On 24th April 2018 the European Commission announced that it had imposed a fine of €124.5 million on Altice, the multinational cable and telecommunications company based in the Netherlands, for implementing its acquisition of the Portuguese telecommunications operator PT Portugal before notification or approval by the Commission (“gun jumping”). This is by far the largest fine imposed by the Commission on a company for gun jumping under the EU Merger Regulation.
This case is of significance as it shows that the Commission is getting increasingly tough on those who indulge in gun jumping or which otherwise breach the procedural rules under the EU Merger Regulation. Although the level of fines are subject to the circumstances of each case it is interesting to look back to 2014 when the Commission fined Scottish salmon producer, Marine Harvest, €20 million for acquiring de facto control of a competitor, without the Commission’s approval. The level of fines and the seriousness with which the Commission takes gun jumping has undoubtedly increased considerably over the last four years. This latest case is designed to send a clear message to others to deter this type of activity.
In announcing its decision in the Altice case the Commission stated “this type of behaviour fundamentally undermines the effectiveness of our merger control system. The fine imposed by the Commission on Altice today reflects the seriousness of the infringement and should deter other firms from breaking EU merger control rules”.
As readers will know under the EU Merger Regulation rules require that merging companies pre-notify relevant mergers with a Community dimension for review by the Commission (“the notification requirement”) and do not implement them until they are cleared by the Commission (“the standstill obligation”). The standstill obligation prevents the potentially irreparable negative impact 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 PT Portugal. The transaction was conditionally cleared by the Commission on 20 April 2015, subject to the divestment of Altice’s businesses in Portugal at the time, Oni and Cabovisão. In May 2017, the Commission addressed a Statement of Objections to Altice setting out its concerns that Altice had implemented its acquisition of PT Portugal before obtaining the Commission’s clearance, and in some instances, even before its notification of the merger.
The Commission concluded in its decision that Altice had infringed the provisions of the EU Merger Regulation by prematurely implementing the transaction by the following :
-Giving Altice under certain provisions of the purchase agreement the ability to acquire the legal right to exercise decisive influence over PT Portugal, for example by granting Altice veto rights over decisions concerning PT Portugal’s ordinary business;
-In certain other cases, Altice actually exercised decisive influence over aspects of PT Portugal’s business, for example by giving PT Portugal instructions on how to carry out a marketing campaign and by seeking and receiving detailed commercially sensitive information about PT Portugal outside the framework of any confidentiality agreement.
The Commission’s Decision of 24th April has no effect on the earlier April 2015 decision to authorise the transaction under the EU Merger Regulation. However the latest decision condemns Altice for its breaches of the procedural elements of the EU Merger Regulation which took place before either the notification and/or the clearance of the transaction by the EU Commission. The level of the fine demonstrates that the Commission considers that Altice was aware of its obligations under the Merger Regulation and therefore their non-observance of their obligations under the Regulation were, at least, negligent.