On 24 April 2018, the European Commission announced that it had imposed a fine of EUR 124.5 million on Altice for acquiring control of PT Portugal before clearance by the Commission ('gun-jumping'). The fine is more than six times the amount which was previously imposed by the Commission for similar offences [see our November 2017 Newsletterf or a discussion of theMarine Harvestcase]. The Commission's recent enforcement actions against gun-jumping violations highlight the importance of strict competition law compliance during M&A transactions.
In February 2015, Altice notified the Commission of its plans to acquire PT Portugal. During its review, the Commission came to suspect that Altice may have breached the EU Merger Regulation by violating both the notification and the standstill obligations [see our June 2017 Newsletter]. Under the EU Merger Regulation, a merger or an acquisition should be notified to the Commission and should not be implemented unless it has been cleared.
In its press release, the Commission concluded that Altice was in a position to use its veto rights in the purchase agreement to exercise decisive influence over PT Portugal's ordinary business before clearance. Moreover, the Commission found that Altice actually exercised such influence by instructing PT Portugal on how to conduct a marketing campaign. In an earlier statement, Competition Commissioner Margrethe Vestager had characterisedAltice's behaviour as follows: "It appears that Altice had already been acting as if it owned PT Portugal. It seems that it gave instructions on how to handle commercial issues, such as contract negotiations."
The Commission has recently opened several investigations relating to potential 'gun-jumping' violations [see our August 2017 Newsletter]. Following the record fine for Altice, companies envisaging a M&A transaction are well-advised to check that veto rights in the purchase agreement do not interfere with ordinary business decisions of the target company and that information exchanges fall within the framework of a non-disclosure agreement.