The preliminary question was raised in an appeal by EY against a decision of the Danish competition authority to impose sanctions on EY for implementing a concentration before having obtained clearance (ie gun jumping). The concentration concerned the acquisition by EY of certain Danish KPMG companies.
However, before having obtained clearance, the KPMG companies concerned had announced that they were withdrawing from their cooperation agreements with KPMG International. Although the actual withdrawal happened only after obtaining clearance, the Danish competition authority nevertheless considered that the announcement of ending the cooperation agreement with KPMG International - which in practice was not without consequence as KPMG International also announced it would remain active in Denmark and several clients subsequently decided to switch to KPMG International - amounted to gun jumping.
Following EY’s appeal, the referring court - the Danish Maritime and Commercial Court - asked the ECJ to provide guidance as to what constitutes gun jumping.
The ECJ followed Advocate General Wahl’s opinion of 18 January 2018 in this respect and ruled that gun jumping can only occur in cases of actions contributing in whole or in part, in fact or in law, to a lasting change of control. In other words, where transactions - despite having been carried out in the context of the concentration - are not necessary to achieve a change of control, they do not constitute acts of gun jumping.
The ECJ moreover ruled that the fact that such transactions may produce effects on the market is irrelevant. Indeed, according to the ECJ, gun jumping does not occur simply because such transactions have effects on the market nor are effects on the market necessary for jumping the gun. The ECJ made in this respect a clear distinction between the rules on the prohibition of gun jumping (Article 7 Merger Regulation) and the rules regarding the prohibition of anticompetitive agreements or concerted practices (Article 101 TFEU). The ECJ was not asked to provide guidance as to whether EY’s behaviour constituted an infringement of Article 101 TFEU or not.
This Judgment provides much needed clarity on the rules of gun jumping which now only relate to actions that could (completely or partially) result in a change of control (which is less stringent than the obligation on merging parties to do nothing to implement the concentration and to simply continue business as usual). However, in practice, merging parties - especially actual or potential competitors - should still proceed with caution regarding actions not contributing to a change of control as these actions could still constitute an anticompetitive agreement or concerted practice.
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