Short Reads

Recent enforcement action emphasizes the importance of compliance with procedural EU merger rules

Recent enforcement action emphasizes the importance of compliance wit

Recent enforcement action emphasizes the importance of compliance with procedural EU merger rules

01.06.2017 NL law

On 18 May 2017, the EU Competition Commissioner Margrethe Vestager stressed the importance for companies involved in mergers of complying with the EU merger rules. By imposing a fine on Facebook for providing misleading information during the WhatsApp takeover and sending a Statement of Objections to Altice for implementing a deal prior to obtaining its approval, the European Commission shows that it will be very attentive to any violations of its procedural rules.

Facebook/WhatsApp

On 18 May 2017, the European Commission imposed a fine of EUR 110 million on Facebook for providing misleading information during its WhatsApp acquisition. Under the EU Merger Regulation, the Commission may impose fines up to 1% of the aggregate turnover of companies that, intentionally or negligently, supply incorrect or misleading information in a notification process. Interestingly, this is the first case where the Commission has imposed a fine for submission of misleading information since the 2004 EU Merger Regulation came into effect.

In December 2016, the Commission sent a Statement of Objections to Facebook alleging that it had provided misleading information in relation to the possibility of automatically matching user accounts on both platforms. Facebook indicated both in its merger notification and in a reply to a request for information that it would be unable to establish a reliable automated matching between the two companies' user accounts. However, two years after the notification, WhatsApp announced an update to its terms of service and privacy policy, including the option of linking WhatsApp users' numbers with Facebook users' identities. The Commission considered that contrary to Facebook's statements, the technical possibility of automatically matching Facebook's and WhatsApp's users ID already existed in 2014, which was known by Facebook's staff.

In calculating the fine, the Commission took into account that Facebook had committed two separate infringements (by providing misleading information in both its notification and in a reply to a request for information). According to the Commission, these infringements were serious because it was prevented from having all relevant information to assess the acquisition. In addition, the Commission found that Facebook staff was aware of the user matching option and that it was relevant for the Commission's assessment. Therefore, Facebook's breach of the procedural rules was at least negligent. Finally, mitigating circumstances were taken into account because Facebook cooperated with the Commission during the infringement proceedings. The Commission decision has no impact on the 2014 decision to authorise the acquisition.

Altice/PT Portugal

On 18 May 2017, the European Commission sent a Statement of Objections to Altice, alleging that it had violated the EU Merger Regulation by implementing its acquisition of telecommunications operator PT Portugal before the notification or approval by the Commission (gun jumping). Under the EU Merger Regulation, a merger or an acquisition should be notified to the Commission and should not be implemented unless it has been cleared by the Commission.

On 25 February 2015, Altice notified the Commission of its intention to purchase PT Portugal and on 20 April 2015, the Commission cleared the transaction subject to conditions. In the Statement of Objections, the Commission expressed the preliminary view that Altice had jumped the gun and implemented the transaction before the Commission's clearance decision and in some instances before even the notification to the Commission. More specifically, the Commission considered that the purchase agreement signed by the two companies enabled Altice to exercise decisive influence over PT before the notification or clearance of the transaction and that in some cases Altice actually did so.

If the Commission concludes that there was a violation, it could impose a fine of up to 10% of Altice's annual worldwide turnover. Altice, through its subsidiary Numericable, has been previously found guilty by the French Competition Authority for jumping the gun. On 8 November 2016, the French Competition Authority imposed a record fine of EUR 80 million on Altice and its subsidiary.

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

  1. European Commission accepts Amazon's commitments in e-book probe
  2. European Commission publishes final report on e-commerce sector inquiry 
  3. European Commission issues new rules for State aid to ports, airports, culture and the outermost regions
  4. District Court of Amsterdam rules on the validity of the assignments and prescription of CDC's claims for damage in sodium chlorate cartel
  5. Belgian Competition Authority fines undertakings for bid-rigging in railway tender

Team

Related news

28.07.2022 NL law
Purely commercial interest also a legitimate interest? Council of State leaves the question unanswered.

Short Reads - On 27 July 2022, the Council of State confirmed that the Dutch Data Protection Authority wrongly imposed a €575,000 fine on VoetbalTV. But the Council did not answer the question whether the AP rightly or wrongly believes that a purely commercial interest cannot be a legitimate interest within the meaning of the General Data Protection Regulation.

Read more

20.09.2022 EU law
Launch of Metaverse blog series

Articles - Stibbe launches a new blog series focusing on the legal challenges of the Metaverse. In our upcoming blog posts, we will discuss the legal challenges of NFTs, crypto-assets, Metaverse platforms, crypto exchanges, DAO, and many more.

Read more

28.07.2022 NL law
Zuiver commercieel belang ook gerechtvaardigd belang: Raad van State laat zich er niet over uit

Short Reads - Op 27 juli 2022 heeft de Raad van State bevestigd dat de Autoriteit Persoonsgegevens onterecht een boete van € 575.000 aan VoetbalTV heeft opgelegd. De hoop bestond dat de Afdeling antwoord zou geven op de vraag of de AP terecht of onterecht meent dat een zuiver commercieel belang géén gerechtvaardigd belang kan zijn in de zin van de Algemene Verordening Gegevensbescherming. Het antwoord op deze vraag blijft echter uit.  

Read more

03.08.2022 EU law
Gotta catch ‘em all? Upward referral of ‘killer acquisitions’ upheld

Short Reads - Companies involved in intended or completed M&A transactions falling below EU and national merger notification thresholds should beware that their deals may still catch the European Commission’s eye. The General Court has upheld the Commission’s decision to accept a national referral request regarding Illumina’s acquisition of Grail: a transaction not triggering any of the notification thresholds within the EEA.

Read more