Short Reads

Commission’s record fine for gun jumping upheld

Commission’s record fine for gun jumping upheld

Commission’s record fine for gun jumping upheld

07.10.2021 NL law

Pre-closing covenants protecting the target’s value or commercial integrity pending merger clearance from the European Commission must be drafted carefully. The General Court confirmed the Commission’s record-breaking fines on Altice for violating the EU Merger Regulation’s notification and standstill obligations. According to the General Court, the mere possibility of exercising decisive influence over the target can result in a gun jumping breach.

The Commission’s gun jumping fines

The Commission's gun jumping rules require companies (i) to notify an intended concentration to the Commission before its implementation if the EU Merger Regulation's thresholds are met (the ‘notification obligation’) and (ii) to await the Commission's clearance of the concentration before implementing it (the ‘standstill obligation’).

On 24 April 2018, the European Commission imposed its highest-ever gun jumping fines (totalling EUR 124.5 million) on Altice, a cable and telecommunications company, for acquiring control over PT Portugal before notification and clearance by the Commission (see our May 2018 newsletter). According to the Commission, the purchase agreement contained several pre-closing clauses enabled Altice to (prematurely) control PT Portugal by conferring on it the possibility of “exercising decisive influence” over PT Portugal’s business beyond what was strictly necessary to preserve the value. The clauses gave Altice the power to block decisions relating to, for instance:

  • the appointment of PT Portugal’s senior management,
  • PT Portugal’s pricing policies,
  • the entry into, amendment or termination of any material contracts,
  • certain transactions or commitments in excess of EUR 5 million (amended to EUR 1 million one month after signing).

The Commission found that Altice had in fact used these powers on several occasions, thereby intervening in PT Portugal’s day-to-day business dealings. According to the Commission, this finding was corroborated by the exchange of commercial sensitive information about PT Portugal before clearance (and, in part, before notification).

The General Court ruling

On appeal, the General Court confirmed that the gun jumping rules can be triggered by the mere possibility of exercising decisive influence over the target. It considered the relevant pre-closing clauses too broad in wording, and the monetary thresholds too low in value (taking account of the purchase price and PT Portugal’s turnover) to be considered necessary to preserve PT Portugal’s value until the closing of the transaction. As a result, Altice could (and on several occasions actually did) exercise decisive influence as from the date of signing the purchase agreement (i.e., prior to the notification of the transaction).  

Furthermore, the General Court acknowledged that the exchange of business information between a potential purchaser and seller can generally be considered part of the acquisition process, but only if the nature and purpose of these exchanges are directly related to the potential purchaser’s need to assess the value of the business. The information exchange between Altice and PT Portugal (i) continued after the signing of the purchase agreement and (ii) related to, commercially and competitively, highly sensitive information. The Commission had therefore been correct to conclude that the information exchanges had contributed to demonstrating that Altice had exercised decisive influence over PT Portugal.

In line with earlier case law (see our March 2020 newsletter), the General Court rejected Altice’s arguments that it should not have been fined twice (for violation of the notification and the standstill obligation respectively). Nevertheless, Altice was granted a 10% reduction of the fine for breach of the notification obligation because it had informed the Commission of the transaction prior to the signing the purchase agreement, and had sent a case team allocation request immediately after signing.


Companies should closely scrutinise their purchase agreement’s pre-closing covenants to ensure they do not extend beyond the preservation of the target’s value or commercial integrity. It is recommended to double-check, for instance, the scope of the wording, the existence of less far-reaching alternatives to attain the same goal, and the level of the (monetary) thresholds involved. Moreover, information exchanges should be curbed by setting up sufficient safeguards (including clean team protocols and confidentiality agreements).

The Commission is likely to continue its tough stance on gun jumping with a promise of adopting interim measures, following Illumina’s premature acquisition of GRAIL. It remains to be seen whether Illumina’s pre-emptive hold-separate agreement will persuade the Commission to tread more lightly on potential gun jumping fines.

This article was published in the Competition Newsletter of October 2021. Other articles in this newsletter:

•    Commission reveals first piece of antitrust sustainability puzzle
•    ACM walks the walk: first-ever vertical price coordination fine
•    Court of Appeal provides guidance for further course of proceedings in pre-stressing steel litigation


Related news

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

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

06.07.2022 NL law
Highest Dutch court: the postman may still ring twice?

Short Reads - The Dutch Minister of Economic Affairs and Climate Policy was wrong to unblock the ACM’s prohibited merger between postal operators PostNL and Sandd on grounds of public interest. According to the Trade and Industry Appeals Tribunal (CBb), the Minister cannot substitute the ACM’s assessment for its own when considering public interest reasons. Since the Minister did do so in this particular case, the CBb annulled the Minister’s merger clearance.

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

06.07.2022 NL law
Foreign Subsidies Regulation crosses the finish line

Short Reads - On 30 June 2022, the European Parliament and the European Council reached agreement on the final text of the Foreign Subsidies Regulation. Adding to the regulatory burdens, this Regulation creates a notification obligation for companies that receive subsidies from non-EU governments in transactions or public procurement procedures. 

Read more