On 6 July 2017 the European Commission sent three statement of objections to three different companies, Merck and Sigma-Aldrich, General Electric and Canon, alleging merger review procedure rule infringements. Two of the objections concerned misleading notification information and one concerned gun jumping.
The EU Merger Regulation requires that merging companies notify transactions prior to their implementation. The merging parties are required by law to provide accurate and correct information in their notifications and they may not implement the transaction unless and until they have been notified and cleared by the Commission. Failing to provide accurate information in the notification or implementing the transaction before Commission clearance, are considered serious infringements and can lead to significant fines from the Commission.
Commissioner Margrethe Vestager, in charge of competition policy, said: "We need companies to work with us to ensure fast and predictable merger control, to the benefit of both companies and consumers. But we can only do our job well if we can rely on cooperation from the companies concerned – they must obtain our approval before they implement their transactions and the information they supply us must be correct and complete."
In the objections sent to Merck and Sigma-Aldrich, the Commission stated its preliminary conclusion that the companies in the notification concerning Merck's acquisition of Sigma-Aldrich, failed to include information about an innovation project. The Commission stated that the inclusion of this information could have had consequences for the transaction's remedy-package.
General Electric notified its purchase of LM Wind to the Commission in January 2017. According to the Commission's objections sent to General Electric, General Electric failed to inform the Commission about their research and development activities and the development of a specific product. This information was according to Commission necessary to assess the competitive landscape and General Electric's future position on the wind turbine market.
The third objections alleged that Canon "jumped the gun" when they acquired Toshiba Medical Systems in 2016, i.e. that they implemented the merger before obtaining approval from the Commission. Canon's gun jumping was allegedly done by a method called "ware-housing", meaning a two-step transaction involving an interim buyer. Prior to notification to and approval from the Commission, the interim buyer acquired 95% of the share capital of Toshiba Medical Systems and Canon acquired the remaining 5% as well as an option to acquire the interim buyer's 95%. After that initial transaction, Canon notified the Commission before executing its option to acquire the remaining 95% of the shares from the interim buyer.
None of these objections affects the approval of the mergers. However, if the Commission concludes that Merck and Sigma-Aldrich or General Electrics provided incorrect or misleading information, these companies could be fined up to 1% of their annual turnover. Canon could be fined up to 10% of its annual turnover, if the Commission concludes that Canon implemented the merger before obtaining approval from the Commission.
These three objections from the Commission comes in the wake of the recent EUR 110 million fining decision imposed on Facebook for providing misleading information in the notification of the WhatsApp acquisition, as well as the objections sent to Altice for allegedly jumping the gun in the in the PT Portugal acquisition. The consequences for infringing the merger procedure rules can be severe and can in some cases have an impact on the already implemented merger. It is also clear from these recent Commission cases, that the Commission does not hesitate to strike down hard on companies they consider have infringed any of these procedural rules.