companies with more than 50 employees have to pay a bonus to all employees if such companies distribute an increased dividend to their shareholders compared to the average dividends per share distributed in the last two financial years. 

From a social security standpoint: a profit sharing bonus is exempted from social security contributions, up to the limit of EUR 1,200 per year and per employee.  Beyond that, it will be subject to social security contributions for the part exceeding this ceiling.  This profit sharing bonus is also subject to the CSG (the general social security contribution) and CRDS (the indirect tax for the repayment of the social security debt) and to the corporate social contribution of 20%.

From a tax standpoint: a profit sharing bonus is considered as an additional compensation in favor of the employee and is subject to income tax (as salary).

This position of the French Ministry of Labor is not shared by the Association Nationale des Sociétés par Actions (French Association of Joint Stock Companies): it considers that, in the absence of the adoption of the statute referred to in paragraph XIV of article 1 of the Statute on December 31, 2013, the Statute is no longer applicable since January 1, 2014.  However, these are only interpretations of the statute with no legal value, and the position of the French Ministry of Labor cannot be ignored.

6.3              Labor and Employment – Reform of unemployment benefit indemnification

Under French law, the payment of unemployment benefits is postponed by two "suspension" delays: a fixed period of time of 7 days, and a variable period of time known as "deferred compensation delay" (différé d’indemnisation) calculated based on two sets of amounts paid to the terminated employee. 

Starting July 1, 2014, the convention relating to unemployment benefits entered into between employers’ representatives and trade unions on May 14, 2014 modified, inter alia, the calculation of the deferred compensation delay.

This delay is the result of two delays (expressed in a number of days) determined based on two different sets of amounts paid to the employee upon termination of the employment contract: (i) first, a delay calculated as amounts paid as a compensation for accrued but unused paid leave divided up by the employee’s reference daily salary and (ii) second, a delay calculated as amounts paid as "non-statutory" indemnities divided up by ninety.  Prior to the reform, this last specific delay was limited to a maximum of 75 days.  It can now reach up to 180 days.

This increased delay postponing the payment of unemployment benefits is likely to be taken into consideration during negotiations triggered by the departure of an employee notably in the context of a mutually agreed-upon termination (rupture conventionnelle homologuée).  In such a situation, it appears that as soon as the terminated employee receives more than EUR 16,200 as indemnities under a mutually agreed-upon termination, the cap of 180 days is reached regardless of the nature (statutory vs. contractual) of these indemnities.

7.                  Data Protection

7.1              Data Protection – Deliberation n°2013-420 of the CNIL Sanctions Committee imposing a financial penalty against Google Inc.

On March 1, 2012, Google decided to merge into one single policy the different privacy policies applicable to about sixty of its services, including Google Search, YouTube, Gmail, etc.  Nearly all Internet users in France are impacted by this decision due to the number of services concerned.  The "G29" (EU Data Protection Authorities working group) then decided to carry out an assessment of this privacy policy.  It concluded that it failed to comply with the EU legal framework and thus issued several recommendations, which Google Inc. did not effectively follow-up upon. 

In this context, the Sanctions Committee of the CNIL (French Data Protection Authority) issued a monetary penalty of EUR 150,000 to Google Inc. on January 3, 2014, upon considering that it did not comply with several provisions of the French Data Protection Act (the "Act"). 

One of the most interesting aspects of this decision relates to the applicability of the Act, which provides in its Article 5 that it is applicable to the processing of personal data where (i) the data controller is established on the French territory, it being specified that the data controller which carries out an activity on the French territory within the framework of an installation, whatever its legal form, is deemed to be established thereon and (ii) the data controller, without being established on the French territory or on that of another Member State uses means of processing located on the French territory, with the exception of processing carried out only for purposes of transit through this territory or that of another Member State. 

Google Inc. notably maintained that (i) the services accessed by users located in France are provided exclusively by Google Inc., which is established in the United States and that since Google France does not effectively carry out any operation in which Google Inc. processes personal data, it would not qualify as an "establishment" within the meaning of the Act and that (ii) it has recourse to no means of processing located in France.  On this last aspect, Google Inc. notably argued that the Data Protection Directive 95/46/EC was not intended to apply to data processing carried out on the computers and mobile terminals of users through cookies (which Google Inc. qualifies as mere "text files") or similar tools.

(a)               On the concept of "establishment": the Sanctions Committee points out that Google France does effectively participate in activities related to the processing of data relating to users of its services.  It points out in this respect that the activity of on-line advertising, which generates the majority of its income, is inseparable from the processing of users’ personal data, since it is because of the considerable volume of data about them available to it that it may guarantee to advertisers its services of extremely precise targeted advertising.  Given the volume of these activities located in France, the Sanctions Committee considers that Google France should be qualified as an establishment within the meaning of Article 5 of the Act, concerning data processing implemented for the purpose of advertising.  The circumstance that the technical operations of processing happen to take place outside of France has no impact on this interpretation.

(b)               On the concept of "means of processing": in any event, even if one were to consider that only Google Inc. is the data controller in the case, the Sanctions Committee considers that the Act is applicable to the case in as much as Google Inc. uses means of processing located in France.  Indeed, the Sanctions Committee, while admitting that a text file does not itself qualify as processing, points out that both reading and writing of information on the browser installed on the user’s terminal are done by means of cookies, with the purpose of collecting information of which Google Inc. is the sole recipient.  Further, Article 2 of the Act defines processing specifically as any operation of collection, recording, consultation, extraction, communication by transmission, broadcast or any other form of sharing.  Thus, access to user information through the medium of a cookie and the reading thereof do indeed constitute processing as understood in this provision. 

Moreover, Article 32-II of the Act explicitly provides for an obligation of prior information on any party initiating "any action tending to access, via electronic transmission, information already stored in its electronic communications terminal equipment, or to write information on such equipment", this party being expressly defined in the law as the data controller.  Consequently, any resource making it possible to perform such actions must be qualified as "means of processing" as understood in the Act.  This confirms the opinion 8/2010 on applicable law, issued by the G29 on December 16, 2010, which had already considered that cookies qualified as "means of processing".

The financial penalty imposed against Google Inc. in this case is the highest the Sanctions Committee has issued until now. 

Google confirmed on January 15, 2014 that it had lodged an appeal against this decision.  The procedure is now on-going before the French Council of State (Conseil d’Etat).

7.2              Data Protection – The CJEU new Google judgment and the contour of the "right to be forgotten"

Data protection law is about to fundamentally change the functioning of search engines.  The CJEU (the "Court of Justice of the European Union") decision of May 13, 2014 regarding Google is giving valuable insight on the legal approach of the activity of research engines, and on their liability with regard to the European data protection regulation.  This decision is important not only for search engines, but also for every individual, since it creates a tangible right to protect one’s e-reputation.

In 2010, a Spanish citizen lodged a complaint with the Spanish data protection authorities against a newspaper and against Google in order to obtain the deletion of personal data contained in webpages dating from 1998.  These webpages, as well as the links leading to them after a search, were considered as infringing on the plaintiff’s right to privacy.

On the one hand, with regard to search engine providers, this CJEU judgment is relevant for the applicability of the Data Protection Directive to intermediary service providers such as search engines.  From the European judges’ point of view, the Data Protection Directive is materially applicable to search engine providers as the latter are actually performing a secondary processing of personal data when indexing and sorting data.  Although the definition of a controller as "the person who determines the purposes and means of processing of personal data" is hardly applicable to Google’s search engine, which cannot detect data containing personal data from other data, the European judges dismissed this argument, considering that Google is "collecting", "extracting", "registering" and "organizing" data within its indexation programs, which is "communicated" or "made available" to research users.  The automatic collection of data by Google makes thus the latter a "controller".

The second aspect of the decision interesting search engine providers consists in the territorial application of the Data Protection Directive.  Google argued that the Directive was not applicable to its search engine activity, which is located in the U.S.  However, as the display of search results is accompanied, on the same page, by the display of advertising linked to the searched terms, the Court considered that the processing of personal data necessary to the search engine activity is carried out in the context of the commercial and advertising activity of Google Spain, thus qualifying Google Spain as an establishment of Google Inc. in the EU within the meaning of the Data Protection Directive.  This may not be the case for all search engines and will require a case-by-case analysis as to whether data processing is "carried out in the context of the activities of an establishment" within a Member State.  This test is highly fact specific and will apply differently to different search engines.

On the other hand, with regard to clients of search engine providers, this CJEU judgment brings a clear improvement of the protection of their privacy.  Prior to this decision, search engine providers used to refuse European citizens’ requests for the deletion of links towards websites containing their personal data, invoking their neutrality.  With this decision, individuals can require the deletion of links towards websites containing personal data although the personal data could not be erased from the said website. 

Therefore, by recognizing a right for European citizens to ask for the deletion of links towards webpages relating to their personal data, the CJEU is actually inferring from the Data Protection Directive a "right to be forgotten".  However, at the same time, the CJUE explicitly clarified that the right to be forgotten is not absolute but will always need to be balanced against other fundamental rights, such as the public interest or the freedom of expression and of the media (since, notably, publishers and journalists benefit from a special exception to the access right for processing carried out "solely for journalistic purposes").  Thus, a case-by-case assessment is needed considering the type of information in question, its sensitivity for the individual’s private life, how easy it is to obtain access to the information and the interest of the public in having access to that information. 

The CJEU decision is remarkable as it strengthens a purely European view of data protection, much stricter than under U.S. law.  This CJEU decision also reminds of the French first instance court’s "Max Mosley" decision dated November 6, 2013.  This latter decision made an injunction to Google Images to immediately withdraw pictures infringing on the plaintiff’s right to privacy and to monitor that these pictures do not appear again on Google Images during five years.  It should be noted that in this decision, as opposed to CJEU’s decision, French judges upheld Google Inc.’s liability, considering that the involvement of Google France in the search engine activity was not proved.

8.                  Public Law

8.1              Public Law – Case Law overruled: Conseil d’État Allows Third Parties Direct Recourse against a public Contract

In a decision Département Tarn et Garonne (CE, Ass., 4 April 2014, n° 358994), the Conseil d’État, overruling its ancient case-law (CE, 4 August 1905, Martin, n° 14220), ruled that third parties can contest the validity of a public contract or some of its clauses. According to this 2014 decision, any third party to a public contract whose interests are likely to be harmed directly by that contract may contest its validity or any specific, non-statutory clauses. Third parties can also possibly request the suspension of the performance of the contracts. The period to contest or to request the suspension lasts for two months as from the publication of notices of public contract awards. The new principle will only apply to contracts signed after April 4, 2014.

8.2              Public Law – The Status of EPIC is likely to constitute State Aid under European Law

The Court of Justice of the European Union (CJUE, 3 April 2014, France vs. Commission, C-559/12 P) has confirmed that the unlimited guarantee provided by the French State to companies having the status of an EPIC (établissement public et commercial / public industrial and commercial entity), constituted State aid under Articles 107 and 108 of the Treaty on the functioning of the European Union. According to the Commission, the EPIC status is deemed to be favorable to public companies by preventing their bankruptcy and by allowing them to obtain more favorable credit terms.

This solution had in fact already been partly admitted for other public establishments, such as EDF (Commission decision n° 2005/145/CE, December 16, 2003) and LNE (National Laboratory of meteorology and testing; Commission decision n° 2007/2017/CE, November 22, 2006), at the time they had the status of an EPIC.

Currently arises the question of maintaining the EPIC status for several public bodies (such as SNCF or RATP).

8.3              Public Law – Publication of Three New Directives on Public Procurement

The European Parliament approved on January 15, 2014 three new directives on Public Procurement (Public Contracts Directive 2014/24/EU, Utility Contracts Directive 2014/25/EU, Concession Contracts Directive 2014/23/EU). These new Public Procurement Directives were published on March 28, 2014 in the Official Journal of the European Union and they came into force on April 17, 2014. Member States must implement these Directives into national law no later than April 18, 2016.

The new directives aim to simplify the rules and procedures, to increase recourse to carry out negotiations and the use of e-procurement.

The new Concession Contracts Directive introduces for the first time a legal framework for the award of concessions across both the public and private sectors. In particular, this directive will improve transparency by imposing publication of concession’s notices in the Official Journal of the European Union as well as publication of notices of contract awards.

8.4              Public Law – Publication of the statute creating mixed-economy companies of unique operation (sociétés d’économie mixte à opération unique (SEMOU))

A statute allowing the creation of mixed-economy companies of single action (SEMOU) has been passed on June 18, 2014 and was published on July 2, 2014 (statute n° 2014-744). The new provision will be introduced in the General Local Authorities Code under a specific title (articles L. 1541-1 to L. 1541-3).

The SEMOU is a new form of local public company, which takes the form of a limited company, created for a limited period in consideration of the fulfillment of its purpose. It can operate exclusively for the performance of the contract for which it was created and not for any other purpose.

The selection of the shareholder(s)/economic operator and the award of the contract to the SEMOU are performed under a single public tendering procedure (tendering procedure, negotiated procedure or competitive dialogue). The local authority should own between 34% and 85% of the share capital and the other shareholder(s)/economic operators not less than 15%.

9.                  Antitrust – Recognition of the Right to Effective Assistance of Counsel in Case of Dawn Raid

Through a decision of June 25, 2014, the French judicial Supreme Court (Cour de Cassation) ordered the French competition authority (Autorité de la concurrence) to return evidence seized from Crédit Agricole during a dawn raid. According to the Supreme Court, the French Ministry for the Economy, which was in charge of on-spot inspections at the time of the events, had denied the bank access to its counsel during the dawn raid, thereby breaching the rights of the defense guaranteed by the European Convention on Human Rights.

It should be noted that the on-spot inspections were made before 2008. Since that date, article L. 450-4 of the French Commercial Code was amended by Order n° 2008-1161 of November 13, 2008. Within the new provision, a person subject to a down raid may seek counsel of his choice who can access the premises visited, get acquainted with all documents before their dawn raid and make submissions in the course of the proceedings.

Gibson, Dunn & Crutcher LLP   

Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this update.  The Paris office of Gibson Dunn brings together lawyers with extensive knowledge of corporate, insolvency, tax and real estate, antitrust, labor and employment law as well as regulatory and public law.  The Paris office is comprised of a dynamic team of lawyers who are either dual or triple-qualified, having trained in both France and abroad.  Our French lawyers work closely with the firm’s practice groups in other jurisdictions to provide cutting-edge legal advice and guidance in the most complex transactions and legal matters.  For further information, please contact the Gibson Dunn lawyer with whom you usually work or any of the following members of the Paris office:

Corporate/M&A/Private Equity
Bernard Grinspan (+33 1 56 43 13 00, [email protected])
Benoît Fleury (+33 1 56 43 13 00, [email protected])  
Ariel Harroch (+ 33 1 56 43 13 00, [email protected])
Jean-Philippe Robé (+33 1 56 43 13 00, [email protected])
Patrick Ledoux (+33 1 56 43 13 00, [email protected])
Judith Raoul-Bardy (+33 1 56 43 13 00, [email protected])
Audrey Obadia-Zerbib (+33 1 56 43 13 00, [email protected])

Jean-Philippe Robé (+33 1 56 43 13 00, [email protected])
Benoît Fleury (+33 1 56 43 13 00, [email protected])  

Public Law/Regulatory/Antitrust
Nicolas Baverez (+33 1 56 43 13 00, [email protected])
Nicolas Autet (+33 1 56 43 13 00, [email protected])
Maïwenn Beas (+33 1 56 43 13 00, [email protected])

Jérôme Delaurière(+33 1 56 43 13 00, [email protected])
Ariel Harroch (+ 33 1 56 43 13 00, [email protected])

Jean-Philippe Robé (+33 1 56 43 13 00, [email protected])
Benoît Fleury (+33 1 56 43 13 00, [email protected])
Patrick Ledoux (+33 1 56 43 13 00, [email protected])
Nicolas Autet (+33 1 56 43 13 00, [email protected])

Real Estate
Jean-Philippe Robé (+33 1 56 43 13 00, [email protected])
Benoît Fleury (+33 1 56 43 13 00, [email protected])
Jérôme Delaurière(+33 1 56 43 13 00, [email protected])

Labor and Employment
Bernard Grinspan (+33 1 56 43 13 00, [email protected])
Jean-Philippe Robé (+33 1 56 43 13 00, [email protected])

Intellectual Property/Data Protection
Bernard Grinspan (+33 1 56 43 13 00, [email protected])
Audrey Obadia-Zerbib (+33 1 56 43 13 00, [email protected])

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