In the M&A world, the image of France viewed from outside is deplorable, and this law is adding extra complexity. Foreign companies have spent $14.8 billion on French targets this year, putting 2013 on track to be the weakest for such deals in at least a decade, according to data compiled by Bloomberg. The new rules may further dissuade potential buyers. France hasnt seen a major hostile takeover since Mittal Steel Co. bought Arcelor SA in 2006 in a transaction then valued at about $36 billion. The attempt to keep potential predators at bay comes even as French companies remain among the worlds most acquisitive. LVMH Moet Hennessy Louis Vuitton SA (MC) and Schneider Electric SA are among companies making $135 billion of takeovers since the start of last year, exceeding most nations in western Europe aside from the U.K., according to data compiled by Bloomberg. An Anachronism The measures were clearly thought up by people living in the last century, said Jean-Pierre Martel, a founding partner at Orrick Rambaud Martel, who advised on French drugmaker Sanofis takeover of Aventis in 2004. Its implicitly aimed at foreigners and meant to defend French interests. Its ridiculous. The biggest French companies have significant foreign investors and are very international. Seen from abroad, this will scare everyone. The debate over protecting French interests has been a political hot potato since Canadian aluminum maker Alcan Inc. bought French rival Pechiney SA a decade ago, eventually breaking it up and shutting plants. More recently, ArcelorMittal, the worlds largest steelmaker, decided to shutter a plant in France in the north-eastern city of Florange. The plant was the site where French President Francois Hollande pledged a few months before being elected in May 2012 to pass a law forcing large firms to sell rather than close sites to cap unemployment, which now stands at a 14-year high. Socialist Credentials The Socialist president, whose popularity is at a record low, is trying to make good on that campaign promise after being accused by some unions of caving in to ArcelorMittal when he ruled against a proposal by Industry Minister Arnaud Montebourg to temporarily nationalize the Florange plant last December.
The conflict is another case of EU countries fighting to prevent global companies such as internet giants, airlines or fast food chains from shopping around to pick the countries where taxes are the lowest. The French court ruled that RyanAir had to respect a 2006 decree that forces airlines in France to pay their staff under French contracts and file taxes and social security contributions in France, RyanAir and a French union of commercial airlines flight attendants and pilots said separately Wednesday after the court hearing. The Irish contracts don’t offer the same level of social benefits to workers as French contracts do, said Fatiha Aggoune, the president of the Syndicat National du Personnel Navigant de Cabine, a union representing flight attendants and pilots in France but doesn’t have any member at RyanAir. She added RyanAir enjoyed an unfair advantage over competitors thanks to lower payroll costs, since the payments involved are higher in France than in Ireland. The union was among a series of plaintiffs sueing the Irish airline. The decree violates European Union legislation and seeks to prevent low-cost from entering the market, RyanAir said. “The 2006 French Decree was specifically introduced as further state protection for the loss-making Air France, and to limit competition to high fare Air France from lower cost airlines, including Ryanair, Easyjet and Cityjet, on French domestic routes,” the Irish airline said Tuesday in a statement. Air France-KLM (AF.FR) posted a EUR163 million net loss in the second quarter this year while Ryanair booked a net profit of EUR78 million in the same period. In a Wednesday statement, RyanAir said it will appeal the ruling and is ready to appeal up to the European Court of Justice. RyanAir said that since the crew operating on the flights to and from Marseille were working for an airline registered in Ireland and spent their working day on Ireland registered aircraft, they could be considered as working principally in Ireland and not in France. The airline crews were living in France and flown back to Marseille everyday so were working in France and should have filed their taxes in France, Ms Aggoune said.
France will give extra EU subsidies to livestock farmers
Hollande unveiled how France, the EU’s top agricultural producer and main beneficiary of EU farm aid, will implement a new European farm policy agreed earlier this year, a process that has exposed tensions between livestock and grain sectors. The French government has promised to use a renegotiation of the EU’s Common Agriculture Policy to favour livestock farmers, although rejigging the bloc’s complex farm payments has proved a headache. “My first priority is livestock farming,” Hollande said at a livestock show in central France, where he was met with jeers and heckled repeatedly. “To let breeders in the situation they are in today, with lower income than the rest of the profession, higher risks, heavy constraints, is to weaken French agriculture as a whole,” he said. Hollande said France would use measures including a subsidy bonus on the first 52 hectares of each farm, seen favouring smaller livestock farms over crop farms spread over wider areas. NEARLY ONE BILLION EUROS In addition, France would use an option given to EU countries to increase the share of subsidies tied to a type of production, rather than per hectare, to direct more money towards livestock farming, as well as aid for specific sectors such as mountain livestock farmers, Hollande said. “This will represent nearly one billion euros ($1.4 billion)each year to be redirected on this objective with significant effects on the income of our breeders,” Hollande said. He did not detail how much precisely would come from the 9 billion euros in annual EU farm aid per year it will receive in the 2014-2020 period. But to ease the transition for grain growers who would lose some aid, France will reduce disparities in basic subsidies by 70 percent by the end of the period, rather than the total convergence allowed by the EU. The government will also allocate to the small-farm bonus, less money than the maximum authorised under the EU reform. Crop growers have attacked the government’s proposed reweighting of farm aid, saying it assumed permanent high grain prices whereas they were vulnerable to market downturns and faced tough competition to export grain. 2013 Agri.EU