This Review provides legal counsel and their teams easy reference guidance on essential EU competition law developments covering key areas of law and policy. Topics covered include:
On September 22, 2021, the EU General Court (GC) upheld a decision from the European Commission (Commission) by which it fined telecommunications operator Altice for gun jumping (T-425/18, Altice Europe v Commission). In particular, the GC affirmed that the Commission could impose two separate fines: (i) a fine for implementing a concentration prior to its clearance by the Commission, and (ii) a fine for implementing a concentration prior to its notification. In coming to those findings, the GC also clarified the appropriateness of certain pre-closing covenants and information exchanges.
CASE HISTORY
CASE LEARNINGS
McDermott’s Annual EU Competition Review summarizes key developments in EU competition rules. During the previous year, several new regulations, notices and guidelines were issued by the European Commission. There were also many interesting cases decided by the General Court and the Court of Justice of the European Union. All these new rules and judicial decisions may be relevant for your company and your day-to-day practice.
In our super-connected age, we can be inundated by information from numerous sources and it is difficult to select what is really relevant to one’s business. The purpose of this review is to help general counsel and their teams to be aware of the essential updates.
This review was prepared by the Firm’s European Competition Team in Brussels, Paris and Germany.
United States: April – June 2018 Update
The second quarter of 2018 ushered in a trial defeat for the US Department of Justice (DOJ) and the beginning of a new era at the Federal Trade Commission (FTC). In June, Judge Richard J. Leon of the US District Court for the District of Columbia denied the DOJ’s requested injunction of the AT&T/Time Warner acquisition. The case marked the first litigated vertical challenge by the Antitrust Division in nearly 40 years. DOJ filed a notice of appeal of the district court’s decision. At the FTC, four new commissioners were sworn in in May, with a fifth to join upon the approval of current commissioner Maureen Ohlhausen to the US Court of Federal Claims. With the transition nearly complete, new FTC Chairman Joseph Simons announced plans to re-examine and modernize the FTC’s approach to competition and consumer protection laws, possibly charting a new course for FTC antitrust enforcement.
EU: April – June 2018 Update
In this quarter, we saw two significant developments concerning the issue of gun-jumping. First, the Court of Justice of the European Union (CJEU) clarified the scope of the gun-jumping prohibition, ruling that a gun-jumping act can only be regarded as the implementation of a merger if it contributes to a change in control over the target. Second, the European Commission (EC) imposed a €124.5 million fine on Altice for having breached the notification and the standstill obligations enshrined in the EUMR by gun-jumping. The EC also issued two clearance decisions following Phase II investigations in the area of information service activities and the manufacture of basic metals. (more…)
French merger control applies if the turnovers of the parties to a transaction (usually the acquirer(s) including its (their) group(s) of companies, and the target) exceeded, in the last financial year, certain (cumulative) thresholds provided in Article L. 430-2, I of the French Commercial Code (the “Code”):
Specific (and lower) thresholds exist for mergers in the retail sector or in French overseas departments or communities[1].
In the situation of an acquisition of joint control, a transaction can be notifiable where each of the acquirers meets the thresholds even if the target has no presence or turnover in France.
There is no exception applicable to foreign-to-foreign transactions.
Acquisitions of ‘non-controlling’ minority shareholdings are not notifiable.
Under Article L. 430-3 of the Code, a notifiable merger cannot be finalized before its clearance by the French Competition Authority (the “FCA”) but the Code does not provide any specific deadline for the notification. There is no filing fee.
Failure to notify a reportable transaction can be sanctioned by the FCA as follows:
Due to the suspensive effect of the filing, these sanctions also apply when the parties start to implement a notified transaction before receiving clearance (so-called ‘gun jumping’) from the FCA.
Nevertheless, individual exemptions may be granted by the FCA to allow undertakings to close before receiving clearance; in practical terms, exemptions are exceptional and limited to circumstances where insolvency proceedings have been opened, or are about to be opened, in relation to the target.
The majority of notified transactions are cleared in Phase I, which lasts 25 business days as from the receipt by the FCA of a complete notification.
A simplified procedure, which lasts for about 15 business days, is available for non-problematic acquisitions, which is often the case for transactions involving private equity funds. Simplified procedures accounted for about 50% of the notified transactions between May 2016 and May 2017.
Phase II is reserved for problematic acquisitions requiring a deeper examination and takes at least an additional 65 business days.
In addition, parties can pre-notify a transaction with the FCA. The pre-notification procedure can prove to be very useful in order to confirm the notifiability of a transaction, the nature and amount of information that will be required by the FCA [...]
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For the first time ever, on 8 November 2016 the French Competition Authority (FCA) sanctioned companies for implementing a transaction that had been notified to the FCA but not yet received a clearance decision, behaviour commonly known as “gun-jumping”. (more…)
On 23 March 2016, the Netherlands Authority for Consumers and Markets (ACM) announced that it had fined four cold-storage firms for having put in place anticompetitive arrangements while in extended merger talks with one another. (case number: 13.0698.31|15.0710.31|15.0327.31|15.0328.31). In addition, ACM fined five individuals for their personal involvement in these anticompetitive arrangements. The case at hand serves as a reminder that gun jumping, which is seen as an infringement of the merger control rules, is not the only antitrust risk associated with an M&A transaction.
While in discussions about a possible merger between them, the cold-storage firms frequently exchanged commercially sensitive information such as the price for food storage, current utilization rates of their storage facilities and whether or not they were looking for work. This information exchange, which took place between 2006 and 2009, sometimes resulted in price fixing, customer allocation or bid rigging. (more…)
by Martina Maier and Philipp Werner
More than 100 countries worldwide have merger control regimes. In the majority of these regimes, including the U.S., EU and most EU Member States, parties to a transaction may not close a deal without approval from the competition antitrust regulator. An infringement of this obligation, or "gun-jumping", carries risks that are generally well understood. But companies should be aware that the German Federal Cartel Office (FCO) has recently taken a more aggressive approach in its enforcement of gun-jumping, in particular concerning the fining policy for gun-jumping.
To read the full article, click here.
by Martina Maier and Philipp Werner
The majority of merger control regimes around the world impose standstill or waiting period requirements for notifiable transactions, e.g. the US, the EU and most EU Member States. If a transaction meets the filing thresholds, it must be notified to the competent antitrust regulator and must not be closed without prior approval by the antitrust regulator or the expiration of the applicable waiting period.
Under German merger control rules, a notifiable merger must not be implemented without prior clearance decision. An infringement of the standstill obligation can (theoretically) lead to fines of up to 10 percent of the group’s worldwide turnover. In addition, the infringement of the standstill obligation renders the contracts ineffective under German merger control rules.
The German Federal Cartel Office (FCO) has recently taken a stricter approach to the enforcement of the merger standstill obligation. In the past, the risk of fines was minor if the merger did not lead to any serious competition concerns, if it was the group’s first infringement of the standstill obligation and if the company itself notified the FCO ex post of the implemented merger.
We see now a growing number of decisions imposing fines for the infringement of the standstill obligation (sometimes referred to as "gun jumping" in the United States). In May 2011, in the latest of a string of such decisions, the FCO imposed a substantial fine for infringement of the standstill obligation although the merger did not lead to any serious competition concerns and although the company had itself notified the implemented merger. These facts were only taken into account as mitigating factors for the calculation of the fine.
The European Commission has also recently imposed fines for the infringement of the standstill obligation.
In this changing environment, the filing requirement and the standstill obligation cannot be seen as a pure formality. It is therefore essential to always verify whether and in which jurisdictions a transaction is notifiable – and not to close the deal before the relevant competition authorities have cleared the deal.
by Jon B. Dubrow, Joseph F. Winterscheid and Carla A. R. Hine
In M&A transactions, early involvement of antitrust counsel is essential to avoid unnecessary expense, delay and antitrust risks. Failure to involve antitrust counsel early on in the process may not only jeopardize the parties’ ability to obtain antitrust clearance, but it can also give rise to potential exposure for independent antitrust violations and deal risk. This article discusses five avoidable antitrust pitfalls to keep in mind early in any transaction planning process.
To read the full article, click here.
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