On 22 September 2021, the European General Court published its ruling in Altice v European Commission (T-425/18) and made clear that, despite a reduction of the fine, it upheld the substantive findings of the European Commission (the Commission) to a large extent.
On 24 April 2018, the Commission imposed a fine of €124.5 million on French telecommunications and media company Altice, for implementing its acquisition of Portugal Telecom before the Commission had cleared the transaction and been notified of certain aspects of the acquisition.(1)
EU merger control rules require that merging companies:
- notify planned mergers that meet the thresholds for review by the Commission; and
- do not implement the transaction until it has been cleared by the Commission.
This "standstill obligation" prevents the potentially irreparable negative effect of transactions on the market, pending the outcome of the Commission's investigation.
In February 2015, Altice notified the Commission of its plans to acquire Portugal Telecom. The transaction was notified and cleared by the Commission in April 2015, subject to the divestment of Altice's businesses in Portugal at the time (ie, Oni and Cabovisão).
However, in May 2017, the Commission addressed a statement of objections to Altice, expressing its concerns that Altice had implemented its acquisition of Portugal Telecom before obtaining the Commission's clearance, and in some instances, even before its notification of the transaction. In particular, the Commission concluded that:
- certain provisions of the purchase agreement had resulted in Altice acquiring the legal right to exercise decisive influence over Portugal Telecom, for example, by granting Altice veto rights over decisions concerning Portugal Telecom's ordinary business; and
- in certain cases, Altice had exercised decisive influence over aspects of Portugal Telecom's business, for example, by giving Portugal Telecom instructions on how to carry out a marketing campaign and by seeking and receiving detailed commercially sensitive information about Portugal Telecom beyond the framework of any confidentiality agreement.
The Court upheld the Commission's findings and considered Altice's conduct, as described above, as "jumping the gun". In its judgment, the Court totally dismissed Altice's appeal against the Commission's decision, although it did reduce the original fine slightly (from €124.5 million to €118.6 million, because Altice had eventually notified the Commission of the transaction).
The Altice case shows, once again, that high fines can be imposed for gun-jumping and other infringements of competition law – namely, up to 10% of the annual turnover of the group to which the corresponding company belongs.
Both the Commission and the Court appear to have broadly interpreted the standstill obligation and considered that the exchange of precise and detailed information between Altice and Portugal Telecom allowed the former company to exercise decisive influence over the latter and to implement the acquisition prior to the Commission's approval. The Court found that the systematic and extensive exchange of commercially sensitive information between Portugal Telecom and Altice constituted a violation of the antitrust prohibition. However, it is not yet clear whether the exchange of information can constitute gun-jumping on its own (ie, in the absence of other measures).
In addition, a breach of the standstill obligation can also have private law consequences:
- the validity of the newly elected management's decisions carried out between the time of the actual acquisition of control and the approval by the competition authority could be held invalid;
- the management of the company acquiring control is exposed to personal liability risks for damages caused by the failure to notify the transaction to the competent competition authority; and
- if the competent competition authority ultimately decides that the merger is incompatible with coopetition law, this may affect the validity of the sale and purchase agreements, and the competition authority may order the dissolution of the transaction, including the disposal of acquired assets or shares in the targets.
For further information on this topic please contact Sebastian Jungermann at Arnecke Sibeth Dabelstein by telephone (+49 69 979885 465) or email ([email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.