European Commission's Altice decision clarifies the rules on gun jumping



On 26 July 2018, the European Commission (“Commission”) published decision imposing a fine of EUR 124.5 million on Altice, a multinational cable and telecoms company. The Commission found that Altice either intentionally or at least negligently breached the standstill obligation enshrined in Article 7(1) of the EU Merger Regulation (“EUMR”) and the notification obligation in Article 4(1) EUMR. The decision contains important clarifications for companies on how to structure their operations before obtaining merger control clearance.

The Commission found that multiple provisions of the Transaction Agreement granted Altice the possibility to exercise decisive influence over the target PT Portugal that could not be justified with value preservation. In particular, the Transaction Agreement afforded Altice the possibility to (i) influence PT Portugal's senior management, (ii) influence PT Portugal 's pricing policies and (iii) influence PT Portugal 's entry into, termination or modification of contracts. Altice and PT Portugal also exchanged commercially sensitive information to a degree that was not justified with the necessity to preserve the value of PT Portugal before clearance and closing.

Control appointment of Senior Management. The Commission considered that having a veto right over the appointment, dismissal and changes to the terms of employment of senior management went beyond what was necessary for the purposes of value preservation. Control over personnel is normally justified with value preservation when is affects only certain key employees instrumental to the business, or in order to prevent material changes to the cost base of the business.

Pricing policies. The Commission concluded that having a veto right over almost all commercial actions with a low monetary threshold was not justified. In particular, the Commission considered that the requirement to obtain Altice's consent prior to modifying the pricing policies and standard offer prices inherently reduced its discretion and ability to act independently on the market.

Influencing the contract negotiations. Altice's consent was also required to terminate, modify or enter into contracts with very low monetary thresholds. In practice Altice was directly involved in numerous contract negotiations such as monitoring and implementation of the Post-paid campaign, renewal of the distribution contract of Porto Channel, selection of PT Portugal’s radio access network suppliers, contract negotiations with VOD provider Cinemundo and the distributor of DOG TV. The Commission clarified that a contract falling within the ordinary course of business is unlikely to have a material impact on the value of the target and therefore cannot be justified. However, an issue outside the ordinary course of business could also be not relevant to maintain the value of a target. The Commission requires a detailed analysis in the context of the target's business.

Exchange of commercially sensitive information. In addition to the provisions of the Transaction Agreement, the Commission also claims that the parties exchanged commercially sensitive information prior to the date of the clearance decision. Such exchanges occurred during the meetings between the management of the two companies and on an ad-hoc basis. The problematic exchanges concerned granular, non-historic, strategic information such as performance indicators, revenues and costs broken down by category, margins divided by type of clients, past and especially future promotions, advertisement campaigns and marketing activities. The Commission especially pointed out that no safeguards were put in place to ensure the preservation of competition, such as clean teams or other protocols with regard to commercially sensitive information. The Commission concluded that the fact that Altice requested and received such strategic detailed information contributes to demonstrating that Altice exercised decisive influence over certain conducts pertaining to PT Portugal.


The Commission concluded that legal rights contained in the Transaction Agreement and the exchange of commercially sensitive information gave Altice the possibility to exercise a decisive influence over Target's business beyond what was necessary to guarantee maintenance of its value between signing and closing date. The Commission also presented evidence that Altice actually did take advantage of this possibility and exercised a decisive influence on many occasions. However, the Commission also concluded that the relevant legal test is whether Altice had the possibility to exercise decisive influence, not whether it actually exercised its veto right in a particular circumstance.


The Altice decision was issued before the European Court of Justice (“ECJ”) overturned the Danish competition authority’s decision on gun jumping in EY/KPMG case in May 2018. The ECJ assessed a narrower issue and found that termination of the cooperation agreement could not amount to gun jumping as it did not contribute to a lasting change in control of the target business. It remains to be seen how the Commission's decision and the ECJ ruling will be reconciled as Altice already announced it will appeal the Commission decision to the General Court.

This last Commission decision shows once again that hefty financial penalties for gun jumping are not only a theoretical risk. The detection risk and the possible fine exposure are vital and should always warrant available safeguards. Companies should ensure that the transaction documents are carefully assessed from a competition law perspective. Clean team solutions, clearly structured procedures and the appropriate documentation should be put in place before any exchange of sensitive information between.

Any Questions? Please contact: Alexander Israel or Dr. Fabian Hübener
Practice Group: Antitrust & Competition