16 November 2017

Commission may shoot off hefty fines for jumping the gun

The General Court recently upheld a EUR 20 million fine imposed on seafood company Marine Harvest for gun jumping. The court agreed with the Commission that the acquisition of a minority shareholding resulted in control, and should therefore have been notified and cleared prior to its implementation. The wide dispersion of remaining shares and previous attendance rates at shareholders meetings led Marine Harvest to gain sole control. Companies can avoid the risk of paying a hefty fine for jumping the gun by performing a merger filing assessment to establish whether the Commission needs to be notified about a transaction prior to its implementation. Most merger control regimes worldwide have gun-jumping rules similar to those of the Commission’s, with some of them even applying to non-controlling minority acquisitions. This is all the more reason for companies to keep a global perspective and to check for and obtain merger control clearance before implementing a transaction.

In the Harvest Marine case, the General Court found that Marine Harvest’s 48.5% minority shareholding resulted in the acquisition of control and should therefore have been notified and cleared prior to implementation. The General Court agreed with the Commission that the wide dispersion of remaining shares and previous attendance rates at shareholders’ meetings led Marine Harvest to gain sole control. The fact that this 48.5% acquisition was the first stage of a three-staged merger deal was no reason to conclude otherwise. The General Court found that even though it was true that the complete takeover took place in several stages and involved various sellers, control was acquired by means of a single transaction and from just one seller.

It would therefore be wise for companies to keep track of all acquisitions, including minority shareholdings, and to check for any applicable merger filing obligations worldwide before implementing them.