Hedge Funds, Powerless State, Belated Parliament
What the inquiry commission reveals about the predation of French productive capacity
The National Assembly's commission of inquiry into the "predation of French productive capacities by hedge funds" does not merely deliver a gallery of weakened industrial or medico-social cases. It uncovers, through its hearings, a broader pattern: a French economy where strategic assets can be captured, restructured, and indebted at a pace the State struggles to control; administrations that apply standards sometimes without sufficient regard for their original political purpose; and a public system where 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. But the commission's records show that in France, the combination of financialization, decision-making fragmentation, and blurred accountability creates fertile ground for value transfers at the expense of employment, productive investment, and sometimes the quality of services rendered. (assemblee-nationale.fr)
The macroeconomic context gives this work a scope that extends far beyond a few isolated cases. France is emerging from several decades of deindustrialization, despite a recent shift. France Stratégie recalls that the share of manufacturing value added in French GDP, which fell throughout the 2000s and 2010s, still represented 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 business failures over twelve months to end of February 2026, a level that confirms the fragility of part 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 Piecemeal: 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 February 26, 2026, the commission's chairman noted that EQT had become a major global player, with 266 billion euros in assets under management at mid-2025, and had taken positions in sensitive French sectors such as Cerballiance, Colisée, and Saur. The commission immediately raised the right questions: the structure of LBO operations, the respective shares 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 demonstrates a shift in the center 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 condemnable. French law permits company sales, leveraged acquisitions, and capital restructuring, subject to compliance with corporate law, labor 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 the financial logic can conflict with the logic of public service, sovereignty, or territorial planning. When networks of laboratories, nursing homes, or essential infrastructure become portfolio assets, the decision-making horizon shifts: maximizing exit valuation may outweigh territorial continuity, service quality, or long-term robustness. This critique is economically arguable and legally admissible, provided it does not transform every operation into inherent fraud. (assemblee-nationale.fr)
The testimonies of workers heard by the commission give substance to this critique. At Cerballiance, a CFTC union representative indicated that the fund's arrival had changed the group's functioning, in a context already hardened by pricing and regulatory policies. He described reduced opening hours, reorganized working schedules, a staffing shortfall of approximately 10% relative to theoretical needs, and an absenteeism rate of 14%, leading to a combined rate of nearly 24%. He added that this development had impacted work quality and, consequently, 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 far from socially or territorially neutral. (assemblee-nationale.fr)
The core of the problem is political. For years, the executive has proclaimed reindustrialization, healthcare sovereignty, and productive reconquest. But in practice, France continues to accept that companies or networks operating in critical links of the chain are governed under the constraints of debt and exit. Control tools do exist — foreign investment screening, sectoral powers, public procurement, prudential frameworks, conditionality on aid — but the commission of inquiry implicitly suggests they often intervene too late, too narrowly, or outside the real center 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, profit line by profit line. (assemblee-nationale.fr)
To speak of "industry sold off piecemeal" is therefore 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 axis, more legally delicate, must be formulated with care. To say that "civil servants subvert the meaning of the law" implies, strictly speaking, the attribution of a culpable intent or a deliberately contrary use of a norm's purpose. The records consulted do not, at this stage, support such a blanket personal accusation. However, they clearly reveal a neighboring and politically serious phenomenon: administrations, agencies, and supervisory bodies apply or co-produce constraints that, cumulatively, can contradict the public interest purpose that the state claims to pursue. This is not necessarily an abuse of power in the litigious sense; it is often a functionalist drift in public action. (assemblee-nationale.fr)
The Cerballiance testimony is illuminating here. The union representative explains that small laboratories were weakened by tariff cuts, but also by compliance costs linked to Cofrac certifications and standards required by Regional Health Agencies (ARS). According to him, these obligations are "extremely constraining," time-consuming, and costly, to the point of having accelerated consolidation and favored the rise of large groups subsequently accessible to funds. In other words, instruments designed to guarantee quality, safety, and sector 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 funds; but one can 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 local target — quality, safety, budget, competition, procedure, solvency, financial orthodoxy — without any authority guaranteeing overall coherence. The Ministry of Health pursues standardization; the national health insurance fund (Cnam) adjusts pricing; regional health agencies (ARS) tighten requirements; accreditation increases fixed costs; Bercy reasons in terms of budgetary sustainability; market authorities examine the formal legality of operations; and at the end of the chain, the ground-level reality reveals that the economic independence of small operators has disappeared. The material outcome can be diametrically opposed to the stated political purpose. In this type of configuration, the letter of the law is respected, but its spirit — preserving effective, pluralistic, and territorially balanced access to services — erodes. (assemblee-nationale.fr)
The critique applies equally to the restructuring apparatus. The insolvency professions emphasize their role as "trusted third parties" and the judicial framework governing their missions. The CNAJMJ highlights the existence of 170 judicial administrators, 330 judicial representatives, 270 firms, and 3,000 employees. This architecture is legitimate: it aims to safeguard business activity, clear liabilities, protect creditors, and, where possible, preserve employment. But the commission explores precisely the gray zone where insolvency proceedings also become a channel for asset disposals, selective takeovers, and capital control reconfigurations. Again, the objection is not that insolvency law is inherently flawed; it is that its application, combined with asymmetric financial power relationships, can lead to formally regular but materially impoverishing outcomes for the productive fabric. (assemblee-nationale.fr)
From this perspective, the executive bears particular responsibility. Not because it openly violates the law, but because it allows a public machine to flourish in which indicators take precedence over purpose. Yet French public law has long recognized the requirements of proportionality, adequacy of means, and effective pursuit of the public 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 may be the most damning for both the executive and the legislature: the dilution of responsibility appears as a structural trait, not an accident. It results from the multiplication of actors, the specialization of competencies, and the fragmentation of decision-making chains. When a strategic company becomes excessively indebted, reduces its workforce, closes sites, or degrades the service it provides, who is accountable? The fund cites market conditions; managers speak of operational necessity; the administration points to its limited competencies; sectoral authorities say they only assess compliance; commercial courts deal with urgency; elected officials explain they raised the alarm; and Parliament eventually opens, belatedly, a commission of inquiry. Each holds a fragment of the truth; none bears 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 were insufficient. It holds hearings after the fact with actors who, for the most part, acted within the scope of their regular competencies. This does not render the inquiry useless; on the contrary, it is indispensable. But it reveals the French paradox: the State is omnipresent in regulation, yet nowhere when it comes to clear accountability. The more distributed the decision-making, the less politically traceable the responsibility. 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, enabling provisions, partial oversight regimes, the absence of strict conditionality on public aid, or reinforced protection of certain productive assets are also the result of legislative choices. The legislature has often preferred seemingly neutral, general provisions rather than assuming a clear doctrine of economic sovereignty. Consequently, it is now investigating the effects of a legal order it helped to shape. The commission's critique therefore applies to both heads of power: a managerial executive and a legislature that is too often reactive. (assemblee-nationale.fr)
The concrete cost of this dilution can be read in the figures. In an economy where the Banque de France records 69,392 business failures over twelve months to end of February 2026, the absence of clear arbitration between productive continuity, service quality, employment, and financial returns is not an abstract weakness; it is a systemic risk. The more the economic fabric is weakened, the more actors capable of deploying debt, restructuring expertise, and rapid exit horizons gain an advantage over long-term industrial actors. In the absence of unified accountability, public authorities condemn themselves to commenting after the fact on restructurings they neither anticipated nor genuinely governed. (banque-france.fr)
It is therefore not enough to denounce hedge funds. The commission above all reveals the weakness of a state that cannot prioritize its objectives and a parliament that exercises oversight too late. The issue is not merely moral; it is constitutional in the broad sense, as it concerns the capacity of public authority 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 the pursuit of the public interest. The third, and deepest, is the fragmentation of responsibility, which allows all institutional actors to be partially competent and politically untouchable. (assemblee-nationale.fr)
At this stage, legal prudence requires that convergent 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 deliberately subverts the law. They show, however, with rare force, that an entire system can produce predatory effects without fault ever being concentrated at a single point. That is precisely what should be alarming. For when industry unravels, when regulations favor concentration, when workers describe a tangible deterioration in working conditions and service quality, 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 accept drawing from it something other than a belated observation.
