Merger control: Divestiture due to incorrect information in merger control proceedings
The German Federal Cartel Office (FCO) recently discontinued divestiture proceedings against the French dairy group Savencia and the dairy Söbbeke due to incorrect information provided in merger control proceedings. Savencia (manufacturer of products including the cheese brands Bresso, Chaumes, Fol Epi, Géramont, Le Tartare, Saint Albray) had in 1999 acquired a holding in the dairy Andechser Molkerei. In 2011, the FCO issued its approval for the takeover of the dairy Söbbeke, Savencia’s competitor on the markets organic fruit yoghurt, natural yoghurt, organic fruit quark and organic beverages.
Savencia had in its merger control filing made incorrect statements on the market conditions and dairy group’s possibilities for exerting influence on the dairy Andechser Molkerei. The FCO initiated divestiture proceedings due to these incorrect statements. Its investigations showed that the two dairies Söbbeke and Ansdechser Molkerei achieved joint market shares of over 50 per cent on several product markets and that the merger therefore led to a significant impediment to effective competition on these markets.
Savencia had offered to sell this holding to the dairy Andechser Molkerei so that the FCO could discontinue proceedings without dissolving the concentration.
Obligation to provide comprehensive and correct information in merger control proceedings
Companies which file mergers with the FCO for clearance are obliged pursuant to sentence 5 of Section 39 (3) of the German Act Against Restraints of Competition to provide accurate and complete information. If a merger is approved by the FCO on the basis of incorrect information, it can – as was threatened in the case of the dairies Andechser Molkerei and Söbbeke – be dissolved by the FCO.
Threat of fines regardless of the outcome of merger control proceedings
Irrespective of the outcome of merger control proceedings, the FCO and the European Commission have the power to impose fines if incorrect or incomplete information is provided by the parties to a merger. Under the Merger Regulation, the EU Commission can impose fines of up to 1 per cent of aggregate worldwide turnover in the preceding fiscal year if these have when notifying a transaction – at least – negligently provided incorrect, misleading, incomplete information or not provided information in time. The FCO can pursuant to Section 81 of the German Act Against Restraints of Competition impose fines of up to 100,000 euros if the parties to a merger intentionally or negligently provide incorrect or incomplete information during merger control proceedings. Fines of up to 1 million euros can be imposed if the incorrect information has been provided with the intention of preventing the merger from being prohibited.
Any questions? Please contact: Hanna Boeckmann
Practice Group: Antitrust & Competition