The eu oecd paper on gun-jumping – kluwer competition law blog 9gag


Gun-jumping is a “hot topic” and increasingly on the radar of competition authorities in Europe and across the globe. As part of the OECD roundtable discussions, the European Union (and a number of other countries) recently submitted a note on the suspensory effects of merger notifications and gun-jumping (Article 7 of the EU Merger Regulation ( EUMR)). The note is helpful as it gives an overview of the legal framework, the relevant gas and supply locations EU decisions and investigations as well as some guidance on failure to notify and gun-jumping conduct. However, a number of practically-relevant gun-jumping issues are not addressed in the note which shows that additional guidance may i gas shares be needed from the European Commission ( EC).

In para 5 the paper briefly makes reference to the ECJ’s EY / KPMG judgment according to which EUMR gun-jumping only captures “ a transaction which, in whole or in part, in fact or in law, contributes to the change in control of the target undertaking”. The note states that the EY / KPMG judgment confirms that both a full and partial implementation of a deal are caught by the EU stand-still obligation, but no further views on the implications for the EC’s post-EY / KPMG gun-jumping practice are given. This would however been helpful, in particular as the EC took a much broader gas and bloating after miscarriage view on what constitutes gun-jumping during the EY / KPMG court proceedings (including measures that “ significantly affect the prevailing competitive situation”; see para gas key bolt carrier 42 of AG Wahl’s opinion of 18 January 2018). The following points would have been of interest:

• It would have also been helpful if the note had set out the EC’s post-EY /KMPG understanding of “grey areas” such as a joint customer outreach or joint negotiations with future suppliers as well as traditionally less obvious electricity jokes risk areas such as IT and HR which merging parties and advisers have in practice been cautious about in light of the recent uptake in gun-jumping enforcement. Uncertainty also exists with regard to a partial or full purchase price payment prior to closing as there are deviating views from EC Case Teams.

Para 13 of the note mentions the Altice / PT Portugal case in which the EC imposed a record fine of €124.5 million on Altice for violating gun-jumping rules. Specifically, the EC found Altice’s pre-closing rights under the SPA to veto and intervene r gas constant kj in the target’s business with regard to senior management, pricing strategies and certain commercial contracts, as well as its actual exercise of such rights, were too far reaching. In addition, according to the EC, the companies also extensively exchanged competitively sensitive information without the appropriate safeguards being in place (clean teams etc.). It is helpful that the EC established gas tax in new jersey certain gun-jumping principles in Altice which are mostly also mentioned in the note (see paras 14 et seqq. and 33):

• The EC acknowledges that SPA pre-closing covenants that intend to protect the value of the target in the interim period are both common and appropriate (para 32 of the note). However, according to the EC, any intervention rights that give the acquirer the possibility to exercise decisive influence over the b games unblocked target are only permitted if they are directly related and necessary for the implementation of the transaction (reference is made to the EC’s Ancillary Restraints Notice), see paras. 70 et seqq. of the Altice decision.

• Para 32 of the EU note mentions that veto rights relating to ordinary course of business of the target it will likely not be relevant for preserving the target’s value. However, according to the EC, even if the veto right falls outside of the ordinary course of the target’s business it may still not be relevant for electricity online games preserving the target’s value and careful analysis is required (para 99 of the Altice decision). Presumably this relates to particularly sensitive areas such as pricing and innovation, but unfortunately the note is silent on this point.

• The EU note is also silent on the the materiality thresholds for commercial contracts above which veto rights apply, e.g. in relation gas utility bill to debt commitments, liability or MA activity of the target. According to the EC in the Altice decision, these must be based on objective criteria such as the size and scope of the target’s activities by reference to (i) the total transaction value, (ii) global target revenues generated by the target and (iii) the value gas variables pogil packet answers of the target’s contracts seen by the acquirer in the data room (paras 106, 166, 235 of the decision).

• Setting thresholds by reference to transaction value and target revenues does not seem very practical and may lead to unnecessarily narrow intervention rights of the electricity and magnetism ppt acquirer in order to avoid gun-jumping risks. Alternatively, one could, for instance, for MA transactions done by the target look at the transaction values of the last few years and calculate an average figure in order to determine the threshold.

• In the Altice decision, the EC also considered the fact that the target business had pushed back on the materiality thresholds during the transaction negotiations, claiming that compliance would be burdensome, as evidence that they enabled Altice gas mask tattoo to direct the target’s ordinary course activities pre-closing (para 96). One could however take the view that such “forth and back” between the parties (as well as the negotiated outcome) is a normal part of the commercial negotiation process and not necessarily an indication for gun-jumping.

• Paras 15 and 33 of the EU note mention that the exchange of competitively sensitive information between the parties is legitimate if the appropriate safeguards are put in place. Such safeguards can be clean teams, confidentiality agreements and electricity around the world NDAs (see e.g. para 53 of the Altice decision). Aside from the general point that such exchange would post-EY / KPMG normally not be considered gun-jumping it would however be useful to have more precise guidance on:

Given electricity projects for grade 6 that Altice has appealed the EC’s decision it can be expected that the EU General Court will take a view on some of the points, e.g. on gun-jumping exceptions for SPA pre-covenants under the ECJ’s formula and the EC’s classification of confidential information exchange as gun-jumping (even though the summary of Altice’s application does not seem particularly pronounced on these points).