Hedge Funds, Powerless State, Belated Parliament
What the Commission of Inquiry Reveals About the Predation of French Productive Capacity
The National Assembly's commission of inquiry into the "predation of French productive capacity by hedge funds" does not merely offer a gallery of weakened industrial or medico-social cases. It uncovers, through its hearings, a broader pattern: a French economy in which strategic assets can be captured, restructured, and indebted at a pace the State struggles to control; administrations that apply standards sometimes with insufficient regard for their original political purpose; and a public system in which responsibility dissolves among ministries, agencies, authorities, regulated professions, and elected representatives. The thesis must not be caricatured: not all private equity operations constitute predation, and not all losses of industrial sovereignty stem from State failure. Yet the commission's records show that in France, the combination of financialization, fragmented decision-making, and blurred accountability creates fertile ground for value transfers at the expense of employment, productive investment, and, at times, the quality of services rendered. (assemblee-nationale.fr)
The macroeconomic context gives this work a significance that extends far beyond a handful of isolated cases. France is emerging from several decades of deindustrialization, despite a recent inflection. France Stratégie notes that the share of manufacturing value added in French GDP, which fell throughout the 2000s and 2010s, still stood at only 15.7% in 2023 in the reference study cited — a sign of a productive apparatus still weakened by historical standards. At the same time, the Banque de France recorded 69,392 corporate failures over twelve months to end-February 2026, a level that confirms the fragility of a portion of the productive fabric. In such an environment, the question is no longer simply whether certain funds go too far; it is whether France's public architecture genuinely protects the country's industrial substance. (strategie.gouv.fr)
French Industry Sold Off Piece by Piece: Financialization as a Mode of Corporate Governance
The first lesson from the hearings: the commission documents less a series of accidents than a modus operandi. During the hearing of EQT Partners France on 26 February 2026, the commission's chairman noted that EQT had become a major global player, with €266 billion in assets under management at mid-2025, and that it had taken positions in sensitive French sectors such as Cerballiance, Colisée, and Saur. The commission immediately raised the right questions: LBO transaction structures, the respective share of debt and equity, the sustainability of indebtedness, and the identity of investors. The very fact that these questions become central in sectors linked to healthcare, elderly care, or water supply illustrates a shift in the centre of gravity: the company is no longer merely a production tool, but a vehicle for financial engineering. (assemblee-nationale.fr)
Legally, precision is required: an LBO is not unlawful in itself, any more than the pursuit of returns is inherently reprehensible. French law permits company sales, leveraged acquisitions, and capital restructuring, subject to compliance with corporate law, labour law, insolvency law, and, in certain cases, foreign investment controls or sector-specific rules. The problem, as it emerges from the hearings, lies less in the existence of these instruments than in their use in sectors where financial logic can come into conflict with the logic of public service, sovereignty, or territorial planning. When networks of laboratories, care homes, or essential infrastructure become portfolio assets, the decision-making horizon shifts: maximizing exit valuation may weigh more heavily than territorial continuity, service quality, or long-term robustness. This critique is economically arguable and legally admissible, provided it does not treat every transaction as inherently fraudulent. (assemblee-nationale.fr)
Testimony from workers heard by the commission gives substance to this critique. At Cerballiance, a CFTC trade union representative indicated that the fund's arrival had altered the group's operations, in a context already made harder by pricing and regulatory policies. He described shortened opening hours, reorganization of working time, a staffing shortfall of around 10% relative to theoretical needs, and an absenteeism rate of 14%, yielding a combined rate of close to 24%. He added that this evolution had an impact on work quality and, consequently, on the quality of care, with patients finding doors closed in the afternoon. These findings do not, in themselves, establish an exclusive legal causal link between investment funds and service deterioration; but they demonstrate that in essential sectors, productivity trade-offs are neither socially nor territorially neutral. (assemblee-nationale.fr)
The heart of the problem is political. For years, the executive has proclaimed reindustrialization, health sovereignty, and productive reconquest. Yet in practice, France continues to accept that companies or networks operating in critical segments are governed under the constraints of debt and exit. There are indeed control tools — foreign investment screening, sectoral powers, public procurement, prudential doctrines, aid conditionality — but the commission of inquiry implicitly suggests that they intervene too late, too narrowly, or outside the true centre of decision-making. Parliament, for its part, appears to be discovering through the inquiry what restructuring practitioners have long known: in a weakened economy, the underfunded company becomes a target; and the targeted company often ends up being managed in pieces, profitability line by profitability line. (assemblee-nationale.fr)
Speaking of "industry sold off piece by piece" is a polemical formulation, but it points to an objectifiable reality: separation between ownership and territory, between financial value and collective utility, between governance and accountability. It is not only capital that changes hands; it is the very purpose of the company that shifts.
When the Administration Subverts the Purpose of the Rule: Formal Compliance, Material Contradiction
The second strand of analysis, more legally delicate, must be stated with care. To say that "civil servants subvert the meaning of the law" presupposes, in the strict sense, the attribution of wrongful intent or deliberate use contrary to the norm's purpose. The records consulted do not, at this stage, support such a wholesale personal accusation. What they clearly reveal, however, is a closely related and politically serious phenomenon: administrations, agencies, and supervisory bodies apply or co-produce constraints that, taken cumulatively, can contradict the public interest objective that public authorities claim to pursue. This is not necessarily an abuse of power in the administrative law sense; it is often a functionalist drift in public action. (assemblee-nationale.fr)
The Cerballiance testimony is illuminating here. The trade union representative explained that small laboratories had been weakened by tariff cuts, but also by compliance costs linked to Cofrac accreditation and standards required by the ARS (Regional Health Agencies). According to him, these obligations are "extremely burdensome," time-consuming, and costly, to the point of having accelerated consolidation and favoured the rise of large groups subsequently accessible to funds. In other words, instruments designed to guarantee quality, safety, and sectoral regulation also produced a structural effect: they raised market entry costs for independent operators, encouraged concentration, and then facilitated financialization. On this basis alone, one cannot say that public officials intended to hand the sector over to the funds; but it is possible to argue, seriously, that they applied compliance objectives without sufficiently integrating their market and sovereignty consequences. (assemblee-nationale.fr)
This is a classic failing of the contemporary State: each administration optimizes its own local target — quality, safety, budget, competition, procedure, solvency, financial orthodoxy — without any authority ensuring overall coherence. The health ministry pursues standardization; the Cnam adjusts pricing; the ARS tighten requirements; accreditation increases fixed costs; Bercy reasons in terms of budgetary sustainability; market authorities examine the formal legality of transactions; and, at the end of the chain, the ground level discovers that the economic independence of small operators has vanished. The material result may be the opposite of the stated political objective. In this type of configuration, the letter of the law is respected, but its spirit — preserving effective, pluralistic, and territorially balanced access to the service — erodes. (assemblee-nationale.fr)
The critique applies equally to the restructuring apparatus. The insolvency professions recall their role as "trusted intermediaries" and the judicial oversight of their mandates. The CNAJMJ highlights the existence of 170 judicial administrators, 330 judicial representatives, 270 firms, and 3,000 employees. This architecture is legitimate: it aims at safeguarding business activity, settling liabilities, protecting creditors, and, where possible, preserving employment. But the commission explores precisely the grey zone in which insolvency proceedings also become a channel for asset disposals, selective takeovers, and reconfigurations of ownership control. Here again, the objection is not that insolvency law is inherently flawed; it is that its operation, combined with asymmetric financial power relationships, can produce outcomes that are formally regular but materially impoverishing for the productive fabric. (assemblee-nationale.fr)
From this perspective, the executive bears a particular responsibility. Not because it frontally violates the law, but because it allows a machine of public administration to thrive in which the indicator prevails over the objective. Yet French public law has long recognized the requirements of proportionality, adequacy of means, and effective pursuit of the general interest. If a norm systematically produces effects contrary to the productive sovereignty it purports to protect, the problem is no longer merely technical; it becomes institutional.
The Dilution of Responsibility: A System Where Everyone Knows, But No One Answers
The third lesson from the hearings is perhaps the most damning for both the executive and the legislature: the dilution of responsibility appears as a structural feature, not an accident. It results from the proliferation of actors, the specialization of competencies, and the fragmentation of decision-making chains. When a strategic company takes on excessive debt, reduces its workforce, closes sites, or degrades the service it provides, who is accountable? The fund invokes market conditions; managers speak of operational necessity; the administration points to its limited competencies; sectoral authorities say they judge only compliance; commercial courts deal with the emergency; elected officials explain that they raised the alarm; and Parliament opens, belatedly, a commission of inquiry. Each holds a fragment of the truth; none assumes the full weight of the consequences. (assemblee-nationale.fr)
The commission of inquiry itself is, in its own way, a symptom of this failure. Its very existence proves that ordinary oversight tools have not been sufficient. It hears, after the fact, actors who, for the most part, acted within the scope of their regular competencies. This does not make the inquiry pointless; on the contrary, it is indispensable. But it reveals the French paradox: the State is everywhere in the rules, and nowhere in clear attribution of responsibility. The more distributed the decision, the less politically accountable it becomes. Yet representative democracy cannot function durably if the social, industrial, or territorial costs of certain operations have no identifiable author. (assemblee-nationale.fr)
This dilution also affects the legislature. Parliament cannot position itself solely as a judge of the executive when it participates in the normative production that makes these impasses possible. Simplification laws, prudential frameworks, delegations of authority, partial oversight regimes, the absence of strict conditionality on public aid or of enhanced protection for certain productive assets — these are also the result of legislative choices. The legislator has often preferred general, ostensibly neutral mechanisms rather than assuming a clear doctrine of economic sovereignty. It is now investigating the effects of a legal order it helped to design. The commission's critique therefore applies to both heads of power: an executive focused on management and a legislature too often reactive. (assemblee-nationale.fr)
The concrete cost of this dilution is visible in the figures. In an economy where the Banque de France records 69,392 failures over twelve months to end-February 2026, the absence of a clear arbitration between productive continuity, service quality, employment, and financial return is not an abstract weakness; it is a systemic risk. The more the economic fabric is weakened, the more actors capable of mobilizing debt, restructuring expertise, and rapid exit horizons gain advantage over long-term industrial players. In the absence of unified accountability, public authorities condemn themselves to commenting after the fact on restructurings they neither anticipated nor truly governed. (banque-france.fr)
Denouncing hedge funds is therefore not enough. The commission shows above all the weakness of a State that does not know how to prioritize its objectives and of a Parliament that exercises control too late. The issue is not merely moral; it is constitutional in the broad sense, for it touches on the capacity of public power to guarantee the continuity of the economic Nation.
Conclusion: The Scandal Is Not Only Predation — It Is the Public Organization of Powerlessness
Taken together, the commission of inquiry's records sketch a severe but defensible conclusion: France is not only confronted with aggressive strategies by certain funds; it suffers from a public framework that makes those strategies more effective than they ought to be. The first scandal is the vulnerability of a productive apparatus weakened enough to become prey. The second is an administration that too often confuses rule-based management with pursuit of the general interest. The third, deeper still, is the fragmentation of responsibility, which allows all institutional actors to be partially competent and politically unaccountable. (assemblee-nationale.fr)
At this stage, legal caution requires that converging indications not be transformed into definitively established culpabilities. The hearings do not demonstrate that every private equity operation is predatory, nor that every public official knowingly subverts the law. They show, however, with rare force, that an entire system can produce predatory effects without the fault ever being concentrated at a single point. That is precisely what should be alarming. For when industry unravels, when norms favour concentration, when workers describe a tangible deterioration in working conditions and services, and when neither the executive nor the legislature clearly assumes the causal chain, economic democracy enters a zone of non-response. The commission of inquiry had the merit of naming this malaise. It remains to be seen whether public authorities will agree to draw from it something more than a belated acknowledgment.
