Insights | April 25, 2018

Commission fines Altice EUR 125 million for gun-jumping

The European Commission has on 24 April 2018 made its decision in the case Altice gun-jumping case where it had alleged (as reported earlier) that Altice, a multinational cable and telecommunications company, had violated the standstill obligation laid down in the EU Merger Regulation (EUMR). Altice has been fined EUR 125 million for implementing its acquisition of the Portuguese telecommunications operator PT Portugal before notification and approval by the Commission.

In February 2015, Altice notified the Commission of its plans to acquire PT Portugal. The transaction was conditionally cleared by the Commission on 20 April 2015, subject to the divestment of Altice’s businesses in Portugal at the time, Oni and Cabovisão. In May 2017, the Commission addressed a Statement of Objections to Altice detailing its concerns that Altice implemented its acquisition of PT Portugal before obtaining the Commission’s clearance, and in some instances, even before its notification of the merger.

The Commission bases its conclusions on the purchase agreement between Altice and PT Portugal, which according to the Commission lead to Alice acquiring the legal right to exercise decisive influence over PT Portugal, for example by granting Altice veto rights over decisions concerning PT Portugal’s ordinary business. In addition to Altice acquiring the legal right to exercise decisive influence, the Commission found that Altice had in fact used that right by, for example, instructing PT Portugal on carrying out a marketing campaign and by seeking and receiving detailed commercially sensitive information about PT Portugal.

The Commission’s decision underlines the ongoing importance of companies planning a transaction to first assess notification obligations carefully and second to ensure that until all the required approvals are granted, the companies concerned remain independent from each other. It is clear that integration planning is an integral part of any transaction and must be able to take place in between signing and closing of a deal. However, today’s decision shows that the line between planning and actually putting into action is a strict one and should be closely monitored.