Traditionally, the time between the years is not known for many interesting decisions and developments in antitrust law. However, it is noteworthy that in the first days of the new year, three decisions were published in which three major competition regulators imposed fines for violations of the merger control standstill obligation. These decisions serve as a reminder to companies that the risks associated with the prohibition to close prior to merger control clearance must be taken seriously, no matter how they may try to ignore, circumvent or mitigate them.
Since the year has just started, here is a quick recap: The “standstill obligation” in merger control refers to a legal obligation that prevents parties to a notifiable transaction from closing their deal until the relevant regulators have completed their review and granted approval. This standstill obligation is meant to ensure that antitrust regulators have enough time to properly assess the potential competitive effects of a transaction before any irreversible steps are taken by the parties. Transactions that breach the standstill obligation are generally deemed invalid until clearance, and regulators can impose fines on the parties involved. This consequence was demonstrated by three decisions from three different regulators in the new year.
The secret way
China has issued the first gun-jumping decision of the new year. The Chinese regulator imposed a fine of more than EUR 200,000 on a snack chain operator that acquired one of its competitors without notifying the deal to the regulator at all.
What makes this case noteworthy – and a useful lesson for companies – is the timeline and the way the regulator became involved. The parties apparently signed their transaction documents in mid-November 2023 and closed the deal just one day later, as indicated by public registers. The regulator only got involved after receiving tip-offs, but did not initiate an investigation until August 2024. This underscores the risk that third-party complaints can spark a regulator’s interest, even after a considerable delay.
The way-too-late way
Another decision comes from the Argentine regulator, where French energy company TotalEnergies was fined for gun-jumping. This case dates back to a deal closed in December 2017.
While the deal was filed to the regulator and was unconditionally approved, the parties missed the notification deadline by 1,381 business days. The fine was calculated on this basis, meaning that for every day of delay, TotalEnergies had to pay a fine of USD 338, resulting in a total fine close to USD 500,000. This highlights a crucial point: when it comes to making up for a missed notification, every day matters.
The already-involved way
Last but certainly not least, the US Federal Trade Commission imposed a record fine of USD 5.6 million on oil companies for illegal pre-merger coordination. Back in 2021, Verdun agreed to acquire its competitor EP in a USD 1.4 billion deal which was notifiable under the US merger control regime. Shortly after signing the transactional documents (but before clearance and closing), the target authorized the acquirer to take over operational and decision-making control over the target’s day-to-day business. In fact, the parties then started to already coordinate on customer contracts and prices. When determining the fine, the FTC also considered the significant competitive concerns raised by the merger investigation, which ultimately led to the deal being cleared only subject to remedies.
No way out
At first glance, these three cases may seem unrelated, but they share a crucial lesson: filing obligations worldwide must be taken seriously. Even if some deals seem less in the spotlight than others, there is always a risk that someone will oppose the deal and lodge a complaint with the relevant regulator. If a deal has been missed for notification, companies should make the necessary filings as soon as the oversight is noticed. Lastly, trying to influence the day-to-day decisions of a target company before receiving regulatory approval clearly crosses the line –especially in cases that are substantively complex.
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