Focus on breach of procedural obligations in merger review cases increases
The European Commission has fined General Electric (GE) €52 million (app. DKK 390 million) for providing incorrect information for the Commission’s review of GE’s acquisition of Danish LM Wind Power.
Commission’s decision of 8 April 2019
By assistant attorney Andreas Riis Madsen
THE CASE IN BRIEF
GE's proposed acquisition of LM Wind Power qualified as a notifiable transaction. At the time of the merger review, GE was marketing a 6-megawatt offshore wind turbine and informed the Commission that it did not have any higher power output wind turbine for offshore applications in development. The Commission learned, however, through information collected from a third party, that GE was simultaneously offering a 12-megawatt offshore wind turbine to potential customers and that the information it had supplied was consequently incorrect. On this background, the Commission decided - after approving the acquisition - to impose a fine on GE for having provided incorrect information during the merger review process.
The fine will not affect the approval of the transaction, though, as the Commission contacted GE during its review, following which GE withdrew its notification to file a second notification with rectified information. The Commission’s approval, thus, was based on this second (rectified) notification.
Numerous cases over provision of incorrect information
Recent years have seen competition authorities increasingly enforcing infringements of procedural rules in merger review cases.
In May 2017, Facebook was fined €110 million for having provided incorrect information for the Commission’s review of Facebook’s acquisition of WhatsApp in 2014. Similarly, the Commission is currently investigating Merck and Sigma-Aldrich on suspicion of similar infringements in Merck’s acquisition of Sigma-Aldrich in 2015.
In December 2014, the Danish Competition and Consumer Authority reported Metro Cash & Carry to the police for having supplied incorrect information for the Authority’s review of its acquisition of two Metro stores. In this case, the Court in Glostrup ultimately imposed a DKK 50,000 fine on Metro. The fine was subsequently upheld by the Danish Eastern High Court.
Back in January 2012, Danish Agro accepted a fine of DKK 50,000 for having failed – during the merger review of its acquisition of S.A.B. a.m.b.a Landbrugets Andel – to rectify the information that the Danish Competition and Consumer Authority had based its approval on. Danish Agro had entered into a conditional framework agreement for the purchase of the assets of a third competing enterprise which the Danish Competition and Consumer Authority considered to be an active competitor of Danish Agro after the merger. The non-disclosure of this framework agreement to the Danish Competition and Consumer Authority caused it to withdraw the approval of Danish Agro a.m.b.a's acquisition of S.A.B. Landbrugets Andel.
What are the lessons from these cases?
The rising number of cases shows the competition authorities’ increasing attention to compliance with procedural rules in merger review processes. With authorities clearly willing to impose substantial fines for non-compliance, merging entities must be vigilant and make sure to supply correct and adequate information to them for merger review purposes. If any undisclosed or incorrect piece of information is found to be relevant to the competition authorities’ approval of a transaction, there is a risk that the approval will be subsequently withdrawn.
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