Fnac-Darty: A Landmark Merger Decision in France

On 18 July 2016, the French Competition Authority (“FCA”) broke new ground in France by holding that retail distribution of electronic products through both physical stores and online channels is a single relevant market.

The background and the FCA’s Decision

The FCA’s decision concerns Fnac’s acquisition of Darty. The proposed transaction drew a great deal of public attention because it involves France’s two largest click and mortar retailers. It drew even more attention in March 2016, when the FCA announced a phase II examination of the potentially negative effects of the merger. However, in its 18 July 2016 decision, the FCA reversed course and granted conditional approval for the transaction after determining the relevant market includes both online and physical distribution channels.

The breakthrough in the definition of Relevant Distribution Market

Bruno Lasserre, President of the FCA, said that this change in defining the relevant market—including both online and physical channels—represents an innovative approach in France and for which the FCA tends to be a leader in Europe: “Competitive pressure exerted by online sale has become significant enough to be integrated in the concerned market, whether it comes from pure players (such as Amazon or Cdiscount) or from stores’ own websites which complete in-store physical sales”, the FCA explained in its press release. The FCA concluded that due to changes in consumers’ purchasing habits, physical stores face competitive pressure from e-commerce companies, including both pure players and click and mortar companies. This new market definition, which includes online competition, meant that the market shares for the physical stores owned by Fnac and Darty in France were of less importance for determining market dominance.

The Geographic Markets

With regard to the geographic market, the FCA examined local catchment areas of the acquired stores even though Fnac has attempted to focus on the national market for retail distribution of electronic products. The FCA examined the effects of the proposed transaction on competition in areas where the new group would have significant market shares. The FCA’s investigation found that for the entirety of local markets outside Paris, Fnac Group will still face competitive pressure from other retailers such as large specialized supermarkets, large food retail supermarkets with significant space dedicated to electronic products, and pure players. However, the FCA also identified some local markets where it had competition concerns because of the strong position of the two companies and the lack of sufficient alternatives on the market. To address these concerns, Fnac Group has committed to divest six physical sale stores located in Paris and the Parisian region.


The FCA’s conditional approval of the Fnac-Darty merger may be a significant step in Europe for analysis of relevant markets that include both physical and e-commerce distribution channels. Companies should factor this into any planned transactions involving both physical and e-commerce.