Veolia-Suez merger: legal guerrilla warfare and intimidation of critics
The conflict between the two French multinationals, world leaders in environmental services, which have clashed with rare violence since Veolia announced on 31 August its intention to buy out its competitor, has reached its peak in recent weeks. In addition to the countless legal proceedings on all fronts, many economists and academics, including the author of these lines, have been intimidated. The rampaging hubris of our captains of industry underlines in hollow the dizzying silence of the state, yet involved in more ways than one in this unprecedented case.
by Marc Laime, December 18, 2020
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"To follow the progress of this file as closely as possible, and to be fully part of the monitoring mission exercised by the Senate committees." This is the objective statedin the Senateby the monitoring committee "on the economic and environmental consequences of the merger between Veolia and Suez" — a project whose first step resulted in Veolia's purchase of 29.9% of Suez's capital on 5 October.
Created on 3 November by the Chair of the Senate Economic Affairs Committee, Sophie Primas (Les Républicains - Yvelines), and the Committee on Planning and Sustainable Development, Jean-François Longeot (Union Centriste - Doubs), its work begins the same day with the hearing of Mr Philippe Varin, Chairman of the Board of Directors of Suez, and Mr. Bertrand Camus, Director General. The next day was that of Mr. Jean-Pierre Clamadieu, Chairman of engie's Board of Directors, before that of Mr. Antoine Frérot, President and CEO of Veolia, on November 10. All are visible online.
The two companies now account for almost 44% of the collective sanitation market and 50% of the water market in France
The senators want to "identify the risks that the merger would pose to consumers and local authorities: together, the two companies now account for nearly 44% of the collective sanitation market and 50% of the water market in France, not to mention their actions in the field of waste and energy. The establishment of an entity with such market power raises fears about rate increases on these essential services for French citizens. »
The hearings showed the two leaders of Suez to the penalty, victims of a conspiracy whose mortal character they denounce, the leader of Engie as a "bad boy" protesting his innocence, and finally Antoine "Imperator" Frérot,who breaks the screen by focusing on his merger project, adorned with all the virtues. Better yet, he pledges to return to senators to report on his commitment to safeguarding the jobs of his prey.
"The takeover bid for Suez willbe... »
As early as December 3, the same Antoine Frérot was squatting on a full page of the daily Le Monde, saying bluntly: "The takeover of Suez will be done".
The tone, and the words used, are surprising compared to the customs and customs of the cozy salons where the cac 40 boards of directors are held. But they leave no doubt about the determination of our captain of industry:
"I no longer believe that a discussion with Suez's board of directors is possible, since they persist in refusing the very principle. Especially since, in parallel with this systematic refusal that is opposed to me, several red lines have been crossed or are in the process of being crossed. First there was the creation of an opaque entity to make Suez Eau France inienan. Suez also announced an acceleration of its asset disposal plan. We are concerned that the current leaders of Suez will seek to reserve certain strategic assets as a safe haven, when we need all of Suez's strengths to build the great world champion of ecological transformation. »
He went on to announce that he would be disembarking the Suez staff at the next general meeting. "Our train is on,and nothing stops a train launched," he addedin a remote press conference on the same day, noting that he is counting on Suez's other shareholders to "pressure" the group's management and that he does not imagine not getting their support and ultimately that of the board of directors — potentially overhauled — of his target.
Two days later, on November 5, Mr. Varin made public the scathing letter he had just sent to the CEO of Veolia, in which he described his communications operations as "threats". The letter also points to a contradiction between Mr. Frérot's interview with Le Monde on the theme of "the takeover of Suez will happen" no matter what, and his desire for "friendly support for at least six months".
"On form,the contempt you show and the terms you use towards Suez, its teams, its governance and its values are particularly shocking. Especially at a time when all energies should be concentrated to face the new wave of Covid-19, which makes your approach even more misplaced. »
Atmosphere...
Iron arm in court
As early as 19 October, the lawyer for the Employees of Suez illuminated in the online media Decision-makers the foundations of the decision of the Paris Court of Justice, which, seized by the employees, had conditioned the continuation of the merger project on the information and consultation of the group's social and economic committees (CSE) (1):
"It considers that the sale of the 29.9% stake held by Engie is in no way an isolated, almost innocuous element. When a company makes such an investment [Veolia's share buyback is estimated at 3.5 billion euros], it's not just to become a shareholder. The court agrees with us and considers, on the contrary, that the sale of the shares is part of a larger industrial project, the acquisition of Suez by Veolia, which will lead to a reorganization of Suez's activities and the sale of some of them. However, such consequences involve organizing the information and consultation of ESCs.
Was there a history?
This order is in line with a fairly conventionalcase law. The texts provide that, when a draft of this order is not submitted for consultation, staff representatives are entitled to refer the matter to a judge. Already in 2014, the Paris Court of Appeal had ordered the suspension of the sale of the [group of stores] Spring to Qatari investors pending the resumption of consultation with the Central Works Council. But,in this case, the information was held by the employer, which is not the case here. The information we are seeking is in the hands, if I may say so, of a "third" person. »
Given the urgency, the action of The employees of Suez was launched in reference, which means that the court must decide quickly. It did so on 9 October by suspending the effects of the acquisition, which had taken place four days earlier,of the30% of Engie in Suez by Veolia. Veolia is appealing.
Fifteen days later, another twist before the Paris Court of Appeal. Usually,the social chamber of the latter examines rather disputes between employers and employees. Veolia's defencefocuses on an argument: "Suez's management had no obligation to consult its CSE." The Court of Appeal finally upheld on Thursday, November 19, the order of reference that conditioned the repurchase operation on the information and consultation of staff representatives. For it may well lead to "a reorganization of Suez's activities and the divestment of some of them." The consequences are so severe that they require "organizing the information and consultation of the social and economic committees (SSCs)."
The court therefore agreed with them in deciding to "suspend the effects" of the assignment. Underscoring the "conservative nature" of the suspension, the Court considers that the measures ordered by the judicial court are, however, "neither likely to affect Veolia's ownership of the acquired shares, or hinder its freedom to undertake, nor infringe on the right of competition".
On the other hand, "the lack of information and consultation with social and economic committees" constitutes "a clearly unlawful disorder." A sign for the CSE lawyer for the water trades that "everyone can no longer pretend to ignore the potentially destructive effects on employment for the victims of a buyback operation."
Read also Marc Laimé,"Behind the Veolia-Suez merger, the dream of a French Gafam", Le Monde diplomatique, 2 November 2020.
For Veolia, this means "that by February 5, 2021, he will recover all of his rights" because Suez told the Court that "the information-consultation procedure of the ESCs has begun" on 3, 4 and 5 November. In addition,Veolia believes that it has provided Suez with all the information and documents necessary for this information-consultation. "Misinformation," Suez retorts.
The procedure has been initiated, but "at this stage,the management of Suez has not obtained from Engie, as of Veolia, all the elements sufficient to precisely respond to the legitimate concerns of the staff representatives." "Contrary to the content of Veolia's press release, the starting point of the consultation period is not set,and the date of February 5, 2021 mentioned by Veolia is inaccurate," the group continues. He added that "in any event, Veolia will remain deprived of its voting rights at the end of this information-consultation until the end of the review by the European Competition Authority, unless the latter is authorized."
At thesame time, Veolia announces that the "Nanterre Commercial Court [has] prohibited Suez from making any decision that could render irrevocable the foreign device of inalienability of the Eau France de Suez". This scheme takes the form of a foundation of Dutch law and aims to prevent Veolia's takeover bid on its competitor. The court's enforceable order, Veolia explains, requires Suez to wait for a general assembly to rule on the scheme or to wait,at the latest, for the general assembly that will decide on the accounts for the fiscal year that ends on 31 December. "In the meantime,Veolia will subpoena the Suez group as soon as possible to have the nullity of this device, which violates essential rules of French law, be judged."
Antoine Frérot dreamed of a "blitzkrieg". The spectre of trench warfare arises.
Searches
On Thursday, November 26, in La Défense, Aubervilliers (Seine-Saint-Denis) and Place de l'Opéra in Paris, on the stroke of 9 a.m., a squad of bailiffs accompanied by computer scientists arrive at the headquarters of Veolia, Engie (formerly GDF-Suez) and the investment fund Meridiam (which we weretalking about in the first part of this series).
Each bailiff has an order from the president of the Nanterre Commercial Court (Hauts-de-Seine), which authorizes them to seize all documents relating to the attempted takeover of Suez by its main competitor, Veolia. Computer scientists have a list of about forty keywords, which Suez has had validated by the court, from which they can "suck up" the contents of the executives' computers, such as computer servers where all the exchanged emails are stored, or that of mobile phones (the seized documents must necessarily mention some ofthe keywords defined by the president of the Commercial Court).
The case quickly turns to the fair ofgrabs, Veolia, Engie and Meridiam reapply dare-dare their advice to try to repress the invaders . According to Jean Veil and Bruno Cavalié,the two Suez lawyers mandated for this operation: to demonstrate that as early as July and even before the official announcement of Veolia's interest in Suez in August, secret and confidential discussions took place in order to "lock down" the operation. The procedure implemented also intends to shed light on the absence of a buyout offer competing with that of Veolia which, in fact, would not have had time to emerge given the acceleration of the process triggered by the seller Engie for the benefit of Antoine Frérot's group.
Read also Frédéric Lordon, "Anti-Comlotist Panics," Le Monde Diplomatique, November 25, 2020.
The operation continues in the early afternoon, 26 November, after a long discussion has been initiated on the documents and other emails that the bailiffs can seize,and those to which they will not have access. All the information collected is then placed in receivership. The Nanterre Commercial Court will decide which ones can be forwarded to Suez. In the meantime, Veolia will be able to challenge this procedure in court, which should still give a lot of work to the lawyers of all the parties...
If the information recovered by Suez justifies it,"several legal actions could be taken," according to Suez's board, Mr Cavalié. In other words, the cancellation of the sale by way of justice.
For his part,Antoine Frérot is scrambling to get a general meeting of Suez shareholders, which would remove the current board of directors before replacing it with affiliates. Failing to do so,the Golden Triangle of the City of Light that Mr. Frérot dreams of may well end up looking like the suburbs of Borodino...
Intimidation
But that's not all. And here is the freedom — considering that the matter is in the public interest — to refer to the procedure of which we have been,along with others,the target,at Veolia's initiative.
On Saturday, December 5th at around 9 a.m. we discover in our mailbox the notice of passage of a bailiff who tried,the day before around 8:30 p.m., to serve us a "Sommation to do" issued by Veolia.
We then join on his mobile phone the cleric who we missed the day before. Which tells us that he will send us the summons by email by the end of the weekend.
Less than an hour later we receive a phone call from Mr. Laurent Obadia, Director of Communications and Advisor to the President of... Veolia! It was to him last October that we addressed the questions we wanted to ask Veolia, and whose answers we published in the first part of this survey.
Read also Marc Laimé,"Veolia-Suez: Genesis of a State Affair," The Diplomatic World, October 26, 2020.
On this occasion, Mr. Obadia apologises, assures us that this was a mistake and that this shipment was not intended for us, adding that it is therefore not necessary for us to recover it from the bailiff. After which we discuss the current case, the representative of Veolia trying to convince us of the benevolence of his group. Unlike Suez, of course.
At this point we still think this is a stupid misreprescing file and addressing. But the next day, Sunday, December 6, the cleric e-mailed us the famous "Sommation to do". And we discover the pot-aux-roses.
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Summons to make Veolia served by bailiff,04-12-20.
This summons is addressed to us because, as public policy advisor for water and sanitation to local authorities, we have publicly commented on Veolia's proposed takeover of Suez. In a context where possible negative comments on this case could cause significant economic harm to Veolia, veolia therefore orders us within 48 hours to send him a statement (to a dedicated Internet address), in which we would assure him that we are neither near nor far ... paid by Suez!
After consulting our advice, we decide to send a formal notice to Veolia in response.
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Our warning in response to the Summons to make Veolia, 07-12-20.
The same evening, on Twitter, a law professor from Assas,who also received a summons, denounced the process before the case reached the media the next day,with the publication on "one" of the site of L'Obs,of the outraged protest of Mr. Élie Cohen, director of research at the CNRS, specialist in industrial economics, who has indeed spoken several times about the project. Within hours the case was relayed by a dozen mediaoutlets, and we learned that it was about fifteen observers, mostly economists and academics,who were targeted by Veolia.
Procedure baillon
In a few hours,without major difficulty, we will identify a dozen of the recipients of the summonses, whose list has not been made public by Veolia. And for good reason. The circumvented formulations used in the document can only be prosecuted by us under "private defamation" (2), sanctioned,in the event of a conviction,by a fine... amounting to 38 euros. On the other hand, if a recipient makes the case public,Veolia could sue him for... public defamation!
Notwithstanding,after reading about a dozen forums or positions signed by some of Veolia's "targets", we find that the comments incriminated by the multinational are generally incomplete, insignificant,if not totally next to the plate, which does not leave to intrigue (3).
In fact, our Machiavelli d'Aubervilliers — the site of Veolia's new headquarters — as one wise jurist explainstous, do not intend to sue us for defamation (4):
"It's more twisted than that,and much more efficient. By instructing their targets to justify the absence of a conflict of interest with Suez, they reserve the possibility,in the absence of an answer within 48 hours — an indication that the target may well be stipendied by their opponent — to prosecute her for "denigration" before the consular court [commercialcourts]. In the event of a conviction, damages can be inthe case of hundreds of thousands of euros. »
In doing so Veolia would do double blow, attesting to the Commercial Court — seized, we saw, the previous week by Suez, that he authorized to search Veolia, Engie and Meridiam — that the company, odiously maligned by sti drapes,is doing everything possible to preserve and its reputation and its stock market price. This would provide similar reassurance to the Financial Markets Authority (AMF), which has also been seized since the beginning of our dark affair by the Suez trade unions.
It should be noted for the good form that Veolia has since notified us in writing,as of December 8, and by mail in recommended with acknowledgement, that this was indeed a "mistake", and that their sweet note should not have been addressed to us. If the whole operation suffers such amateurism, the outcome of the takeover is enough to inspire the deepest concerns.
And let us point out that at this stage, although having responded in the terms that we thought were appropriate to Veolia's initiative, we could know, as a lawyer confirmed to us, in view of the virulence of our response, find ourselves quoted by Veolia to better overwhelm the possible "stiseds" of Suez that she would continue with her vindictiveness — almost as "witness of morality"!
Finally, in a long unsigned message, broadcast on Veolia's Twitter feed, the company ventures even more into the thinly veiled designation of its targets, again inaugurating a new register in the war of influence that opposes it to its prey.
Read also Grégory Rzepski, "These pools where media "experts" proliferate", Le Monde diplomatique, December 2019.
Worse, in an interview with the weekly Le Point, Veolia, breaking a taboo on community service companies — that of conflicts of interest — specifically implicates Sophie Primas, Senator LR who chairs the follow-up mission set up in the Senate,on the grounds that she would appear in a promotional clip of Suez! Here, the same part of multi-band pool, it is a matter of making the coming conclusions of the said mission suspicious in advance (5). Good pick in this case, since we learned since then, on December15, thatMrs Primas was entangled in another conflict of interest... (6). This break from an absolute taboo does not cease to question when we know the care that our two behemoths take to "treat" the elected representatives, as illustrated again on 4 December by the presence of Mr. Antoine Frérot at the Pollutec show in Lyon (7).
"Despite the cost in terms of the image of this strange procedure,at Veolia, we assume," says the weekly Marianne. And we even claim a parentage with the approach undertaken by our colleague Le Monde diplomatique. A year ago, under the title"These pools where media 'experts' proliferate", the "Diplo" had indeed tried to decipher where the invited experts spoke on the sets and in the columns of the newspapers. Enough stipendied stands. We think it would be normal for the media to specify where people are talking when they speak. When a person publishes in four or five newspapers the same or almost the same forum, claiming his only position in the university, while he is also a director of a company that almost entered as a white knight of Suez against Veolia ... Well, we can ask questions," Explains Marianne Laurent Obadia, Veolia's communications director, who aims without naming him Élie Cohen (8). »
Privatisation of instruments of justice
"The leaders of Suez, aided by an armada of business lawyers and bankers, are arrowing out of all woods," the daily Le Monde said in its December 11 edition. At their request,the Paris Court of Justice asked Veolia on 9 Octoberto launch the legal information process - consultation of the representative bodies of Suez staff: 99 social and economic committees must be consulted. Suez, who plays the watch, says the procedure will be completed "no later than 31 May."
Veolia retorts that everything can be done by February 5. The latter announced on Thursday (December 10th) that it had made available to the unions of Suez a 76-page document describing the project, as well as the offer given to Engie, the Veolia-Meridiam agreement (which would take over Suez Eau France)... "This approach exceeds legal obligations"and some of the information provided is confidential related to business secrecy, Veolia said, adding that Suez had a lot of information since mid-October.
In addition, Mr. Frérot again invited Suez employees "to propose a date" for a meeting in order to defend its operation and convince them that it will not lead to job losses or questioning of acquired rights. In the meantime, his group cannot enjoy the rights associated with the 29.9% it holds, nor seize the antitrust services of Brussels and a few countries where there are important Suez-Veolia duplicates (UnitedKingdom, Germany, Australia...) ».
The excesses of financial capitalism have been manifested for thirty years through tax havens, private arbitration tribunals established by the World Bank or the InternationalChamber of Commerce, but also in American judicial extraterritoriality, which has become a new economic weapon of war (9).
On a smaller scale,the events of the Veolia-Suez case illustrate today,against a background ofbusiness secrecy and threat to information, equally disturbing slips and ruptures.
Marc Laimé