Op-Ed: “Marine Harvest: where there’s smoke, there’s gun-jumping” by Miguel Sousa Ferro
Yesterday, on 4 March 2020, the Court of Justice of the European Union rendered its judgment in the Marine Harvest v Commission case (C-10/18 P), upholding the Commission’s decision and the General Court’s (GC) Judgment in T-704/14.
By decision of 23 July 2014, in case COMP/M.7184, the Commission imposed on Marine Harvest (now Mowi), a Norwegian undertaking, a fine of 20 million EUR for gun jumping (10 million EUR for infringement of the standstill obligation in Article 7(1), and 10 million EUR for infringement of the notification requirement in Article 4(1) of Regulation 139/2004), relating to a horizontal concentration in fish farming.
Marine Harvest acquired, on 18 December 2012, 48,5% of the share capital of Morpol. As required by Norwegian law, a public offer was made for the remaining shares, on 15 January 2013, and upon its conclusion, on 12 March 2013, Marine Harvest owned 87,1% of Morpol’s share capital. The Commission argued Marine Harvest acquired de facto sole control over Marpol on 18 December 2012, because it was highly likely to achieve a majority at the shareholders’ meetings. The GC and the Court of Justice confirmed the Commission’s view.
(i) Scope of applicability of the exemption of Article 7(2) for public bids
The first ground of appeal was, arguably, not particularly challenging. But it did provide legal certainty for future cases where public bids are required by law following acquisitions of minority controlling shareholdings. Marine Harvest argued the concentration benefited from the Article 7(2) exemption because it viewed it as a two-stage single concentration, the initial share purchase being conditioned (by law) on the public bid. But this was predicated on ignoring ‘overkill’ in the share purchase. The public bid was irrelevant for the acquisition of control, which had already occurred de facto.
The Court of Justice noted (paragraphs 42-54) that only recital 20 mentions the concept of ‘single concentration’, and does not provide an exhaustive definition thereof. Recitals have no legally binding force, they can only help interpret the rules of the Regulation. The recital cannot lead to a contra legem interpretation of the rules of the Regulation, and it cannot be used to extend the scope of the exception found in Article 7(2). Under Article 3, there is a concentration as soon as parties implement operations contributing to lasting change in (de jure or de facto) control of the target undertaking. Transactions which are irrelevant for the change of control are irrelevant for the identification of a concentration. As the Court summarised it, ‘the appellant cannot maintain that a transaction which is not necessary to achieve a change of control of an undertaking, such as a public bid launched after the acquisition of control of the target undertaking, falls within the concept of “concentration” referred to in Articles 3 and 7 of Regulation No 139/2004’ (paragraph 54). The Court also rejected (paragraphs 56-64) that a different outcome was required by a teleological interpretation of Article 7(2). As an exception, this rule must be interpreted narrowly.
(ii) Principle of ne bis in idem, set-off principle, and principle governing concurrent offences
The outcome of the second part of the debate was less obvious. The Commission imposed two separate (and identical) fines, one for failing to notify prior to implementation (Article 4(1)), and one for implementing prior to authorisation (Article 7(1)). The Court found this did not infringe the above-mentioned principles, but Advocate General Tanchev’s Opinion proposed a different outcome.
The debate before the Court of Justice has two different levels. One concerns the clarification of the specific issue. In that regard, it seemed a rather unpragmatic and superfluous debate, at least in what concerns the outcome of future cases. If the Court had required the Commission to impose a single fine for gun-jumping, instead of a fine divided in two components, expectedly, the amount of the future single fines would be the same as the sum of the two components would have been.
However, the judgment provides important clarifications of a few novel issues relating to the principles in question, which will be useful in a broader set of circumstances.
It clarified that the non bis in idem principle does not apply to penalties imposed by the same authority in a single decision (paragraph 78). This involved distinguishing case C-617/17Powszechny Zakład Ubezpieczeń na Życie (paragraphs 79-80).
The Court’s clarifications on whether the Commission should have considered the first penalty when determining the second were less clear, because of these proceedings’ specificities (paragraphs 83-84).
As for the issue of concurrent offences, the Court of Justice indicated that neither of the two infringements in question were deemed by the legislator to be more serious than other, and implicitly confirmed that the principle of concurrent offences is also applicable in EU Competition Law (paragraphs 98-100 and 117). Also, concerning the obligations to notify and to abstain from implementing the concentration pursue autonomous objectives, the second can be infringed without the first having been infringed, and the Regulation itself provides separate fines for the breach of these provisions (paragraphs 101-105). In this case, therefore, it cannot be concluded that the Regulation requires an infringement of Article 7(1) to subsume the infringement of Article 4(1) (para 107). Somewhat surprisingly, the Court even considered that to find otherwise would diminish the effectiveness of these provisions, and that there would be no need for Article 14(2)(a) (paragraphs 108-110). Finally, the Court emphasised the distinction between an instantaneous infringement (Article 4(1) and a continuous infringement (Article 7(1)) as a potentially important component in the application of the concurrent offences principles (paragraph 115).
Miguel Sousa Ferro is a Professor at the University of Lisbon Law School and at the European University in Lisbon, and Managing Partner of a law firm in Lisbon. His recent publications include ‘The EU Antitrust Damages Directive: Transposition in the Member States’ (Oxford University Press), and ‘Market Definition in EU Competition Law’ (Edward Elgar).