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Procedural developments in EU merger control

Gun-jumping and provision of incorrect/misleading information

Abstract

To deliver accurate decisions in tight timelines, the EU merger control system has procedural rules regarding gun jumping (i.e., no implementation of concentrations before notification/clearance) and provision of correct/non-misleading information. Recently, the Court issued two judgments and the Commission adopted three decisions applying these rules. The Courts’ judgments provide guidance on the concepts of partial implementation; single concentration; and fines for gun-jumping. The Commission’s decisions concerned gun-jumping through warehousing schemes (Canon), through veto rights in agreements and during integration discussions (Altice). In \(\mathit{GE}\)/LM Wind, the Commission emphasized the need for precise information in merger notifications, including on parties’ pipeline activities.

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Notes

  1. 1.

    The large majority (∼90%) of all mergers notified to the European Commission (“Commission”) are cleared after an initial 25 working day investigation (known as “Phase I”), with over 80% of them approved through a simplified procedure (based on data for 2019).

  2. 2.

    Regulation 139/2004 of the Council of 20 January 2004 on the control of concentrations between undertakings [2004] OJ L 24/1.

  3. 3.

    As defined in Article 3(1) of the Merger Regulation.

  4. 4.

    See Article 2(1) of the Merger Regulation.

  5. 5.

    The importance of the ex ante nature of the EU merger control regime has been confirmed by the General Court (“GC”) in Electrabel v. Commission: “the effectiveness of [the EU merger control regime] is ensured by the introduction of ex ante control of the effects of concentrations with a [Union] dimension” (see T-332/09 Electrabel v Commission, EU:T:2012:672, para. 246). The significance of the ex ante nature of the EU merger control regime has been recalled in more recent CJEU judgments, which are discussed in Sect. 3 below.

  6. 6.

    See Article 7(2) and (3) of the Merger Regulation.

  7. 7.

    Regulation 802/2004 of the Commission of 21 April 2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings [2004] OJ L 133/1.

  8. 8.

    This has been confirmed by the GC in T-151/05 NVV and Others v Commission, EU:T:2009:144, para. 185.

  9. 9.

    Articles 14(1)(b) and 14(1)(c) of the Merger Regulation allows the Commission to impose fines to undertakings “where intentionally or negligently: (\(b\)) they supply incorrect or misleading information in response to a [simple] request made pursuant to Article 11(2); and (\(c\)) in response to a request made by decision adopted pursuant to Article 11(3), they supply incorrect, incomplete or misleading information or do not supply information within the required time limit”.

  10. 10.

    C-633/16 Ernst & Young, EU:C:2018:371, paragraphs 12-13 (“Ernst & Young”).

  11. 11.

    Ernst & Young, para. 43.

  12. 12.

    Ernst & Young, para. 46.

  13. 13.

    Ernst & Young, para. 47.

  14. 14.

    Ernst & Young, para. 48.

  15. 15.

    Ernst & Young, para. 49.

  16. 16.

    Ernst & Young, para. 49.

  17. 17.

    Ernst & Young, para. 49.

  18. 18.

    Ernst & Young, para. 59. See also operative part of the judgment.

  19. 19.

    Ernst & Young, para. 51.

  20. 20.

    Ernst & Young, para. 60

  21. 21.

    Ernst & Young, para. 61

  22. 22.

    Ernst & Young, para. 61 (referring back to paras. 12 and 13).

  23. 23.

    C-10/18 P Marine Harvest, EU:C:2020:149 (“Marine Harvest”).

  24. 24.

    Under Norwegian low, an acquirer of more than one third of the shares of a listed company is obliged to make a bid for the remaining shares (Marine Harvest, para. 6).

  25. 25.

    Marine Harvest, para. 8.

  26. 26.

    Commission decision dated 30 September 2013, Case M.6850 – Marine Harvest/Morpol.

  27. 27.

    Commission decision dated 23 July 2014, Case M.7184 – Marine Harvest/Morpol.

  28. 28.

    T-704/14 Marine Harvest v Commission, EU:T:2017:753.

  29. 29.

    Marine Harvest also claimed that imposing two fines would violate in the alternative, the set-off principle (Marine Harvest, paras 68 and 73).

  30. 30.

    Pursuant to Article 7(2) of the Merger Regulation, “Paragraph 1 [of Article 7(1)] shall not prevent the implementation of a public bid […] by which control […] is acquired from various sellers, provided that: (\(a\)) the concentration is notified to the Commission pursuant to Article 4 without delay; and (\(b\)) the acquirer does not exercise the voting rights attached to the securities in question or does so only to maintain the full value of its investments based on a derogation granted by the Commission under paragraph 3”.

  31. 31.

    Marine Harvest, paras. 17-31.

  32. 32.

    T-704/14 Marine Harvest v Commission, EU:T:2017:753, paras 85-229.

  33. 33.

    Opinion of Advocate General Tanchev dated 26 September 2019 in Marine Harvest, paras. 42-75.

  34. 34.

    Marine Harvest, para. 59.

  35. 35.

    Marine Harvest, para. 44.

  36. 36.

    Marine Harvest, para. 44.

  37. 37.

    Marine Harvest, para. 52.

  38. 38.

    Marine Harvest, paras. 52 and 54.

  39. 39.

    Marine Harvest, para. 53.

  40. 40.

    See Sect. 1 of this article.

  41. 41.

    Marine Harvest, paras. 68-73.

  42. 42.

    Marine Harvest, para. 78.

  43. 43.

    Marine Harvest, para. 77.

  44. 44.

    Marine Harvest, para. 80.

  45. 45.

    Marine Harvest, paras. 87-96. The Advocate General agreed with Marine Harvest that imposing two fines under both provisions would violate the principle of concurrent offences, but considered that Article 7(1) should subsume Article 4(1) since it contains an “additional element” compared to Article 4(1) (Opinion of Advocate General Tanchev dated 26 September 2019 in Marine Harvest, paras. 143-168).

  46. 46.

    Marine Harvest, para. 101.

  47. 47.

    Marine Harvest, para. 103-104.

  48. 48.

    Marine Harvest, paras. 109-110. The Court considered inadmissible Marine Harvest plea of the illegality of Article 14(2)(a) of the Merger Regulation (Marine Harvest, paras. 121-128).

  49. 49.

    Commission Decision of 19 September 2016, Case M.8006 – Canon/TSMC.

  50. 50.

    Commission Decision of 27 June 2019, Case M.8179 – Canon/TMSC, Article 14(2) procedure (“Canon”).

  51. 51.

    The reason why Canon and Toshiba (the seller) opted for this two-step transaction structure was the following. Toshiba, due to its financial difficulties, aimed at divesting its ownership in TMSC and realising the capital gain from that transaction by the end of its fiscal year (31 March 2016) in order to avoid a capital deficit appearing in its accounts.

  52. 52.

    Canon, paras. 101ff.

  53. 53.

    Canon, para. 143.

  54. 54.

    Canon, para. 149.

  55. 55.

    Canon, para. 150.

  56. 56.

    Canon, para. 151.

  57. 57.

    Canon, paras. 162ff.

  58. 58.

    Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings [2008] OJ C95/1.

  59. 59.

    CJN, para. 35.

  60. 60.

    Canon, para. 94.

  61. 61.

    Action brought on 5 July 2018, T-425/18 Altice Europe v Commission.

  62. 62.

    Action brought on 9 September 2019, T-609/19 Canon v Commission.

  63. 63.

    Commission decision of 20 April 2015, Case M.7499 – Altice/PT Portugal.

  64. 64.

    Commission Decision of 24 April 2018, Case M.7993 – Altice/PT Portugal, Article 14(2) procedure (“Altice”).

  65. 65.

    Altice, para. 480.

  66. 66.

    Altice, para. 70.

  67. 67.

    Altice, paras. 74ff.

  68. 68.

    Altice, paras. 78ff.

  69. 69.

    Altice, paras. 85ff.

  70. 70.

    Altice, paras. 181ff.

  71. 71.

    Altice, paras. 220ff.

  72. 72.

    Altice, paras. 251ff.

  73. 73.

    Altice, paras. 378ff.

  74. 74.

    When setting the fine, the Commission took into account among other factors, the fact that “the transaction which has been implemented before clearance raised serious doubts as to its compatibility with the internal market” (Altice, para. 620).

  75. 75.

    Action brought on 5 July 2018, T-425/18 Altice Europe v Commission.

  76. 76.

    In its decision, the Commission explained that “the withdrawal of the notification could be inter alia the result of the fact that the Commission informed GE at the said State of Play meeting on 1 February 2017 that it would consider the possibility of opening an infringement investigation against it for its submission of incorrect information” (\(\mathit{GE}\)/LM Wind, para. 206).

  77. 77.

    Commission decision of 20 March 2017, Case M.8283 – General Electric Company/LM Wind Power Holding.

  78. 78.

    Commission decision of 8 April 2019, Case M.8436 – General Electric Company/LM Wind Power Holding, paras. 3 and 65, Articles 1 and 2.

  79. 79.

    \(\mathit{GE}\)/LM Wind, paras 4, 66, 157–158.

  80. 80.

    \(\mathit{GE}\)/LM Wind, paras 39 and 186. The Commission explained that this customer spontaneously reached out to the Commission in the context of another EU merger case, Case M.8134 – Siemens/Gamesa.

  81. 81.

    \(\mathit{GE}\)/LM Wind, paras. 4 and 46.

  82. 82.

    \(\mathit{GE}\)/LM Wind, paras 4, 157-158.

  83. 83.

    \(\mathit{GE}\)/LM Wind, para. 5, and Sect. 2.1.

  84. 84.

    \(\mathit{GE}\)/LM Wind, para. 12.

  85. 85.

    \(\mathit{GE}\)/LM Wind, para. 12.

  86. 86.

    \(\mathit{GE}\)/LM Wind, para. 184.

  87. 87.

    \(\mathit{GE}\)/LM Wind, para. 184.

  88. 88.

    \(\mathit{GE}\)/LM Wind, paras. 115-136.

  89. 89.

    \(\mathit{GE}\)/LM Wind, Sect. 2.2.3.

  90. 90.

    \(\mathit{GE}\)/LM Wind, para. 26.

  91. 91.

    GE/LM Wind, para. 69 and Sect. 5.2.3. See also \(\mathit{GE}\)/LM Wind, paras. 67-68 and para. 156.

  92. 92.

    \(\mathit{GE}\)/LM Wind, para. 189.

  93. 93.

    In Phase I, notifying parties can decide to withdraw their notification, which means that the process will start again as of day 1 of the 25 working day period once the transaction is re-notified. This tool is usually used, e.g. in case of incompleteness of the original notification.

  94. 94.

    \(\mathit{GE}\)/LM Wind, para. 185.

  95. 95.

    \(\mathit{GE}\)/LM Wind, para. 192.

  96. 96.

    \(\mathit{GE}\)/LM Wind, para. 187. See also \(\mathit{GE}\)/LM Wind, para. 192.

  97. 97.

    See Commission decision dated 17 May 2017, Case M.8228 – Facebook/Whatsapp (Art. 14.1 proc.), Commission’s investigation in Case M.8181 – Merck/Sigma-Aldrich (Art. 14.1).

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Correspondence to Marion Bailly.

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The views expressed are purely those of the writers and may not in any circumstances be regarded as stating an official position of the European Commission. The authors of this article would like to thank Caroline Tixier for her comments.

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Bailly, M., Malamataris, C. Procedural developments in EU merger control. ERA Forum 21, 251–265 (2020). https://doi.org/10.1007/s12027-020-00614-w

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Keywords

  • Mergers
  • Gun-jumping
  • Procedural infringements