EU merger control law provides for an obligation of the parties to provide correct and complete information in merger control proceedings. This obligation has a very high relevance for the European Commission, as latest enforcement activities demonstrate.
On 19 March 2024, the European Commission sent a Statement of Objections to an insulation panels maker alleging that the company provided incorrect, incomplete and misleading information during merger control proceedings for the company's planned acquisition of a mineral fibre sandwich panel producer.
These investigations of the European Commission demonstrate yet again that the Commission expects companies to provide accurate and complete information, and moreover to strictly comply with procedural rules during merger proceedings. Otherwise, companies risk the imposition of painful fines.
About the case at hand
On 3 March 2021, the acquirer notified to the European Commission its plan to acquire the target. Both companies are leading suppliers of mineral fibre sandwich panels. Due to preliminary competition concerns that the proposed transaction could significantly reduce competition in the sale of mineral fibre sandwich panels in several European countries, the European Commission initiated an in-depth investigation into the transaction in April 2021.
The investigation confirmed the Commissions' competition concerns, so that in March 2022, the European Commission issued a Statement of Objections outlining its concerns that the proposed transaction could negatively affect competition in certain building material markets, leading to higher prices, reduced quality or less choice for customers.
In April 2022, the parties ultimately abandoned the transaction.
This did not stop the European Commission from investigating its suspicions that the filing party intentionally or negligently supplied incomplete, incorrect and/or misleading information during the Commission's investigation of its proposed acquisition of the target company.
The investigations substantiated these suspicions and led the European Commission to send a Statement of Objections to the company, in which the European Commission takes the preliminary view that the company intentionally, or negligently, provided incorrect, incomplete and misleading information with respect to basic facts related to its internal organisation, the scope of the relevant product and geographic market, the existence of barriers to entry and expansion, the importance of innovation, and the closeness of competition between the company and the target, as well as vis-à-vis their competitors.
Besides reputational damage and particularly watchful competition authorities the company is now threatened with being fined by the European Commission.
Pursuant to Article 14 (1) of the EU Merger Regulation the European Commission could for each instance impose a fine up to 1 % of the company's annual worldwide turnover, if it were to conclude that the company intentionally, or negligently, provided incorrect, incomplete or misleading information.
However, the final word has not been spoken in this case. The company now has the possibility to examine the documents in the European Commission's file, reply to the European Commission's Statement of Objections in writing, and request an oral hearing to present their comments on the case.
More information will be published on the Commission's competition website, in the public case register under the case number M.10962.
The European Commission's prosecution practice
This case is not an exceptional case. The European Commission watches over the obligation of the notifying parties to provide accurate and complete information, as a look back on the European Commission's prosecution practice demonstrates:
However, not only the provision of accurate and complete information has been supervised by the European Commission. The European Commission also fined a French telecommunications and mass media company in 2018 and a Japanese corporation specialising in optical, imaging and industrial produces in 2019 for breaches of the standstill obligation (i.e., gun jumping), making a clear and unambiguous statement that it would strictly supervise that companies fully comply with all procedural rules.
German Federal Cartel Office supervises obligation to provide accurate and complete information
The enforcement of the obligation to provide accurate and complete information in merger control proceedings is also of high priority to the German competition authority, the Federal Cartel Office.
Pursuant to § 39 (3) sentence 5 of the German Act for Restraints against Competition (GWB) the notification of a concentration shall not contain or use any incorrect or incomplete information for the purpose of prompting the competition authority to refrain from issuing a prohibition of the planned concentration or from issuing an information notice that the competition authority initiated second phase proceedings.
Breaches of this regulation can be sanctioned with the imposition of a fine, and the Federal Cartel Office made use of this possibility in several cases in the past years:
- In 2005, the Federal Cartel Office imposed a fine of EUR 250,000 on a German fiber, resin, and intermediates company for providing incorrect information during merger control proceedings.
- In 2013, the Federal Cartel Office fined the controlling shareholder of a German family business in the meat industry being party to a merger EUR 90,000 for providing incomplete information over the course of the notification of the concentration.
- In 2016, the Federal Cartel Office imposed a fine of EUR 90,000 on a French food company for notifying the acquisition of the majority shareholding of a German dairy based on incorrect information.
Concluding remarks: Review information provided in merger control proceedings
In conclusion, there is a high risk of the European Commission as well as national competition authorities checking the correctness and completeness of information provided by the parties in merger control proceedings, and the parties are likely to being imposed with a painful fine for providing incorrect, incomplete or misleading information. Therefore, companies are urgently advised that as being parties to a notification they should take great care to comply with the procedural rules and to ensure that they only provide accurate and complete information to the competition authorities.
For more information on this Statement of Objections and the obligation of providing accurate and complete information during merger control proceedings, contact your CMS client partner or CMS expert: Elisa Götz.
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