EU General Court confirms tough gun-jumping fine
Video | 4月 2022 | 6:31
Video Details
| Jay Modrall | Richard, it is great to be here with you today discussing gun-jumping again. Last September, the General Court upheld a Commission decision imposing a fine of almost €125 million on Altice for gun-jumping in connection with its acquisition of PT Portugal. How does the Commission decision, of course, but also the Court victory, change the landscape for merging companies? |
| Richard Whish QC | Well, it’s an interesting area and, of course, in recent years we have had a number of these so-called gun-jumping cases. That is to say, a situation where there is an obligation to notify a merger and a companion obligation not to complete the merger until one’s got the authority of the competition authority. And we’ve seen a number of cases, both at EU level – Marine Harvest comes to mind, and then Altice – and at NCA level, the Ernst & Young/KPMG case we’ll come on to, and elsewhere in the EU and the world generally, where fines have been imposed for these kinds of infringements. |
| Jay Modrall | Richard, you’ve mentioned the Ernst & Young judgment that also appeared a couple of years ago. The Ernst & Young judgment took an apparently quite different approach to the analysis of gun-jumping and in its appeal Altice relied very heavily on the Court of Justice’s ruling in that case. Why did that argument not succeed? What is the difference in the approach? |
| Richard Whish QC | Ok, so just to be clear, in the Altice case the question is whether, through the operation of provisions in the shareholders’ agreement, including the covenants and through actual decisions and exchanges of information, whether Altice was exercising decisive influence over the target, PT Portugal. Now, there was that Ernst & Young case, that was referred from Denmark, and what that case says, quite correctly, that the infringement, in terms of Article 7 – breaching the standstill obligation – the infringement is implementing the acquisition of control of the target, for example, by exercising decisive influence. Now, every case is decided on its own particular facts, and without going into the facts of Ernst & Young, I think what happened there was something very specific and it involved steps being taken that were preparatory to, but not part of, the implementation of acquisition of control of the target. And I just think the facts of Altice were different. And the covenants in question that existed in the agreement went beyond simply attempts to maintain the value of the business to be acquired, certain decisions were taken by Altice that looked like the exercise of influence and information was exchanged. And what the General Court says, on the facts of that case, is that it is satisfied that Altice was going beyond merely protecting the value of the business, for example, and so influence was being brought to bear. |
| Jay Modrall | Altice also relied, Richard, on a series of arguments based on general EU law principles such as ne bis in idem, proportionality and the prohibition against double punishment. And the General Court rejected all of those arguments. Do you think they gave those arguments sufficient weight? |
| Richard Whish QC | Well, to my mind this is lawyers’ law. I can’t see this as a great contribution to the promotion of consumer welfare to run these arguments. There’s an infringement of completing without having notified, and there’s an infringement of completing without the permission of the relevant authority. And one can argue that in certain circumstances an infringement of Article 7 necessarily in the case of no notification also involves an infringement of Article 4. So does that mean that ne bis in idem, or some variant of that is being committed? And what the Court said in Marine Harvest and repeats now is that these provisions are capable of their own independent spheres of application. And you could have a case where you have notified, but you complete without permission. Well, you can have an infringement of one, but not the other. In a case like this, you have an infringement of both. And the Court says therefore, the Commission’s two decisions can be upheld. |
| Jay Modrall | Richard, although the arguments that Altice advanced were essentially all rejected by the General Court, the General Court did exercise its discretion to reduce part of the fine imposed on Altice for violation of Article 4(1) of the Merger Regulation. Why did they do that and what might the implications be for the future fining policy of the Commission in gun-jumping cases? |
| Richard Whish QC | Well, what was it about? It’s about the fact that the Court does have an unlimited jurisdiction in relation to the level of fines, which means that it can leave the fine as it is, it can reduce it – it can even, if it wishes to, increase it. And, here, the Court says, well, ok Altice, you didn’t notify, in the sense of putting in a Form CO, but actually you did tell the Commission what was going on – there’s a merger here, and we will be notifying it. I think a case allocation meeting had taken place, and that there was a team identified for it. And so, in that sense, the Court says we don’t think that the Article 4 infringement was quite as bad as the Commission thought it was and so we will reduce the fine a bit. Well, ok, unlimited jurisdiction in relation to fines, that can happen. On your second point, is this going to lead to a change in practice on the Commission’s part? I wouldn’t have thought so for a moment. |
Senior Counsel
Email
jay.modrall@nortonrosefulbright.com