In its ruling of 4 March 2020 the Court of Justice of the EU (CJEU) dismissed Marine Harvest’s appeal against the Commission’s decision in which it had imposed two separate fines of €10 million each for failure to notify a transaction under Article 4(1) EUMR and for implementing that transaction prior to clearance, in breach of the standstill obligation under Article 7(1) EUMR. Marine Harvest argued that this meant it had been fined twice for the same conduct, in breach of the principle of ne bis in idem under which nobody should be punished twice for the same offence. Marine Harvest also argued that this infringed the general principle governing ‘concurrent offences’ which should prevent the Commission from penalising a company for two offences which have the same objective. The CJEU concluded that failure to notify and breach of the suspension obligation are separate infringements for which the Commission can impose separate fines. The CJEU departed from the opinion that had been issued by the Advocate General.
The same issue is under appeal in other gun-jumping cases currently before the General Court (Altice and Canon/Toshiba), as the Commission has adopted this approach in all its infringement decisions where a transaction had been implemented prior to notification, typically allocating the fine equally between breach of Article 4(1) and Article 7(1) EUMR. We can now expect the Commission to continue imposing separate fines for both infringements.
The ruling is a useful reminder that breaches of procedural rules under the EU merger control regime are taken very seriously, a trend we are also seeing in other jurisdictions. In the UK for example the CMA has over the last two years adopted infringement decisions, imposing fines for breach of initial enforcement orders (requiring the parties to prevent further integration), in a wide range of cases.
- Background to the case
- Advocate General Tanchev's opinion
- CJEU ruling
Background to the case
On 14 December 2012 Marine Harvest (a Norwegian salmon farmer and processor) entered into a share purchase agreement (SPA) under which it acquired a 48.5% stake in one of its competitors, Morpol, a company that was listed on the Oslo stock exchange. The SPA transaction, which was not notified to the Commission under the EUMR, completed on 18 December 2012.
In early 2013 Marine Harvest made a mandatory public offer for the remaining 51.5% shares in Morpol, through which it increased its shareholding to 87.1%. A formal EUMR notification was submitted in August 2013 and the transaction was conditionally cleared in October 2013. In its decision clearing the transaction, the Commission raised its view that prior to the public offer Marine Harvest had already acquired de facto sole control over Morpol, as a result of the SPA transaction. In July 2014 the Commission issued an infringement decision finding that Marine Harvest had breached the notification and the standstill obligations, imposing a fine of €10 million for each of these infringements.
On appeal, the General Court rejected Marine Harvest’s argument that this meant it had been fined twice in respect of the same conduct, in breach of the principle of ne bis in idem, on the basis that this principle was not infringed when both fines were imposed as part of the same decision.
Marine Harvest brought a further appeal before the CJEU, on the following two grounds:
- The General Court failed to apply the principle of ne bis in idem and the principle governing concurrent offences
- The General Court had erred in law, misinterpreting the notion of a single concentration, by finding that it was not necessary to examine the appellant’s arguments that there was a conditionality between the December 2012 SPA transaction and the 2013 Public Offer
Advocate General Tanchev's opinion
Although agreeing with the General Court on its reasoning in relation to the ne bis in idem principle, Advocate General Tanchev advised the CJEU that the general principle of international law governing concurrent offences should prevent the Commission from imposing a fine for both failure to notify and implementation prior to clearance. Marine Harvest could not be fined twice for the same conduct, on the basis that the breach of the notification obligation in Article 4 EUMR is “subsumed” by the breach of the standstill requirement in Article 7 EUMR. Both obligations have the same objective, seeking to prevent the implementation of mergers before they are notified and declared compatible. They protect the same value and should not be applied together.
Ne bis in idem and the principle of concurrent offences
The principle of ne bis in idem protects undertakings from being found liable, or proceedings being brought afresh, on the grounds of conduct for which it has already been penalised or declared not liable by an earlier decision that can no longer be challenged. The principle does therefore not apply in this case where two penalties were imposed by the same authority in a single decision.
The CJEU did not follow the Advocate General’s advice in relation to concurrent offences but instead endorsed the General Court’s approach that there are no specific rules on concurrent offences under EU law. In any case, neither of the offences has been defined as more serious than the other, and they are both subject to the same level of fines. Although there is a link between both offences, an infringement of one does not automatically result in an infringement of the other and each of the provisions has its own objective. The Commission is therefore in a position to impose separate fines for breach of each.
The notion of single concentration
The General Court had held that the Commission was correct in finding that Marine Hose had acquired control following the SPA transaction in December 2012 when it acquired a 48.5% stake in Morpol. The transaction was therefore implemented prior to notification or clearance, and Article 7(2) EUMR (which permits the implementation of a public bid) did not apply in this case. It dismissed Marine Harvest’s argument that the 2012 SPA transaction and the 2013 Public Offer should be regarded as a single concentration which would benefit from the Article 7(2) exemption.
The CJEU rejected Marine Harvest’s argument that the General Court had misinterpreted the concept of a ‘single concentration'. The concept of ‘single concentration' is only described in recital 20 of the EUMR, and it is not possible to rely on a broad interpretation of that wording in order to extend the scope of Article 7(2) EUMR. The prohibition set out in Article 7(1) EUMR is directly linked to the definition of the concept of concentration set out in Article 3 EUMR, and as Article 7(2) provides for an exception to that prohibition it is equally linked to the concept of concentration of Article 3 EUMR.
As the public bid was launched after the change of control of the target, the General Court was right to conclude that it was not necessary to examine conditionality between the two transactions and the CJEU dismissed the claim of misinterpretation of the concept of single concentration.