Increasingly, competition authorities are taking a more pro-active stance against gun-jumping and fining companies for engaging in integration activities prior to merger clearances being obtained.
Although the UK operates a voluntary merger regime so that completion can take place without notifying and seeking prior clearance from the Competition and Markets Authority (the “CMA”), the CMA can impose, and does so as a matter of course in relation to completed mergers, an Initial Enforcement or ‘Hold Separate’ Order (an “IEO”), until its investigation completes. The purpose of such an order is to ensure that no (further) integration takes place which might prejudice any Phase II merger reference or might impede any action which the CMA ultimately considers justified, including the unravelling of a completed transaction.
The CMA has recently fined PayPal £250,000 for its failure without ‘reasonable excuse’ to comply with an IEO imposed in connection with its completed acquisition of iZettle; a transaction which was ultimately cleared by the CMA at Phase II.
The CMA had granted a derogation from the IEO so that PayPal was permitted to engage in international integration activities, including cross-selling pilot campaigns involving its non-UK businesses, provided that these activities did not affect the UK and were confined to non-UK jurisdictions. However, these pilot campaigns resulted in UK customers being contacted in breach of the IEO.