Merger control in M&A Transactions: Risk of fines in the millions for breaching the merger control prohibition of implementation
A recent fine of 20 Mio. Euro against a Norwegian salmon breeding and salmon processing company for breaching the prohibition on implementation of the EU-Merger Regulation (ECMR) currently causes a stir in the M & A practice. This case clarifies that the cartel authorities actually do more to identify and sanction breaches of the notification requirement and the therefrom resulting prohibition of implementation.
In certain cases mergers of companies are subject to the control by the Federal Cartel Office and the European Commission. While transactions between companies are generally allowed and welcomed due to the liberal economic order, they also can be detrimental to the based competition. Therefore, they must be examined and evaluated by the cartel authorities beforehand. Only after official release notification the merger may be consummated, until then the so-called prohibition of implementation applies.
In the case at hand, the European Commission considered that the Norwegian salmon breeding and processing company did not fulfill its obligation to notify in due time even though it has been foreseeable for it and it could have behaved accordingly. However, the company took over its competitor (also from Norway), without waiting for the release under the EU Merger Regulation.
Companies, which are planning a merger or M&A process, are held to have considered and checked the merger legislation with utmost care. Additionally, a decisive factor is the consideration of the prohibition of implementation which is is triggered by the notification and not to consummate, neither in the meaning of legal nor factual terms, until the release decision of the Federal Cartel Office and the European Commission has been received.
Lawyer Matthias Kirsch, LL.M. (USA), Osnabrück