Ignoring the stand-still obligation under the EU Merger Control Regulation ("EMCR") leads to very high fines. This was confirmed by European Commission (the "Commission") and EU Court of Justice decisions last month (Case C-84/13) On 3 July 2014 the EU Court of Justice reconfirmed the validity of a 2009 Commission decision imposing a fine of EUR 20 million for the acquisition of control by Electrabel over a company without having obtained prior approval from the Commission under the EMCR. On 23 July 2014 the Commission imposed a fine of exactly the same amount on Marine Harvest for a similar omission.
Interestingly, both cases relate to acquisitions of ("de facto") sole control over a company on the basis of a minority shareholding: both Electrabel and Marine Harvest held less than 50% of the outstanding shares and voting rights after the transaction. The cases therefore show that also in transactions leading to the acquisition of relatively low shares, merger control filing obligations, including stand-still provisions, may be triggered. We note that there are of course also national competition law regimes (including those in Germany and the UK) requiring prior notification of the acquisition of minority shares, irrespective of the question whether decisive control is acquired. Moreover, the Commission is contemplating the introduction at the EU level of a notification regime for minority shareholdings.
Both the EU Court of Justice and the Commission emphasize that a violation of the stand-still obligation is serious because early implementation of a notifiable transaction affects the structure of the market and may make it considerably more difficult for the Commission to restore effective competition where the transaction is capable of restricting competition. The notification obligation, the Commission's review of the effects of the transaction and the ensuing stand-still obligation are there to avoid any permanent and irreparable damage to effective competition.
As to the level of the fine, the Commission takes into account the (inherent) seriousness of the violation and its duration. In spite of the fact that failing to do the filing and respecting the stand-still obligation can be considered a "one-off" infringement, it is the Commission's view that it is a continuous infringement for the period between the implementation of the transaction and the ultimate approval of the transaction – the end of the standstill obligation – by the Commission.
In the case of Electrabel the Commission and the EU Court of Justice did not consider the fact that the transaction did not lead to any competition law concerns to be a factor worthy of mitigating the level of the fine. In the Marine Harvest decision the Commission considered the fact that the transaction entailed substantive competition law concerns (requiring "remedies" before approval could be granted) as an aggravating circumstance. Conversely, the fact that Marine Harvest did not exercise its control (use its voting rights) after closing and before Commission approval and the fact Marine Harvest itself notified the Commission about the transaction shortly after its closing were mitigating circumstances.