Short Reads

ACM jumps on gun-jumping bandwagon

ACM jumps on gun-jumping bandwagon

ACM jumps on gun-jumping bandwagon

04.04.2022 EU law

Companies involved in multi-step acquisitions should beware of potential gun-jumping risks. The Dutch Authority for Consumers and Markets (ACM) has fined a trade association for failing to notify the acquisition of four pharmacies involving a consecutive partial resale. Unlike the European Commission’s gun-jumping fine for partial implementation of a concentration through a ‘warehousing’ two-step acquisition (see our July 2019 newsletter; appeal pending), the ACM’s fine relates to faulty turnover calculations due to an unmaterialized two-step transaction.

The ACM’s fine is a clear reminder that competition authorities are actively policing all types of potential gun-jumping breaches. Companies are well advised to keep a watchful eye on their gun-jumping obligations.

Background

Similar to the European Commission’s gun-jumping rules, the ACM requires companies (i) to notify an intended concentration to the ACM before its implementation if the turnover thresholds are met (the ‘notification obligation’) and (ii) to await the ACM's clearance of the concentration before implementing it (the ‘standstill obligation’).

In 2019, the VNA, a Dutch trade association for pharmacies, informed the ACM of its intention to acquire four pharmacies and subsequently sell part of one pharmacy’s activities to a third party within 12 months after the acquisition. According to the VNA, the turnover generated by those activities could be excluded from the turnover threshold calculations, since the consecutive resale led the VNA to acquire only temporary control. On the basis of those turnover calculations, the acquisition fell below the turnover thresholds and therefore did not have to be notified, in the VNA’s opinion.

However, financial difficulties at the intended buyer caused the resale to fall through, thereby triggering the ACM’s notification obligations after all. The VNA notified the (already implemented) acquisition to the ACM in 2021.

Multi-step acquisition

The ACM believed the VNA had breached the gun-jumping rules by implementing the acquisition before the notification. Since the intended resale had been based on a letter of intent, rather than a legally binding document, the ‘resale activities’ should have been included in the initial turnover calculations. The ACM referred to the European Commission’s Jurisdictional Notice to explain that the turnover of the second step in this type of multi-step acquisition may be excluded from the turnover threshold calculations only if:

  • the subsequent resale is agreed between the various buyers in a legally binding manner; and
  • the resale takes place within a short period after the first acquisition (no longer than one year).

Fine calculations

The VNA’s failure to notify the acquisition in time resulted in a EUR 350,000 fine. The fine would have been higher, but the ACM granted a 35% fine reduction because (i) the VNA cooperated with the investigation in accordance with the ACM’s guidelines for simplified resolution of cases involving a fine; and (ii) the VNA had contacted the ACM in 2019 about the intended acquisition and notified it in 2021 as soon as it realised that the turnover thresholds were being exceeded. An additional fine reduction was granted due to the limited scope of the transaction and the turnover of the four pharmacies, which was just above the ACM’s notification thresholds.

Conclusion

Companies should be aware that multi-step acquisitions might prove tricky from a gun-jumping perspective. Gun jumping appears to be an ongoing hot topic for competition authorities (see our newsletters of November 2017, July 2019, March 2020, October 2021, December 2021 and January 2022). It may therefore be worthwhile to double-check for potential gun-jumping breaches when involved in mergers or acquisitions.

This article was published in the Competition Newsletter of April 2022. Other articles in this newsletter:

  1. Game on for gatekeepers: Digital Markets Act finalised
  2. ECJ in Bpost and Nordzucker cleaner limits for non bis in idem
  3. The ECN+ Directive implemented in Belgium and introduction of merger filing fees

Team

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

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
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
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

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
Take note(s): Qualcomm’s EUR 1 billion dominance abuse fine quashed

Short Reads - The General Court annulled the Commission’s EUR 1 billion fine imposed on Qualcomm for abuse of dominance on the LTE chipsets market. In addition to finding fault with the Commission’s foreclosure analysis of Qualcomm’s alleged exclusivity payments, the General Court found that the Commission’s procedural irregularities alone would have sufficed to set the Commission’s decision aside.

Read more