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Americans doing business in France don’t just have linguistic, cultural and gustatory challenges to overcome. That’s old news. Now they must find their way through a thicket of EU regulations, French laws and the myriad areas where the two intersect. Mon Dieu! Corporate Counsel assistant editor Andrew Longstreth asked four Paris-based lawyers for guidance. M&A: David Freedman, Baker & McKenzie

American-based multinationals that want to take over a French company in an all-stock transaction can do it — but there are high hurdles to clear, says attorney David Freedman, who heads Baker & McKenzie’s projects, finance and capital markets group in its Paris office. An American acquirer would become subject to French securities law, which means meeting French and U.S. securities rules simultaneously. It’s not easy, says Freedman. While basic principles of disclosure are similar in the two countries, the mechanics are different. Just to send out an earnings release in France, for example, a company needs approval from the Commission des Op�rations de Bourse, one of the country’s two market authorities. Unlike the U.S. Securities and Exchange Commission, the French commission asks questions about the release before the document is made public. After the release is approved, companies must make sure that its contents get into the marketplace in a timely fashion. If a release is not picked up by the newswires, the company must buy space in a national financial newspaper. Full-page ads typically run around $15,000. And foreign companies must have their ads translated into French. “That’s the kind of thing that will drive an American nuts,” says Freedman, “because it’s a big waste of time and money.” BANKRUPTCY: St�phanie Chatelon, Deloitte & Touche Juridique et Fiscal

French bankruptcy law doesn’t have much sympathy for creditors, according to St�phanie Chatelon, a Paris-based partner at Deloitte & Touche Juridique et Fiscal (the law firm affiliated with the U.S.-based accounting firm Deloitte & Touche). The main goals of the law — and there are basically only three, though there’s quite a lot of regulatory language to explain them — are to revive the activity of the business, to save jobs and, lastly, to pay back creditors. Creditors, even secured ones, have a slim chance of recovering their money once a bankruptcy proceeding begins, Chatelon says. “When a company goes bankrupt [in France], they are often too deep in difficulties and their assets have already been pledged,” she explains. Chatelon therefore advises creditors that the minute there’s word that a company may be in financial difficulty, they should pursue their claims as aggressively as possible. Generally, once a French bankruptcy proceeding starts, liabilities are frozen for an “observation period” of six to 20 months. (The United States does not have a comparable rule, but there is a cooling-off period in which the debtor has 180 days to propose and confirm a plan. The judge may extend that time.) During this time a court-appointed receiver tries to reorganize the company so that it can continue operating. Legal fees incurred after the bankruptcy filing, employee compensation and limited groups of creditors all have priority on the debtor’s assets. The court-appointed receiver can even force current creditors to keep doing business with the debtor. “That’s a big difference [from American bankruptcy law],” says Chatelon. “For Americans, it’s quite unacceptable that you’ve already lost money with a company and someone from the court imposes the continuation of the contract you have with the bankrupt company.” Even though French law is designed to save companies, Chatelon notes, 90 percent of companies that go into bankruptcy in France wind up liquidating. “The idea of the law was very good,” laments Chatelon, “but the results have been very poor.” INTELLECTUAL PROPERTY: Nathalie Hadjadj-Cazier, HSD Ernst & Young

Nathalie Hadjadj-Cazier, intellectual property partner-in-charge for HSD Ernst & Young in Paris (the law firm affiliated with the United States-based accounting firm Ernst & Young), has seen it all too often: An American company, looking to do business in France for the first time, wants to bring its trademarks along, and finds out that it isn’t so easy. “Usually, what happens is that we find the trademark is already protected in France [by another company]. The American client says, ‘I don’t understand, I’ve been using that trademark for years. What can I do?’” And the answer often is: Not much. “Around 7,000 trademarks are registered in the world every day,” explains Hadjadj-Cazier. “This means it’s very difficult to find an available trademark in France.” The problem also lies in France’s trademark laws. As in Europe, trademark rights in France are granted to those who file first — not to those who use a trademark first, as in the United States. That’s often disappointing news to U.S.-based multinational corporations that strive to operate under one name in all countries. But “we try to find a way to keep that name in France,” says Hadjadj-Cazier. “For instance, we see if we can purchase a trademark or make a license agreement.” Hadjadj-Cazier says that when doing business in Europe for the first time, American companies should first consider registering their trademarks with the European Community, which gives protection throughout the 15-country European Union. An EC trademark is less expensive than filing in all the different countries. The process also is less onerous than most U.S. lawyers might think: In the United States a trademark holder has to show evidence that a trademark is still being used five years after an original filing. But in Europe, no such evidence is necessary. ANTITRUST: Jean-Mathieu Cot, Clifford Chance

Before American companies worry about France’s new “merger control” law — which was scheduled to go into effect last month — Clifford Chance’s Jean-Mathieu Cot recommends that they first check to see whether European Union antitrust laws apply to their deal. A transaction is generally subject to European Commission control when the acquirer and target of a merger together have 5 billion euro ($4.4 billion) in worldwide pretax sales and 250 million euro ($217 million) in pretax sales in Europe. If the company’s sales fall below that amount, then the individual country has jurisdiction. Passing the EC threshold is a “good thing,” says Cot, head of the law firm’s antitrust practice in Paris, because it spares the parties the lengthy and cumbersome process of having to file the transaction in every EU nation where the company does business. When the EU antitrust thresholds are not met, however, companies must meet the individual countries’ laws. In France that means complying with the New Economic Regulation Act, which governs mergers. Previously, antitrust filings were voluntary in France. But under the new regulation laws, filing with the country’s antitrust authority is mandatory when the acquirer and the target together exceed 150 million euro ($130 million) in worldwide pretax sales and 15 million euro ($13 million) in pretax sales inside France. It’s important to note that, even if companies don’t have assets in France, they may be subject to French antitrust laws. For example, when the now Chicago-based Boeing Co. bought Jeppesen Sanderson Inc., a supplier of aviation information services based in Denver, last year, Cot says, neither company had assets in France. Nevertheless, because each company had sales in France, the French antitrust authorities declared the merger subject to their laws. And the French government asked Boeing to take actions in order to ensure that Jeppesen’s intimate knowledge of Boeing’s competitor Airbus S.A.S. of Blagnac Cedex, France, would not give the U.S. company an unfair competitive advantage in the French market. Boeing was able to make these assurances, and the merger went through in July. Related charts: The Expats and The Natives Buying a Piece of France — The Biggest Deals in 2001

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