On 4 March 2020, the European Court of Justice ("ECJ") dismissed the appeal made by Norwegian seafood company Marine Harvest against a 2017 ruling of the General Court ("GC") confirming the European Commission ("Commission") 2014 decision fining Norwegian seafood company Marine Harvest for putting into effect its acquisition of salmon producer Morpol before getting the Commission's approval.
| whAT YOU NEED TO KNOW - KEY TAKEAWAYS |
- Failure to notify the acquisition of control to the Commission can result in two distinct breaches of the EU Merger Regulation: (a) failure to notify; and, (b) completing prior to clearance (gun-jumping).
- Such breaches can lead to significant fines of up to 10% of the total group turnover generated by the companies involved.
- Companies should pay attention to EU merger procedural rules, in particular when carrying out acquisitions in stages.
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Background
In a previous edition of the Ashurst Newsletter, we explained that Marine Harvest – now called Mowi - acquired its rival Morpol in three stages through the acquisition of:
- a 48.5% shareholding in December 2012;
- a 38.6% of the remaining shares in March 2013; and
- the remaining shares in November 2013.
The acquisitions were, however, not formally notified to the Commission until August 2013.
In July 2014, the Commission decided that the 2012 acquisition had already conferred Marine Harvest de facto control of Morpol. It therefore concluded that Marine Harvest had breached the EU Merger Regulation by implementing the acquisition without prior notification and consequently imposed two fines of EUR 10 million each, one for failure to notify and the other for gun-jumping.
In October 2017, the GC confirmed the Commission's decision, in particular that the Commission was right in imposing two distinct fines in its decision as Marine Harvest had breached both its filing and standstill obligations. This judgment was appealed before the ECJ.
The ECJ's judgment
In March 2020, the ECJ upheld the GC's ruling that Marine Harvest was properly fined both for failure to notify and for carrying out the concentration before the Commission had cleared the acquisition.
It thus considered that the GC was right to rule that the Commission could distinguish between situations in which the undertaking complies with the notification obligation but infringes the standstill obligation, and situations in which that undertaking infringes both those obligations. Concluding otherwise would render some of the Commission's enforcement powers under the EU Merger Regulation "redundant".
This ruling was adopted despite the contrary Opinion of AG Evgeni Tanchev which concluded that when a merger is implemented before it is notified and before it is approved, the infringement of one provision should "subsume" the other such that half of Marine Harvest's EUR 20 million fine should be annulled.
With thanks to Schéhérazade Oozeerally of Ashurst for her contribution.
