Merger control: Undertakings involved required to provide full and accurate information in the merger notification

The EU Commission recently closed proceedings against special materials companies Munksjö and Ahlstrom concerning an alleged infringement of the rules regarding the provision of information in the context of a merger investigation (cf. IP/14/1222). The background to these proceedings was the notification of a planned merger between the Swedish Munksjö AB and a division of the Finnish Ahlstrom Corporation in October 2012.

Investigative proceedings following incorrect information

In Phase II of the merger control proceedings, the Commission found that the undertakings had initially provided information on the relevant market and their market shares which differed significantly from the information in internal documents which were later provided, in which the estimations for the size of the relevant market were much lower and the companies’ own market shares were much higher. Nonetheless, the merger was approved in May 2013. Due to the submission of incorrect information, however, the EU Commission initiated an investigation and sent the undertakings concerned a “statement of objections” in May 2014. due to the incorrect information on the relevant market and market shares.

Potential fines depend on outcome of intended concentration

The legal background to the proceedings is Article 14 of the Merger Control Regulation (Council Regulation (EC) 139/2004), which gives the Commission the power to impose fines of up to 1% of the aggregate global turnover of the concerned undertakings if these have at least negligently provided incorrect, misleading or incomplete information in a notification or do not provide information within the required time limit. As the above example shows, it is irrelevant in this respect whether false information had an impact on the actual outcome of the procedure. The amount of the fine is based on the type, gravity and duration of the infringement, whereby the Commission always considers incomplete or incorrect information in the Form CO to be “serious infringements”. Voluntarily admitting to the infringement and later cooperation with the Commission can lead to a reduction in the fine. If incorrect information is provided, each undertaking involved is liable for the information it has provided; the specification of a single joint representative does not make any difference to this. The limitation period for those type of infringements is three years.

Significant fines can also be imposed by the Federal Cartel Office

In Germany, Sec. 81 of the German Act Against Restrictions of Competition gives the Federal Cartel Office the power to impose administrative fines on undertakings and natural persons if they fail to notify a merger correctly or completely. The fine for intentional or negligence infringements is up to 100,000 Euros. If, however, information has been provided with the intention of preventing a prohibition of the merger, fines can be imposed of up to 1 million Euros on natural persons and of up to 10% of aggregate turnover in the preceding year on undertakings of associations of undertakings.