EU Law and Practice Contributed by: Porter Elliott, Catherine Gordley and Niharika Parshurampuria, Van Bael & Bellis
transaction or if they implement a transaction before receiving clearance. The Commission has become increasingly willing to impose large fines for gun-jumping and other proce - dural violations, with the following examples. • In July 2023, it imposed the largest fine to date (EUR432 million, corresponding to 10% of aggre - gate worldwide turnover) on Illumina for an espe - cially blatant violation of the standstill obligation in relation to its acquisition of GRAIL (however, this fine has since been annulled by the Court of Jus - tice – see 2.1 Notification ). • Previously, the largest gun-jumping fine was EUR124.5 million, imposed on Altice for imple - menting its acquisition of PT Portugal before noti - fying the transaction (this fine was reduced by the Court of Justice to EUR115.5 million on appeal). • Other recent gun-jumping fines range between EUR20 million and EUR30 million, including EUR28 million on Canon/Toshiba Medical Systems Corpo - ration in 2019; EUR20 million on Marine Harvest/ Marpol in 2014; and EUR20 million on Electrabel/ Compagnie Nationale du Rhône in 2009. 2.3 Types of Transactions The EUMR only applies to “concentrations” – ie, mergers, acquisitions of control and certain “full- function” joint ventures (JVs). As a rule of thumb, in order for a transaction to be considered a concentra - tion, there should be a change in the nature of control of an undertaking (see 2.4 Definition of “Control” ). How this change in control is brought about (whether through a purchase of assets or shares, or by other means) is immaterial. Purely internal restructurings or reorganisations that do not lead to a change of control do not qualify as concentrations within the meaning of the EUMR. 2.4 Definition of “Control” The EUMR defines “control” as rights, contracts or other means which, together or separately, confer the possibility of exercising decisive influence over an undertaking. Such control may be held solely (ie, by one undertaking) or jointly (by two or more under - takings). The acquisition of control, including through changes in the nature of control (eg, from sole to joint,
or vice versa), will generally constitute a concentration under the EUMR. Sole Control The classic example of an acquisition of sole control is where Company A acquires 100% of Company C. However, sole control can also arise where Company A acquires less than 100% of Company C, provided that A’s stake in C allows A to determine, on its own, the key strategic commercial decisions of C. This might be the case, for example, where all such deci - sions are to be taken by a simple majority vote of C’s board of directors and A is entitled to appoint the majority of the directors of C’s board. The above are examples of “positive” sole control (where A is able to take strategic commercial deci - sions relating to C on its own). Sole control can also be “negative”. This is where A does not have the power to take strategic commercial decisions relating to C on its own but is the only shareholder of C with the power to veto such decisions. Joint Control Joint control exists where two or more undertakings have the possibility of exercising decisive influence over another undertaking. In this context, decisive influence normally means the power to block deci - sions. A typical example of joint control would be a 50:50 joint venture (“C”), with both shareholders (“A” and “B”) having veto rights over key strategic decisions of C, such as the approval of C’s business plan or budg - et, or the appointment of C’s senior management. In such a situation, as A and B must reach a consensus in determining the commercial policy of C, they are considered to jointly control C. Veto rights that are of the kind typically granted to minority shareholders for the preservation of their basic shareholder interests, such as a veto over changes to C’s corporate statute or the liquidation of C, would not normally confer con - trol in the absence of other factors. Both sole control and joint control may be de jure (eg, based on contractual rights set out in a shareholders’ agreement) or de facto (eg, as a result of strong eco - nomic links or other factors that confer the possibility
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