On 26 October 2017, the General Court dismissed an appeal by Marine Harvest against a € 20 million fine imposed on it by the Commission for implementing its acquisition of sole control over Morpol without first obtaining approval under the EU Merger Regulation (see VBB on Competition Law, Volume 2014, No. 7, available at www.vbb.com).

By way of background, Marine Harvest acquired 48.5% of Morpol in December 2012. Later, Marine Harvest acquired the remaining shares of Morpol through a public bid.  This second acquisition of shares was notified to the Commission, which conditionally cleared it in August 2013. However, in January 2014, the Commission informed Marine Harvest that it was conducting an investigation into whether a notification should have been made at the time of the December 2012 acquisition.

On 23 July 2014, the Commission decided that the December 2012 acquisition gave Marine Harvest de facto sole control over Morpol and should have been notified to, and approved by, the Commission prior to the acquisition of that shareholding. In particular, the Commission found that the other shareholdings in Morpol were widely dispersed and that this enabled Marine Harvest, by virtue of its 48.5% stake, to obtain a stable majority at shareholder meetings, which in turn gave Marine Harvest control over Morpol. The Commission fined Marine Harvest € 10 million for failure to notify prior to acquiring control (Article 4(1) of the EU Merger Regulation) and € 10 million for breach of the standstill obligation (Article 7(1) of the EU Merger Regulation).  

The EU Merger Regulation imposes a standstill obligation on merging parties that requires them to refrain from implementing a transaction prior to the deal receiving clearance from the Commission. However, Article 7(2) of the EU Merger Regulation provides an exception to the standstill obligation if a party (a) acquires control of a company through a public bid or (b) acquires shares in a series of transactions from various sellers – so long as the transaction is notified without delay and the voting rights attached to the acquired shares are not exercised or only exercised after a formal derogation is obtained from the Commission. In its appeal against the Commission's decision, Marine Harvest argued that Article 7(2) of the EU Merger Regulation applied to the December 2012 acquisition of shares as that acquisition was conditionally linked to the later public bid for the remaining shares in Morpol.  Essentially, Marine Harvest claimed that its acquisition constituted a single transaction taking place in two stages, which was duly notified in a timely manner at the time of the second stage of the transaction.  According to Marine Harvest, it was only at the time of the second stage that its obligation to notify the transaction and obtain approval arose.

In a lengthy judgment, the General Court rejected this argument. First, the General Court held that the December 2012 acquisition was not a public bid but rather an acquisition of shares by a single private purchaser which had already closed before the public bid was submitted in January 2013. Second, the General Court held that control was not acquired from various sellers but was rather acquired from just one seller.  As such, Article 7(2) did not apply. As a result, the General Court found that although Marine Harvest did not exercise control following its acquisition of 48.5% of the shares in Morpol, the possibility of decisive influence had been acquired in "the formal sense", and that this required notification to the Commission of the December 2012 acquisition. On this basis, the fines imposed by the Commission were justified.

The General Court's judgment serves as a warning to merging parties to carefully assess not just whether control is being acquired but when control is being acquired.

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