A primer on avoiding procedural breaches in EU Merger Control.
The European Commission (Commission) is cracking down on parties that break procedural rules in transactions subject to European Union (EU) merger control. A recent example is the €110 million ($130.78 million) fine it imposed on Facebook for providing misleading information in the merger clearance process for the acquisition of WhatsApp. The Commission is also investigating General Electric’s acquisition of LM Wind as well as Merck KGaA’s acquisition of Sigma-Aldrich on the same grounds, and the Dutch telecom operator Altice for alleged “gun jumping” in relation to its acquisition of PT Portugal (i.e., allegedly taking control of, and giving instructions to, the target regarding contract negotiations as well as exchanging sensitive information before closing). The agency also addresses gun jumping allegations at Canon in its acquisition of Toshiba Medical Systems Corporation. Below are some practical steps for companies to keep in mind to avoid similar investigations/sanctions in the context of transactions that are subject to merger control:
The Commission is increasingly requesting parties to submit substantial data and large volumes of internal documents as part of the merger filing within the very tight deadlines of the merger control process. The merging parties are under a positive obligation not to submit “any statement which gives a distorted picture of the true facts asked for, and which departs significantly from reality on major points”.
Creation, preservation, review, and management of internal documents is therefore critical. In particular, parties should consider
Merging parties must continue to act as independent companies until the receipt of EU merger control clearance. In particular, the parties need to refrain from coordinating their competitive behavior, sharing each other’s commercial strategy, and exchanging competitively sensitive information beyond what is necessary for due diligence purposes without the requisite safeguards (e.g., clean team arrangements). Consequently, the parties should consider
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 Case IV/29.895 – Telos, OJ  OJ L58/19. Para. 21.