This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.

Freshfields Transactions

| 4 minutes read

Privatization program of the French government approved by the French Supreme constitutional court

The Conseil constitutionnel has validated several provisions of the PACTE Law, including those authorising the privatization of Aéroports de Paris and La Française des Jeux.

Several members of the Parliament submitted a claim before the Conseil constitutionnel in relation to the constitutionality of the provisions of the PACTE law (the Law PACTE), which has just been validated by the French Parliament. Most notably, the members of Parliament requested the cancellation of the provisions of Law PACTE which authorises (i) the privatization of Aéroports de Paris (ADP) and (ii) La Française des Jeux (FDJ). They invoked that ADP and FDJ could not in fact be privatized, in accordance with the Preamble to the 1946’s French Constitution, which prohibits the privatization of a company having the character of (a) a de facto monopoly or (b) a national public service. By its decision No. 2019-781 DC dated 16 May 2019, the Conseil constitutionnel validated these provisions.

Aéroports de Paris (ADP)

Regarding ADP, the Conseil constitutionnel first of all dismissed the objections based on the failure to take into account the 9th paragraph of the Preamble to the 1946’s French Constitution. The Conseil constitutionnel also rejected criticism of the provisions relating to the compensation of ADP and the operation of the public airport service.

  • To rule out the qualification of de facto monopoly, the Conseil constitutionnel noted that whilst ADP is exclusively responsible for operating several civil aerodromes located in the Île-de-France region, there are other aerodromes of national or international interest on French territory. In addition, although ADP largely dominates the French airport sector, it faces increasing competition from the main regional airports, international services, and the major European airport connection hubs. Importantly, the transport market in which ADP operates includes routes which could be substituted by several modes of transport. ADP thus finds itself on certain routes, in competition with road and rail transport, particularly regarding the latter due to the development of high-speed train lines.
  • In the case of the existence of a national public service, the Conseil constitutionnel referred to its consistent case-law that even though the need for certain national public services derives from principles or rules of constitutional value, the determination of other activities that must be established as a national public service is left to the discretion of the legislator or the regulatory authority by determining their organisation at a national level.
    • The Conseil constitutionnel’s recent Decision No. 2019-1 RIP, dated 9 May 2019 ruled that the operation and development of the Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget aerodromes do not constitute a national public service whose necessity derives from principles or rules of constitutional value.
    • As the legislation stands, it noted that no provision currently in force qualifies ADP as a national public service and that, as stated in the French Transport Code, the State is competent to create, develop and operate "aerodromes of national or international interest", the list of which was drawn up by decree of the Conseil d'État and includes several airports located in different regions. Therefore, the legislator has not intended to entrust ADP with sole operation of a public airport service of a national nature. A number of these regional aerodromes which are operated by companies also responsible for public service missions are in competition with ADP.

It concluded that, as it stands, ADP does not have the characteristics of a national public service within the meaning of the 9th paragraph of the Preamble to the 1946’s French Constitution.

Given these reasons, the Conseil constitutionnel considered that the provisions of the 9th paragraph of the Preamble to the 1946’s French Constitution does not prevent the transfer to the private sector of the majority of the shareholding of ADP.

La Française des Jeux

With regard to FDJ, the Conseil constitutionnel held that despite the fact that the contested provisions grant a company exclusive rights to lottery games marketed on the physical network and online as well as sports betting games on the physical network, these exclusive rights do not grant FDJ a de facto monopoly within the sector of money and chance games (including horse betting, casino games and online sports betting). Moreover, although FDJ offers competition with other operators in sports betting and online poker games, these activities, together with those of its exclusive rights, do not give it a dominant position in the gambling sector, which would constitute a de facto monopoly.

In response to an argument alleging to a breach of the 11th paragraph of the Preamble to the 1946’s French Constitution, which protects the right to health, the Conseil constitutionnel noted that the privatization of FDJ cannot be exempt from the regulations governing gambling and chance, pursuant to the law dated 12 May 2010 on the opening to competition and regulation of the online gambling sector. This aims to limit and regulate the supply and consumption of games and to control their exploitation in order to prevent excessive or pathological gambling and to protect minors.

The Law PACTE will now enter into force in the coming days.

The privatisation process of FDJ should start before the end of the year. The privatisation process of ADP is more uncertain and will not start, in any event, before 2020. The Conseil Constitutionnel approved one week before its ruling on Law PACTE, a law which provides for a possible referendum on the planned sale of the government's stake. The proposal brought by opposition politicians now requires the signatures of 4.7 million of the French electorate within a nine month period (i.e. until March 2020). In the event this condition is met, a law to consider that ADP cannot be privatized could be submitted to the Parliament. In the absence of vote from the Parliament a referendum could be set up on this question. Even if this process does not prevent, in itself, the government from privatizing ADP in the short term, the French Minister of Economy has announced that the French State will wait until the end of the nine month period described above before starting the privatisation process of ADP.

It should also be noted that Law PACTE contains provisions on many other subjects. In particular, the Law PACTE extends the Minister of Economy’s remedial powers and the panel of possible sanctions in case of breach of the French foreign investment regulations. For more information on this topic, read our blog here