Three years after the European Commission (EC) fined Belgian electricity and natural gas company Electrabel €20 million (US$26 million) for acquiring Compagnie Nationale de Rhône (CNR) of France without obtaining prior clearance to do so, the European General Court fully upheld the EC decision. The General Court upheld the decision despite:

  • Electrabel having only acquired a (controlling) minority stake in CNR;
  • Electrabel having notified the transaction voluntarily to the EC (albeit more than four years following completion of the transaction); and
  • the EC having found no competition concerns arising from the actual transaction, as it considered that there were no significant overlaps between Electrabel and CNR’s activities.


In December 2003, Electrabel increased its holding in CNR substantially, from below 20% to 49.94% of CNR’s capital and 47.92% of its voting rights, initially without notifying this transaction. In August 2007, Electrabel contacted the EC to seek a view on whether the transaction should have been notified as an acquisition of control. The EC confirmed that Electrabel had acquired de facto sole control and that, therefore, the transaction was notifiable.

In April 2008, the EC decided not to oppose the transaction. However, in June 2009, the EC imposed a record fine of €20 million against Electrabel for having consummated a notifiable transaction without having obtained prior clearance to do so by the EU antitrust watchdog. This fine covered an infringement period from December 2003 to August 2007.

General Court Judgment

Electrabel’s challenge of the EC decision was rejected by the European General Court. Despite only holding a minority stake in CNR, the General Court affirmed the EC analysis that it was virtually certain that Electrabel would obtain a majority at any current or future CNR general meeting, even without holding the majority of shares, because the remaining shareholders were widely dispersed. Further, Electrabel dominated CNR’s Board of Directors, holding an absolute majority on the board and being capable of retaining this position, as well as holding decisive influence of CNR by playing a central role in its operational management.

The General Court held that the infringement by Electrabel went well beyond a mere formal or procedural infringement. Although Electrabel’s initial failure to notify the EU competition authority was deemed unintentional and negligent, and the actual transaction raised no competition concerns in itself, the General Court held that the infringement ought to be viewed as a serious one that lasted for a significant period of time. The General Court noted that, although the fine was substantial, it was at the lower end of the range of amounts that could have been imposed (up to 10% of the worldwide turnover of an undertaking).


The fact that the General Court has upheld this record EC fine emphatically underlines the importance of observing standstill obligations and not consummating notifiable transactions prior to receiving all necessary antitrust clearances. It also serves as a reminder that even minority stakes, depending on circumstances and applicable merger control regimes, may be caught. Even negligent, unintentional failures to observe the relevant merger control regimes can lead to hefty fines.

In addition, national competition authorities in Europe have imposed significant fines for failure to notify. Most prominently, in 2008/2009, the German Federal Cartel Office imposed two substantial fines, including fining Mars a record €4.5 million (US$5.9 million) for having knowingly consummated its acquisition of Nutro Products before receiving clearance from the German competition authority.