Antitrust

2 2 Such aggressive enforcement of procedural rules makes merger control more difficult and more risky to manage at a time when foreign investment control and substantive merger review are also tightening. GUN-JUMPING Most merger control regimes require parties to await clearance before they execute a notifiable transaction (the standstill obligation). Failure to comply with this obligation is called gun-jumping and can lead to significant fines. While the EU and U.S. competition authorities have remained active in enforcing gun-jumping cases, 1 other competition authorities across the world have started focusing on gun-jumping enforcement. For example, at the time of writing, the Chinese competition authority has published six penalty decisions related to gun-jumping in 2018, and publicly announced 17 gun-jumping cases in 2017. China clearly ramped up its enforcement against non-notifiers, not just imposing fines but also 'naming and shaming' infringing companies. In Japan in 2016, the Japan Fair Trade Commission (JFTC) formally criticized the two-step structure used in Canon/Toshiba Medical Systems (TMS), whereby Canon used a so-called 'warehousing' structure involving an interim buyer, which allowed it to acquire TMS prior to obtaining the relevant merger approvals. 2 Even though the JFTC did not impose a penalty on Canon, the public announcement served as a warning to others contemplating similar structures. Other national competition authorities such as Denmark, Austria, Greece, Lithuania, Romania, Hungary, Portugal, Moldova, Philippine, Indonesia, India, Mexico and Brazil have also been active in enforcing gun-jumping in the last year. Even in jurisdictions without a standstill obligation in their merger control regimes, procedural rules are being more strictly implemented. For example, in July 2018, the Australian competition authority brought proceedings for the first time for gun-jumping, against Cryosite Limited in relation to its entry into an asset sale agreement with Cell Care Australia Pty Ltd. The majority of gun-jumping cases involve straightforward failure to notify. There have, however, also been more subtle cases where authorities have paid closer attention to whether merging parties, between the signing and closing of the deal, have started to integrate part of the deal too early. This is what happened in the European Commission's Altice case, attracting one of the biggest fines ever for gun-jumping (almost €125 million). The EC concluded that Altice gave instructions on the marketing campaign of the target, benefitted from a sales and purchase agreement with 'ordinary course' business covenants that went beyond what was necessary and were not sufficiently caveated by materiality. Further, Altice had sought detailed commercially sensitive information outside a clean team arrangement. Together these things amounted to an exercising control prior to clearance and hence gun-jumping. Similarly, the U.K. Competition and Market Authority (CMA) imposed a £100,000 fine in June 2018 against Electro Rent for the termination of the lease for its U.K. premises in violation MERGER CONTROL 03 A G E N C I E S , I N C L U D I N G T H E E C , H A V E B E C O M E M O R E R E C E P T I V E T O W A I V E R R E Q U E S T S F R O M T H E S T A N D S T I L L O B L I G A T I O N O R W O R K I N G W I T H PA R T I E S T O S P E E D U P C L E A R A N C E I N U N P R O B L E M AT I C CAS E S Tougher Implementation of Procedural Rules in Merger Control

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