Act No. 2026-403 of 26 May 2026 on the simplification of economic life — Articles 22 and 24

Promulgated on 26 May 2026 and published in the Official Journal on 27 May 2026 following review by the French Constitutional Council (decision No. 2026-903 DC of 21 May 2026), the Act on the simplification of economic life introduces two major changes for French M&A transactions. First, Article 22 substantially reforms the employee prior-information regime originating from the 2014 "Hamon Act": the notice period drops from two months to one month, the scope is narrowed to companies with fewer than 50 employees, and sanctions are significantly reduced. Second, Article 24 substantially raises the French merger-control notification thresholds: the worldwide threshold moves from €150 million to €250 million, and the French threshold from €50 million to €80 million. Two cumulative reforms which, applied to ongoing or upcoming deals, warrant a careful review of timing and operational parameters.

A long-awaited step change

French law had long framed business sales with two procedural regimes widely regarded by practitioners as burdensome and, for some sellers, off-putting.

First, since Act No. 2014-856 of 31 July 2014 (the "Hamon Act"), the prior information of employees in the case of a sale of a business or of the majority of the share capital of a small or mid-sized enterprise imposed on the seller a duty to inform each employee individually at least two months before the transaction, on pain of a financial penalty. The regime was widely criticised as a barrier to confidentiality and to deal fluidity.

Second, French merger control relied on notification thresholds set in 2004 and never revalued — remarkably low against market evolution: from €150 million in cumulative worldwide revenue and €50 million in France, a transaction had to obtain clearance from the French Competition Authority, generating an administrative process that could freeze closing timelines for several weeks.

The Simplification Act modernises both regimes. It results from a long parliamentary process, with definitive adoption on 15 April 2026, two Constitutional Council referrals on 21 and 28 April 2026, and a partial censure decision dated 21 May 2026. Neither the Hamon reform (Article 22) nor the merger-threshold increase (Article 24) was struck down, and both come into force on staggered timetables that must be anticipated.

Article 22 — Reforming the Hamon regime: refocused, faster, lighter

A regime refocused on very small companies

Before the reform, the prior-information obligation applied to all companies with fewer than 250 employees. Two procedures coexisted: one for companies with fewer than 50 employees, or those without a "CSE" (works council) with broad powers, and another for companies with 50 to 250 employees with a broad-powered CSE.

The Simplification Act ends this duality. The obligation to inform employees individually is now refocused on companies with fewer than 50 employees, together with companies with 50 to 250 employees that have no CSE despite the legal requirement, provided they can evidence this through a formal "carence" minutes (procès-verbal de carence). For companies with 50 or more employees and a broad-powered CSE, the direct information duty is simply abolished: these companies remain subject to CSE information and consultation obligations under the Labour Code, which takes over.

This rationalisation ends a duplicative process and clarifies the picture: where an operational CSE exists, collective employee representation replaces individual notice.

A shorter one-month period

For companies still within the scope, the Act reduces the prior information period from two months to one month before the sale. The seller must still inform each employee individually, but on a tighter schedule that is more compatible with the operational constraints of confidential negotiations, often tied to exclusivity agreements and narrow deal windows.

The one-month clock starts from the notification to employees — by any means providing certain date — and runs until the effective conclusion of the sale. Individual waiver mechanisms (allowing an accelerated timeline where all employees have expressly waived their offer right) remain in place and become, in practice, a useful management tool for sellers on tight-schedule transactions.

A lighter penalty

On sanctions, the reform notably softens the constraint: in case of breach, the civil fine drops from 2% of the sale price to 0.5%. On multi-million-euro transactions, the seller's financial exposure remains real but becomes proportionate, while the initial risk of transaction nullity — long ago replaced with a fine by the legislator — remains discarded.

Effective date: sales concluded from 27 July 2026

The reform applies to sales concluded from 27 July 2026, two months after the promulgation of the Act. Deals closed before that date remain governed by the previous regime — two-month notice, 2% fine, scope including companies of 50 to 250 employees with a broad-powered CSE.

This calendar cut-off is critical: ongoing deals require precise arbitration on the optimal closing timing. For some transactions, accelerating signing within the pre-reform window may look counter-productive; for deals with flexible timing, postponing the closing after 26 July 2026 enables the immediate benefit of the shortened notice period and lighter sanction.

Article 24 — Raising the merger-control notification thresholds

A significant increase

For twenty years, French merger control required that any transaction reaching two cumulative revenue thresholds — €150 million worldwide and €50 million in France for at least two of the parties — be notified to the Competition Authority, on pain of suspended completion pending clearance. Retail-specific thresholds were even lower (€75 million worldwide and €15 million in France).

Article 24 substantially raises these thresholds:

• for the general regime, the worldwide threshold rises from €150 million to €250 million (+66.7%) and the French threshold from €50 million to €80 million (+60%);
• for retail, the worldwide threshold rises from €75 million to €100 million and the French threshold from €15 million to €20 million;
• overseas territories thresholds remain unchanged.

The Competition Authority estimates the change will reduce annual notifications by 20 to 30%, meaning some thirty to fifty transactions each year will escape prior control. For deals in the "grey zone" — cumulative revenues between the old and new thresholds — the reform simply removes the notification step, easing costs, timing and uncertainty.

Effective date: notifications filed from 1 October 2026

The Act comes into force on the first day of the fourth month following its publication, i.e. 1 October 2026. The new thresholds apply to concentrations whose notification to the Competition Authority is filed from that date. It is the notification date — not the signature or closing date — that triggers the new regime.

A point of attention for ongoing deals: transactions in the grey zone with closings targeted for summer 2026 may consider strategically postponing notification to autumn, subject to contractual and commercial calendar constraints. Conversely, transactions that have initiated an anticipatory notification process may want to consider withdrawing and refiling after 1 October 2026 — a decision to be assessed against dossier maturity and Authority expectations.

A structural impact on the mid-market

The threshold increase has a particularly marked impact on the mid-market, whose valuation structure sits precisely in the zone affected by the threshold shift. For this segment, the reform provides a double simplification: removal of the statutory notification period (25 working days in Phase I, extendable in Phase II) and neutralisation of the risk of conditional commitments or prohibition inherent in prior control. Mid-market deals regain a welcome operational fluidity.

For transactions exceeding the new thresholds, however, nothing changes: notification procedure, review deadlines, commitment and prohibition powers of the Authority remain the same.

Practical takeaways for sellers and investors

These two reforms, whether standalone or combined, require a rethink of ongoing deal workflows.

Map the calendar of ongoing deals. Every sale, LBO, acquisition or merger in progress should be reviewed against the dual calendar: 27 July 2026 for the Hamon reform, 1 October 2026 for merger-control thresholds. For certain deals, a small shift in closing or notification timing unlocks the lighter regime immediately.

Update conditions precedent clauses. Sale documentation — LOI, term sheet, SPA — must reflect the new parameters: employee waivers, CSE scope, notification thresholds, review timeline. Conditions precedent and resolutive clauses tied to Competition Authority clearance must be revised in light of the new thresholds.

Secure the information documentation. For sales that remain within the Hamon perimeter (fewer than 50 employees, "carence" minutes), the documentation of individual employee notice — notification, acknowledgment of receipt, potential waivers — must be flawless, including to prove compliance with the one-month period. Documentary rigour remains the best protection against the 0.5% fine.

Reassess pending pre-notifications. Deals preparing a notification to the Competition Authority while sitting below the new thresholds must be reassessed: notification becomes optional for such transactions from 1 October 2026. Withdrawing an ongoing notification, or strategically delaying its filing, deserves a case-by-case cost-benefit analysis.

Conclusion: a reform that streamlines French M&A

The 26 May 2026 Act on the simplification of economic life is not a radical overhaul of French sale law; it is a common-sense reform that refocuses procedures on their core purpose and gives the French mid-market a long-awaited operational fluidity. Strengthening the CSE, shortening the Hamon notice, cutting the applicable fine and materially lifting merger-control thresholds together form a coherent package that, from late 2026 onwards, should produce tangible effects on the volume and pace of transactions.

COTEG advises sellers, buyers, financial and industrial investors throughout the full deal lifecycle: legal and tax structuring, due diligence, protocol negotiations, management of employee information duties, notification to competition authorities, closing and post-deal integration. In a regulatory environment that evolves by successive layers, calendar anticipation and precise command of thresholds and deadlines make the difference between a smooth deal and a constrained one.

Author: Stéphane Toullalan, Partner — M&A, Corporate Law, Tax Litigation.

This article is published for information purposes only and does not constitute individualised legal advice. The above developments reflect the state of French law as of 15 July 2026.