Short Reads

Recent enforcement action demonstrates an increasing focus on compliance with procedural EU merger rules

Recent enforcement action demonstrates an increasing focus on complian

Recent enforcement action demonstrates an increasing focus on compliance with procedural EU merger rules

01.08.2017 NL law

On 6 July 2017, the European Commission sent three separate Statements of Objections (SO) to Merck and Sigma-Aldrich, General Electric (GE) and Canon for alleged breaches of procedural EU merger rules. The Commission claims Merck /Sigma-Aldrich and GE provided incorrect or misleading information, while Canon allegedly implemented a merger before it was notified and cleared.

Two months ago, the Commission imposed a fine of EUR 110 million on Facebook for providing misleading information during its WhatsApp takeover and issued an SO to Altice for ‘gun jumping’ [see our June 2017 Newsletter]. These developments signal the Commission’s 'no tolerance approach' towards companies that violate (procedural) merger rules. 

Merck / Sigma-Aldrich

On 6 July 2017, the Commission sent an SO to Merck and Sigma-Aldrich alleging that the companies had provided incorrect or misleading information during Merck's acquisition of Sigma-Aldrich. The Commission had concerns that the merger would reduce competition for certain laboratory chemicals, but cleared it on June 2015 subject to the divestment of certain Sigma-Aldrich assets. However, the companies omitted important information in the merger filing about an innovation (pipeline) project, which would have otherwise been included in the remedy package. The failure to provide this information impaired the viability and competitiveness of the divested business. In the meantime, Merck agreed to license the relevant technology to Honeywell, the buyer of the divested business, almost one year after the Commission decision. 

General Electric / LM Wind

On 11 January 2017, GE notified the Commission of its planned acquisition of LM Wind, a Danish manufacturer of wind-turbine blades. On 2 February, GE withdrew its notification, only to re-notify the same transaction eleven days later. This second notification included new information on a future project, originally omitted from the first notification.

On 6 July 2017, the Commission sent an SO to GE, alleging that the company failed to provide information in the original notification concerning GE’s R&D activities and the development of a specific product. According to the Commission, this omission also influenced its assessment of another transaction in the wind turbine market, the acquisition by Siemens of Gamesa.

Canon / Toshiba Medical Systems

In the SO sent to Canon, the Commission alleged a different violation of the procedural merger rules. Its preliminary conclusion is that Canon 'jumped the gun' by implementing its acquisition of Toshiba Medical Systems before it was notified, and subsequently approved by the Commission. According to the Commission, Canon used a two-step process known as 'warehousing'. An interim buyer first acquired 95% of Toshiba's share capital for EUR 800, after which Canon paid EUR 5.28 billion for the remaining 5%, including share options which granted Canon the right to purchase the interim buyer's stake. After the Commission approved the merger, Canon exercised its share options, thereby acquiring 100% of the shares in Toshiba Medical Systems.

Although the Commission's SOs will not affect the approval of any of the mergers, they could lead to fines of up to 1% of Merck and GE’s annual worldwide turnover, and up to 10% for Canon. Once again, Commissioner Vestager stressed the importance of complying with procedural merger control rules, in particular with the requirement to provide complete and correct information. Companies are required to provide all the information necessary for the Commission to conduct its merger control assessment, including information on the transaction’s potential impact of innovation (i.e. accurate information about future projects or products), which is an increasingly important part of the economy [see our July 2017 Newsletter].

This article was published in the Competition Law Newsletter of August 2017. Other articles in this newsletter:

1. Court of Justice dismisses Toshiba's appeal against the gas-insulated switchgear fine
2. Trade and Industry Appeals annuls fine imposed on real estate traders
3. District Court of Rotterdam upheld ACM's decision to clear lottery merger
4. ACM closes probe into Fox over live-soccer TV rights due to lack of evidence of consumer harm
5. District Court of The Hague rules on ACM's powers to select and inspect digital data

Team

Related news

03.10.2019 NL law
It's in the details: HSBC fine quashed for insufficient reasoning

Short Reads - The General Court annulled the EUR 33.6 million fine imposed on banking group HSBC for its participation in the euro interest rates derivatives cartel. Full annulment was granted based on the Commission's failure to provide sufficiently detailed reasoning for the first step of the fine calculation, establishing the value of sales. As the value of sales could not be established in a straightforward way, the Commission used a proxy. When doing so, the Commission needs to properly explain its reasoning to allow the companies fined to understand how it arrived at the proxy. 

Read more

03.10.2019 NL law
The postman will no longer ring twice: Minister unblocks postal merger

Short Reads - The Dutch Authority for Consumers and Markets (ACM) recently blocked postal operator PostNL's acquisition of its only national competitor, Sandd, because this would create "a monopolist on the postal delivery market". However, the Dutch Minister of Economic Affairs and Climate Policy has overruled the ACM's decision on grounds of public interest. Invoking industrial policy or public interest reasons for merger clearance seems to be catching on.

Read more

03.10.2019 NL law
The ACM has to pay: moral damages awarded to real estate traders

Short Reads - The Dutch Authority for Consumers and Markets (ACM) needs to cough up a total of EUR 120,000 in moral damages to three real estate traders. The Dutch Trade and Industry Appeal Tribunal (CBb) agreed with the real estate traders that the annulment of the ACM's cartel decisions against them was insufficient compensation for the harm they suffered as a result of the length of the procedure and the press coverage of their cases.

Read more

02.10.2019 NL law
Politie aansprakelijk voor schietpartij Alphen aan den Rijn

Short Reads - De politie is aansprakelijk voor de schietpartij in een winkelcentrum Alphen aan den Rijn in 2011. Dat oordeelt de Hoge Raad in zijn arrest van 20 september 2019 (ECLI:NL:HR:2019:1409). Bij deze schietpartij vonden zes mensen de dood en raakten zestien mensen gewond. De dader doodde ook zichzelf. Nabestaanden van dodelijke slachtoffers, slachtoffers die gewond raakten en winkeliers spreken de politie aan tot schadevergoeding. Zij voeren aan dat de politie de vergunning voor de wapens die de man gebruikte, niet had mogen verlenen.

Read more

03.10.2019 NL law
Margrethe Vestager to play matchmaker between enforcement and regulation

Short Reads - Current Competition Commissioner Margrethe Vestager may face even greater challenges in the next European Commission. President-elect Ursula von der Leyen has not only nominated Vestager for a second term as Commissioner for Competition, but has also asked her to coordinate the European Commission's digital agenda. As a result, Vestager may soon be tackling digital issues through competition enforcement whilst also proposing additional regulation to deal with these (and related) issues pre-emptively.

Read more

02.10.2019 NL law
Dutch national police service liable for unlawful granting of firearms permit

Short Reads - In a recent decision (ECLI:NL:HR:2019:1409), the Supreme Court has decided that the Dutch national police force is liable for damage suffered by victims of a shooting which took place in a shopping centre in 2011; an event that shocked the Netherlands. The Supreme Court held that the police had unlawfully granted a permit for the firearms used in the shooting.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring