On 6 July 2017, the European Commission provided a reminder to take merger control procedural rules seriously. The Commission announced three separate investigations, all related to alleged breaches of the EU merger procedural rules, but the same principles apply in the very large number of jurisdictions worldwide which have their own similar rules. Most countries impose fines for breach of the rules.
Two of the Commission’s investigations relate to the alleged provision of incorrect or misleading information. In one of these, the Commission alleges that General Electric (GE) provided incorrect or misleading information during the Commission's investigation of GE's planned acquisition of LM Wind. Specifically, GE allegedly failed to provide information to the Commission concerning its research and development activities in onshore and offshore wind turbines and the development of a specific product. The missing information allegedly had consequences not only for the Commission's assessment of GE's acquisition of LM Wind but also for the assessment of Siemens' acquisition of Gamesa.
The third case the Commission is investigating relates to alleged “gun-jumping” by the purchaser of a business. The allegation is that Canon Inc. implemented its acquisition of Toshiba Medical Systems Corporation before notifying it to, and also before obtaining approval from, the Commission.
The Commission alleges that Canon used a so-called "warehousing" two-step transaction structure involving an interim buyer, which essentially allowed it to acquire Toshiba Medical Systems prior to obtaining the relevant merger approvals. As a first step, the interim buyer acquired 95 percent of the share capital of Toshiba Medical Systems for €800 (voting shares), while Canon paid €5.28 billion for both the remaining 5 percent (non-voting shares) and share options over the interim buyer's stake.
The Commission alleges that under this first step, Canon paid the full price for and effectively acquired the target. This was therefore gun-jumping. The fact that Canon exercised the share options only following the Commission’s approval of the merger, so that only at that point did Canon legally acquire 100 percent of Toshiba Medical Systems, is seen as irrelevant.