Focus on breach of procedural rules in merger control cases
The past months have seen both the Norwegian, Austrian and UK competition authorities issue penalties for breach of procedural rules in merger control cases. Clearly, a proper understanding of the rules and requirements is becoming increasingly important, as they are not the same across all jurisdictions.
By assistant attorney Andreas Riis Madsen
Penalty for Norgesgruppen
The Norwegian Competition Authority has announced its intention to fine Norgesgruppen NOK 20,000,000 (app. EUR 2,028,000) for failing to report its acquisition of store premises in Bergen, Norway. The Authority emphasises that the amount of the penalty is intended to ensure deterrence and to enable effective control of compliance with disclosure requirements.
Under Norwegian law, the Authority is allowed to impose on specific sectors or enterprises a duty of disclosure even if their revenue does not exceed the general thresholds. This the Authority has done in relation to the convenience goods industry, a relatively concentrated industry in Norway. Additionally, special duties of disclosure apply on other markets where local competition is essential, i.a. the fuel, garden centre, power, and locksmith markets.
Click here to read the press release about the announced penalty for Norgesgruppen
Penalty for Wietersdorfer
In Austria, the national cartel court (first instance) fined pipe systems company Wietersdorfer EUR 70,000 for having purchased 50 per cent of Slovenian construction materials manufacturer Calcit without the requisite approval. The acquisition was implemented 6 July 2018 but was not cleared by the Austrian competition authorities until 15 January 2019.
Click here for the press release on the penalty issued to Wietersdorfer (in German)
UK decisions
Also the UK Competition and Market Authority (CMA) has delivered decisions about non-compliance with merger notification procedures.
The CMA has issued an unwinding order to Bottomline in connection with its acquisition of Experian’s Payments Gateway Payments business. An unwinding order is a special option available to the CMA because, in the UK, implementation of a merger need not necessarily await the merger control procedure. In the UK, therefore, a merger may be implemented before it has been approved by the CMA, but any such implementation comes with the risk that the CMA might order the enterprises to reverse the merger until such time as the CMA has determined whether it impedes competition and is therefore to be prohibited. To mitigate that risk, enterprises can make voluntary notifications to the CMA.
Also, the CMA has fined pest control company Rentokil GBP 27,000 (app. EUR 30,000) for failure to adequately disclose information for use in the CMA's assessment of Rentokil’s acquisition of Mitie Pest Control. Rentokil’s failure to adequately respond to CMA’s requests meant, in the CMA’s opinion, that the CMA had to expend additional resources reviewing the merger. In some cases, Rentokil failed to provide more than half of the relevant documents, and much of the evidence which was not provided related to issues which were central to the CMA’s analysis. For example, in response to the CMA’s request to receive all internal documents pertaining to negotiations for the purchase agreement Rentokil submitted four documents and later, responding to additional questions, sent 14 more.
Explaining its failure to provide relevant documents Rentokil pointed to its internal search methodology. This explanation, however, left the CMA dissatisfied. The CMA, consistent with announcements by other authorities to have issued penalties for breach of procedural rules on merger control, emphasised the importance of disclosing all relevant information so that the authorities may properly assess the merger. The CMA noted also that the penalty must be substantial enough to achieve deterrence.
Continued focus on merger control procedural rules
These latest national decisions come in the wake of earlier penalties this year issued by the European Commission and also the Danish Competition and Consumer Authority for non-compliance with merger control procedural rules.
Failure to notify mergers have been met with fines (see: Merger control: an area of continuing focus). Also, fines have been issued for provision of incorrect information in merger review cases (see: Focus on breach of procedural obligations in merger review cases increases).
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