The Belgian Competition Authority recently published its decision on the acquisition by Cordeel Group (a general contractor company) of the Belgian activities of the Dutch Imtech Group (a technical services company). The latter which had filed for bankruptcy.

In its decision, the Belgian Competition Authority on one hand approved the concentration unconditionally and on the other hand imposed a fine on Cordeel Group for implementing the concentration without its prior approval. Closing or otherwise implementing a transaction which must be notified to the Belgian Competition Authority, without obtaining prior approval by the authority, is referred to as “gun-jumping” and constitutes an infringement of the standstill obligation under Belgian merger control law. 

The facts and procedure – In August 2015, the Dutch Imtech group, to which the Belgian Imtech activities belonged, proved to be in severe financial distress. Royal Imtech N.V., the group’s ultimate parent as well as several other companies in the group were finally declared bankrupt on 13 August 2015. The Belgian activities of Imtech however remained in business and were acquired by Cordeel Group on 19 August 2015 in an effort to save the companies as a going concern.

However, this acquisition qualified as a concentration which had to be notified to the Belgian Competition Authority (“BCA”) under Belgian merger control law. In fact, the turnover of the companies concerned exceeded by far the Belgian merger control turnover thresholds. As a result, on 22 September 2015 the BCA contacted Cordeel Group, on its own initiative and informed it of the applicable merger control procedure, the standstill obligation and the risk of a fine in case of gun-jumping.

According to the decision, Cordeel Group was not aware of its obligations and had not been warned by its external lawyers. Cordeel Group first reacted on 20 October 2015 by requesting dispensation of the standstill obligation with retroactive effect. Such dispensation with retroactive effect was granted by the BCA on 22 October 2015. Cordeel Group next initiated pre-notification discussions with the BCA.

Although the transaction would normally have been eligible for a simplified and shortened procedure, the BCA considered that considering the circumstances a standard notification procedure was required. Indeed, the simplified procedure would not have allowed the BCA to decide in the same decision on the concentration and the infringement of the standstill obligation.

The concentration was finally notified by Cordeel Group on 10 November 2015 and unconditionally approved by the BCA on 23 December 2015. A remarkable and most exceptional event was the request by the Minister of Labour, Economy and Consumers to be heard as a sort of amicus curiae in the procedure, advocating against the imposition of a fine.

The BCA however did not refrain from imposing a EUR 5.000 fine on Cordeel Group for infringement of the standstill obligation. The standstill obligation of Article IV.10, §5 of the Belgian Code on Economic Law (“BCEL”) implies that a concentration that must be notified to the BCA must not be closed or otherwise implemented without the BCA’s prior approval.

This transaction was a clear candidate for approval; hence no further measures restoring effective competition were required. However one should note that when a concentration cannot be approved by the BCA, in addition to imposing a fine for gun-jumping, it will order the unwinding of the transaction on the basis of Article IV.62, §7, BCEL.

Commentary on the decision – It is remarkable that the BCA contacted the acquiring party on its own initiative to inform it that it believed that the transaction should have been notified and that the standstill obligation may have been infringed. It shows that the BCA is actively monitoring the market and does not shy away from acting of its own motion, also in merger control cases. Also note that under EU merger control law, Article 7(1) ECMR imposes a similar standstill obligation and that the European Commission may take similar action.

With its active pursuit of this case, resulting in a decision to impose a fine, the BCA has taken a strict stance underlining the importance of the standstill obligation. The BCA leaves no doubt that the obligation to notify and obtain prior approval by the BCA, before implementing a transaction, constitutes a cornerstone of the merger control regime, even for straightforward cases where the parties have a combined market share of no more than 25%.

The BCA also astutely notes that “jumping the gun” has not been to Cordeel Group’s advantage. Besides triggering a fine, it impeded the application of the simplified and shorter merger control procedure which led to the more cumbersome and lengthier standard merger control procedure.

On the other hand the BCA was remarkably lenient in this case. The BCA granted a dispensation from the standstill obligation with retroactive effect. The retroactive effect of the dispensation allowed Cordeel Group to preserve the validity of its legal actions following the effective implementation. The BCA also took into consideration the particular circumstances of this case as attenuating factors, such as the parent companies’ bankruptcy, the value of the transaction, the limited duration of the infringement and the lack of negative consequences on competition. The BCA notes that imposing a financially “really deterrent fine” would be disproportional and unjustified under such circumstances. The BCA suffices with imposing a EUR 5.000 fine, which can be described as symbolic.

Three things one should take away from this case:

  1. Parties should always verify whether a transaction triggers merger control thresholds in Belgium or in other jurisdictions. If necessary, parties should include a condition precedent in the transaction agreements allowing for merger control.
  2. The Belgian Competition Authority actively monitors the market for transactions which must be notified.
  3. Not respecting the standstill obligation or “gun-jumping” may lead to fines, even for relatively straightforward concentrations. For complex concentrations which cannot be cleared, the Belgian Competition Authority will impose unwinding of the transaction.

The non-confidential version of the decision can be accessed on the website of the BCA through this link (in Dutch).