On 18 December 2012, Marine Harvest acquired 48.5% of Morpol’s share capital and put out a press release announcing that it would acquire, in accordance with Norwegian law, the remainder of the securities by a takeover bid.
After informing the Commission that it would not exercise its voting rights before authorization from the latter, the takeover, notified on 9 August 2013, was authorized subject to certain divestment commitments. The Commission having decided to open proceedings for breach of the obligations to notify and suspend the transaction, MarineHarvest was eventually handed down two fines of EUR 10 million each. In a judgment dated 26 October 2017(LawLex171732), that ruling was upheld by the EU General Court.
Although Marine Harvest maintained that the takeover of the targets was the result of ″a series of transactions in securities […], by which control within the meaning of Article 3 is acquired from various sellers″, which entitled it, in application of Article 7(2) of the Merger Regulation to derogate from the obligation not to implement the transaction before it has been cleared, the General Court, like the Commission found that de facto sole control arose from thepurchase of 48.5% of Morpol shares had already been acquired because from the closing of the acquisition Marine Harvest was highly likely to achieve a majority at the shareholders’ meetings, given the size of its shareholding and the level of attendance of other shareholders at shareholders’ meetings in previous years.
The existence of a single concentration cannot result from transactions which, although ancillary to the merger, do not have a direct functional link with its implementation of the merger, such as a public bid launched after the acquisition of control of the target undertaking.
The concept of control within the meaning of Article 3 of the Regulation stems from the rights conferred by the possibility of exercising decisive influence on the activity of an undertaking since the acquisition of control in the formal sense and not in terms of its actual exercise is the only decisive factor. While it is true that the complete takeover of the target undertaking took place in several stages and through several sellers, control was acquired through a single transaction, namely through the purchase of a controlling interest, and through a single seller, regardless of whether the remaining units were purchased by public bid. In the Court of Justice, Marine Harvest, now Mowi ASA, relied on recital 20 of Regulation No 139/2004, which provides that of closely connected transactions are to be treated as a single concentration in that in they are linked by condition or take the form of a series of transactions in securities taking place within a reasonably short period of time, to argue that the transaction was not implemented before it was notified in violation of the standstill obligation.
However, the Court held that the applicant could not rely on a broad reading of the wording of recital 20, which has no binding legal force, to extend the scope of Article 7(2), which, although it permits, in certain circumstances, the implementation of a public bid before it has been notified to the Commission and before it has been authorized, only applies to transactions which are necessary to achieve a change of control.
Mowi ASA also challenged the imposition of two separate fines for the same facts based on the ne bis in idemprinciple. The Court rejected that argument however: the ne bis in idem principle and the set-off principle do not apply to a situation in which several sanctions are imposed in a single decision, even if these sanctions are imposed for the same facts. The applicant also claimed that the General Court had infringed the principle of concurrent offenses i.e. that the violation of the standstill obligation under Article 7(1) warranted only a single penalty on the grounds that this, more general, offense covered the breach of the notification obligation under Article 4(1). After upholding the finding that the EU legislature has not defined one offense as being more serious than the other, and acknowledging that if, as the applicant argues, it is indeed not possible to envisage a violation of Article 4(1), regardless of any violation of Article 7 1), the Court nevertheless notes that in the situation where an undertaking notifies a merger before its implementation, that undertaking may disregard Article 7(1) and implement the merger before the Commission declares it compatible with the internal market. In addition, Regulation No 139/2004 provides for the possibility ofimposing separate fines for each of those infringements. Failure to comply with the notification obligation is aninstantaneous infringement for which a three-year limitation period applies, while the standstill obligation constitutes a continuous infringement which is triggered when the first infringement is committed and for which the limitation periodis five years, it is not possible to claim that only the breach of the standstill obligation is punishable on the ground that it also covers the first infringement, without unduly favoring an undertaking which has violated both compared to an undertaking having only violated the standstill obligation in view of the different limitation periods applicable for the prosecution of the two infringements. The imposition of two separate fines is therefore justified and businesses will need to be particularly vigilant in the context of their merger transactions in light of this ruling.