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The European Commission (EC) has fined multinational telecommunications company Altice €124.5 million for taking control of PT Portugal before obtaining approval from the competition authority. That is how the EC’s investigation ends; in May 2017, the commission addressed a statement of objections to Altice, considering that there was evidence it had breached the merger regulations.

As we explained in this post, Altice notified the EC of its intention to acquire the Portuguese operator in February 2015, and two months later, the operation was authorized subject to conditions. The EC expressed its concern over a possible price increase on the market: at the time of the notification, Altice’s Portuguese subsidiaries were competitors with PR Portugal for Portugal’s telecommunications services and the merger could have reduced Altice’s competition pressure excessively. Therefore, the approval was conditional on Altice’s divestment of its Portuguese subsidiaries.

After its investigation, the EC concluded that Altice breached its obligations with it before the approval decision was issued and even before notification of the operation

According to the EC, certain provisions of the purchase agreement resulted in Altice acquiring the legal right to exercise decisive influence over PT Portugal, by Altice (i) acquiring veto rights over decisions concerning PT Portugal’s ordinary business, and (ii) giving PT Portugal instructions on its marketing campaign and receiving commercially sensitive information about PT Portugal. Therefore, and considering that Altice was perfectly aware of its standstill obligation (the obligation to suspend the operation until the competition authorities give their approval) and that its breach was “at least, negligent,” the EC fined Altice €124.5 million.

The high fine is proof of the serious consequences of breaching competition law in the case of mergers. Remember that Facebook was also fined €110 million recently for including “misleading information” in the notification process concerning its acquisition of Whatsapp (as we inform here).

Altice, which declared it would appeal the fine in the EU courts, had already been fined €80 million for gun jumping in 2016 for its acquisition of the telecommunications company SFR. In that case, the parties notified of the operation and waited for its approval, but the French Competition Authority considered that the parties cooperated too closely between the signature and closure, because, among other things, they exchanged strategic information.

Based on the above, it is advisable that companies participating in a merger are extremely careful during the period between signature and closure. The standstill obligation also exists in national law and the Spanish Competition Authority has imposed several fines in the past for breach of this obligation.

Click here to read the EC’s press release.

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