The path was cleared for financial penalties to be administered more liberally in cases of ‘gun-jumping’ during mergers and acquisitions, as confirmed by the European Court of Justice (ECJ) on November 9, 2023. The ruling came as a result of an appeal brought forward by Altice, a multinational telecommunications corporation found guilty of infringing standstill rules and failing to notify about its acquisition of PT Portugal.
According to the specifics of the case released by White & Case LLP, two separate fines were handed to Altice by the European Commission (EC). The ECJ not only validated this decision of double penalization but also upheld the EC’s expansive interpretation of what constitutes ‘gun-jumping’ – any pre-emptive actions taken by the acquiring firm prior to obtaining clearance from relevant authorities.
This confirmation by the ECJ increases the risks for corporations and firms planning on mergers and acquisitions, as premature implementation risks substantial financial penalties. It is a stark reminder that such firms should always wait for necessary legal clearances before taking any steps towards implementing the intended transaction, regardless of how certain or necessary they might seem.
Altice was ordered to pay two separate fines, one for breaching standstill obligations, and another for failing to notify EC about its acquisition of PT Portugal. While the ECJ confirmed the EC’s right to impose these double penalties, it did step in to reduce the fine for failure to notify by €3.1 million.
This ruling is a fortification of the EC’s ability to impose separate fines for each individual infringement detected, thereby strengthening its regulatory powers in the domain of mergers and acquisitions.
In a world where large enterprises are constantly evolving and growing through mergers and acquisitions, this ECJ ruling asserts the importance of stringent compliance with merger control regulations and the gravity of the potential repercussions of ‘gun-jumping’.