Mowi can be fined twice for “gun-jumping” rules EU’s highest court

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“This case is a stark reminder that parties involved in transactions should keep an eye on procedural merger rules”. Court of Justice of the EU (CJEU) has ruled that salmon farmer can now be fined two EUR 10 million fines for related infringements of merger control rules.

In 2014, Mowi was fined two EUR 10 million fines by the European Commission for failing to notify it of its plans to acquire a minority stake in a rival Morpol before closing the transaction.

The term “Gun jumping” occurs when merging parties are competitors and co-ordinate their competitive conduct prior to the actual closing of the transaction.

Pinsent Masons explained that Mowi challenged the Commission’s decision in the EU’s General Court, but in 2017 the court dismissed the appeal. The case came before the Court of Justice of the European Union (CJEU) for consideration after the salmon farmer raised a further appeal, claiming the General Court had erred in law in reaching its verdict.

Furthermore, court advisor Advocate General argued last September that Mowi was fined twice for the same thing, and that a lower court misapplied the law, and therefore it should have been halved in the long-running court case.

Law360 now reports that the EU’s top court has upheld both multi-million fines.

Analysing the case on Pinsent Masons, lawyer competition law expert Laura Stammwitz wrote that the ruling was “surprising” and urged businesses to be more attentive of procedural merger rules.

“To the surprise of many, the court did not follow its advocate general and allows the Commission to fine merging parties twice under the current legal framework, for failure to notify and early implementation of a transaction,” Stammwitz said.

“This case is a stark reminder that parties involved in transactions should keep an eye on procedural merger rules. In practice, an early assessment of where to notify and the creation of appropriate safeguards for due diligence activities and integration planning are vital to minimise the risk of huge fines. Even where a minority stake is acquired, the parties should carefully examine whether this actually confers sole control upon the acquirer and therefore has to be notified,” she added.