On 26 October 2017, the General Court (GC) dismissed an appeal lodged by Harvest Marine, a Norwegian seafood company, against a EUR 20 million fine imposed by the European Commission. The fine was imposed on Harvest Marine in 2014 for implementing its acquisition of Norwegian salmon producer Morpol before obtaining the required clearance from the Commission under the EU merger control rules, also referred to as "gun jumping" [see our August 2014 Newsletter].

The acquisition of Morpol, at that time a listed company, took place in three steps. Firstly, Harvest Marine acquired 48.5% of the share capital in Morpol from two legal entities controlled by Morpol's founder in November 2012. Secondly, this acquisition triggered a mandatory public bid for the remaining outstanding shares in Morpol resulting in a 87.1% shareholding in March 2013. Thirdly, the purchase was completed on 12 November 2013 followed by de-listing of Morpol. Even though informal contact took place between Harvest Marine and the Commission starting three days after closing of the December 2012 transaction, the concentration was not formally notified until 9 August 2013.

Central to this case is Harvest Marine's argument that it could rely on the specific exemption from the standstill obligation for public bid situations under Article 7(2) of the EU Merger Regulation. Pursuant to this provision, the general standstill obligation does not apply to a public bid or a series of transactions admitted to trading on a regulated market by which control is acquired from various sellers if (i) the concentration is notified to the Commission without delay and (ii) the acquirer does not exercise the voting rights attached to the shares.

The GC rejected this argument. The GC held that the decisive event for notification of the concentration as well as the standstill obligation is the acquisition of control in the formal sense rather than factual exercise of this control. In this case, the GC found that de facto sole control had already been acquired after the first purchase in December 2012, "by means of single transaction and from just one seller"– even though the formal sellers had been two separate legal entities – leading to this situation falling outside the scope of Article 7(2) of the EU Merger Regulation. The GC confirmed that a minority shareholder, like Harvest Marine after the December 2012 transaction, could be considered to have de facto sole control based on past attendance at Morpol's shareholders' meeting. Furthermore, the GC found that the three-step acquisition did not constitute a single concentration.

The GC sanctioned the Commission's approach that Harvest Marine's failure to notify and its breach of the standstill obligation were two separate infringements justifying two separate fines in a single fining decision.

This judgment sheds light on the triggering event for notification of public deals that are structured in several phases. It shows that a purchaser acquiring a minority shareholding conferring negative sole control from a single seller should observe the notification and associated standstill obligations.