European Commission Imposes €20 Million Fine for Failing to Notify a Merger

The following post comes to us from Sullivan & Cromwell LLP and is based on a Sullivan & Cromwell publication by Juan Rodriguez, Axel Beckmerhagen, Patrick Gorman.

On 23 July 2014, the European Commission fined Marine Harvest ASA €20 million for failing to notify its acquisition of Morpol ASA in accordance with the EU Merger Regulation and closing the transaction prior to receiving the European Commission’s approval. This is the first time the European Commission has imposed a fine in relation to a two-step transaction comprising a sale of a block of shares followed by a mandatory public bid for the remainder of the target’s shares. The level of fine is a further reminder that failure to comply with the EU Merger Regulation can have significant financial and reputational consequences.


Marine Harvest ASA (“Marine Harvest”) and Morpol ASA (“Morpol”) were both active in the farming and primary processing of Scottish salmon. Morpol’s shares were listed on the Oslo Stock Exchange. On 14 December 2012, Marine Harvest entered into an agreement to acquire 48.5% of Morpol’s shares from Morpol’s two largest shareholders. The acquisition closed on 18 December 2012, triggering a mandatory public offer under Norwegian law, which closed on 12 March 2013. This resulted in Marine Harvest holding 87.1% of the shares in Morpol. Marine Harvest acquired the remaining shares on 12 November 2013. Morpol was de-listed from the Oslo Stock Exchange on 28 November 2013.

Article 4(1) of the EU Merger Regulation (“EUMR”) requires transactions between parties meeting the revenue thresholds set out in Article 1 of the EUMR to be notified to the European Commission (the “Commission”) prior to completion. Furthermore, Article 7(1) of the EUMR provides a general “stand-still” obligation that requires transactions meeting the notification thresholds not to be completed before approval by the Commission.

Article 7(2) of the EUMR sets out a special stand-still obligation for public bids and allows completion to occur prior to the acquirer receiving the Commission’s approval, provided that the acquirer: (i) notifies the transaction to the Commission immediately following publication of the bid; and (ii) does not exercise voting rights attaching to the tendered shares prior to the Commission’s approval of the transaction.

Under Article 14(2) of the EUMR, the Commission may impose a fine of up to 10% of a party’s annual turnover for negligent or deliberate failure to comply with the notification and stand-still obligations.

Although Marine Harvest acquired control of Morpol without complying with these obligations, it began pre-notification discussions with the Commission shortly after the acquisition and formally notified the transaction to the Commission on 9 August 2013. The Commission approved the acquisition, subject to divestments, on 30 September 2013. [1]

The Commission’s Fining Decision

The Commission determined that by acquiring the 48.5% stake in December 2012, Marine Harvest had acquired de facto sole control of Morpol, and thereby breached the requirement under the EUMR not to complete the acquisition of control of Morpol prior to receiving the Commission’s approval.

In determining the gravity of Marine Harvest’s breach of the EUMR, the Commission noted that:

  • 1. Marine Harvest is a large European company with previous experience of the EUMR (Marine Harvest notified a transaction under the EUMR in 2005), and should have been aware of its obligations; and
  • 2. The infringement was particularly serious because the transaction raised substantive competition concerns and was approved only subject to a divestment remedy.

The Commission took account of the duration of the breach, being the time elapsed between Marine Harvest’s acquisition of control of Morpol on 18 December 2012 and its notification and the Commission’s approval in, respectively, August and September 2013.

The Commission also accepted two mitigating factors:

  • 1. Marine Harvest did not exercise the voting rights it acquired in Morpol prior to receiving the Commission’s approval; and
  • 2. Marine Harvest contacted the Commission shortly after completing the transaction to disclose what it had done.

Based on these factors, the Commission considered that a fine of €20 million, equivalent to less than 1% of Marine Harvest’s 2013 turnover, would be both proportionate and adequate to ensure sufficient deterrence.


This is the second fine by the Commission in just over five years for failure to notify a merger under the EUMR. In June 2009, the Commission fined Elactrabel (also €20 million) for failing to notify its acquisition of Compagnie Nationale du Rhône. That fine was upheld on appeal to the European Court.

The Marine Harvest fine is a further reminder of the financial and reputational risks in failing to notify and await the Commission’s approval of mergers, acquisitions and joint ventures under the EUMR prior to completing the transaction.

Marine Harvest is also important because it is a test case for how the Commission applies the EUMR stand-still obligation to transactions structured as an initial the sale of a significant block of shares in the target followed by a mandatory public offer for the remaining shares. To date, it has not been clear whether the Commission would apply the EUMR stand-still obligation for public bids to the first step in such transactions, thereby allowing completion of the sale of the block of shares to occur before the Commission has granted approval of the transaction. While that is the approach taken by certain national competition authorities in the EU, [2] the Commission has made clear in Marine Harvest that it applies the EUMR general stand-still obligation to the initial acquisition of the block of shares, and therefore will treat completion of that part of the transaction before approval as a breach of the EUMR.

Marine Harvest has indicated that it is likely to appeal the Commission’s decision. Until the outcome of the appeal in known, it is clear that acquirers will breach the EUMR if they complete the first step of a two-step acquisition which meets the EUMR filing thresholds before the Commission has granted approval.


[1] The Commission determined that the acquisition would result in significantly reduced competition in farming and primary processing of Scottish salmon, with the risk of price increases for Scottish salmon. To address the Commission’s concerns, Marine Harvest agreed to divest the majority of Morpol’s salmon farming business in Scotland.
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[2] For example, the Autorité de la concurrence in France.
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