EU General Court upheld EUR 20m fine for failure to notify acquisition

By judgement of 26 October 2017, the General
Court (EU), rejected the appeal by the
Norwegian company Marine Harvest ASA, and upheld the European Commission’s fine in the amount of
EUR 20m.

The fine was imposed on
Marine Harvest for failing to notify its acquisition of Morpol ASA in
accordance with the EU Merger Regulation, and closing the transaction prior to
receiving the European Commission’s approval.

Marine Harvest and the Morpol
ASA, then listed on the Oslo Stock Exchange, were both active in the farming
and primary processing of salmon. Marine Harvest entered into an agreement to
acquire 48.5% of Morpol’s shares from Morpol’s two largest shareholders on 14
December 2012. The acquisition triggered a mandatory public offer under
Norwegian law, which closed on 12 March 2013. This resulted in Marine Harvest
holding 87.1% of the shares in Morpol. We quote from the summary of the
decision:

“The Commission, first of all, considered
that the applicant had acquired de facto sole control of Morpol after the
closing of the December 2012 Acquisition because the applicant was highly
likely to achieve a majority at the shareholders’ meetings, given the size of
its shareholding (48.5%) and the level of attendance of other shareholders at
shareholders’ meetings in previous years.”

“The Commission further considered that the
December 2012 Acquisition did not benefit from the exemption under
Article 7(2) of Regulation No 139/2004. In that regard, it noted that
Article 7(2) of Regulation No 139/2004 applied only to public bids or
to a series of transactions in securities by which control within the meaning
of Article 3 of Regulation No 139/2004 was acquired ‘from various
sellers’.”

Thus, the entire acquisition could not be
considered as one single concentration even if the initial acquisition
triggered a mandatory public offer. The fact that Marine Harvest did not
exercise its voting rights in Morpol, and had kept Morpol as an entity separate
from the applicant during the merger review process, was seen as mitigating circumstances
but not a sufficient defence. The judgement
shows that failure to comply with the EU Merger Regulation can have significant
financial consequences. If a transaction does not have an EU-dimension, the
situation will be the same under national law.

Erlend Balsvik, Corporate
and M&A specialist

Harald Evensen,  Competition law specialist