In March 2007, Schering Plough made a public offer to acquire a controlling interest in Organon Biosciences, a Dutch company with subsidiaries and a works council in France.
In August of that year, Schering Plough notified the European Commission of the acquisition.
In September 2007, the French works council of Organon Biosciences decided to appoint an expert, based on the following provisions of the French Labour Code:
…where an undertaking is a party to a concentration [a merger or acquisition that has been notified to the EU Commission under EU competition law], the employer must meet with the works council within three days of the Commission’s press release publishing the fact of the notification. The works council may decide to appoint an expert… (Article L. 2323-20 of the French Labor Code).
Organon Biosciences and Schering Plough requested the annulment before the French courts of the works council’s decision to appoint an expert. They argued that the French subsidiaries of Organon Biosciences were not parties to the concentration and, therefore, the French works council was not entitled to an expert.
The Cour de Cassation, the French Supreme Court, held that all the entities, whether directly or indirectly subject to a change of ownership, are parties to the concentration.
The works council of Organon Biosciences’ French subsidiaries was therefore entitled to appoint an expert.
What Does This Mean For Companies?
Once the Commission has published its press release announcing the concentration, the works council may decide to appoint an expert (usually a chartered accountant) to help the French subsidiary and employees understand the consequences of the concentration, regardless of how far removed the French subsidiary may be from the main parties involved.
The expert is entitled to request from any company involved in the concentration any information relevant to the concentration. Given the expert’s very broad powers of investigation, the works council has every reason to insist on appointing one.
Amongst other things, the expert’s investigations often reveal to the works council key information on the integration of the new entities. It is crucial, therefore, to bear these powers in mind when establishing and managing any concentration in France.