On 26 October, the EU’s General Court issued two key rulings in relation to merger control. While one judgment sends a signal that complainants can successfully challenge decisions of the European Commission (the “Commission”), the other acts as a stark reminder that failure to comply with merger control rules can have severe consequences for companies.
Rare defeat of EU antitrust regulator
In a rare blow, the General Court annulled the Commission’s 2014 decision following an in-depth review to approve US television company Liberty Global’s acquisition of Ziggo, the largest Dutch cable operator. The judgment follows a complaint filed by Dutch rival KPN in 2015 claiming that the regulator had failed to carry out a proper assessment of the transaction’s impact on the market for pay-TV sports channels.
The Commission must now re-consider the transaction in light of the General Court’s decision.
This is one of only a few successful challenges to Commission merger decisions. Earlier this year the General Court annulled the Commission’s decision to block the merger between UPS and TNT due to infringement of UPS’s rights of defence. In 2006, the General Court’s predecessor, the Court of First Instance (“CFI”) reversed the Commission’s clearance of a merger between BMG and Sony, following a complaint by the Independent Music Publishers and Labels Association that the Commission had conducted an inadequate competitive assessment. The judgment was celebrated as a victory for complainants, only to later be set aside by the European Court of Justice on appeal. In the meantime Sony and BMG re-notified the transaction, obtaining clearance for the second time. In 2002, the CFI annulled the Commission’s 1999 decision to prohibit a merger between holiday companies MyTravel and First Choice, also on the basis of manifest errors of assessment. Also in 2002 the CFI annulled the Commission’s decision to prohibit the Schneider Electric/Legrand merger due to infringements of rights of defence and inadequate economic analysis.
KPN’s success in the present case is therefore a rare but welcome sign that the Commission’s merger decisions are not immune to challenge, and that it is not only the merger parties who can challenge a merger decision – if a third party is adversely impacted by a Commission decision, it is open to them to challenge it before the EU courts.
Gun jumping fine against Marine Harvest upheld
The General Court also upheld a fine of €20 million imposed by the Commission on Norwegian seafood company Marine Harvest for late notification of its purchase of salmon producer Morpol. The fine was levied against two infringements: (1) the company’s failure to notify the deal prior to its implementation and (2) the company’s implementation of the deal prior to its approval, conduct known as “gun-jumping”.
While Marine Harvest had been in contact with the regulator since December 2012, it only formally notified the transaction on 9 August 2013. The Commission held, and the General Court agreed, that the company’s merger filing obligation was triggered several months earlier, on 18 December 2012, when it secured de facto control of Morpol by acquiring 48.5% of its share capital. The Commission therefore considered that Marine Harvest had breached its obligations under the EU Merger Regulation, and fined Marine Harvest €20 million.
We has recently commented on the global trend of antitrust watchdogs cracking down on companies who fail to meet their merger control obligations. This judgment serves as a further reminder that failure to do so can have costly consequences.