Gun jumping


Author Definition



Most jurisdictions have adopted ex-ante merger control regimes, providing for mandatory pre-notification of concentrations above certain thresholds, together with an obligation not to implement them until the competent competition authority has cleared the transaction ("standstill obligation"). Gun-jumping encompasses any behaviour that infringes these closely related obligations by implementing the transaction either before its notification (“procedural gun-jumping”) or its approval (“substantive gun-jumping”). The term gun-jumping originated in sports and refers to athletes starting the race before the starting gun is fired. Gun-jumping has lately hit the headlines in the EU as some competition authorities have adopted stricter interpretations of those obligations and imposed staggering fines.



The concept of gun-jumping is not defined in EU competition Law. It refers to two related infringements of the EUMR: (i) the obligation to notify to the European Commission concentrations having an EU dimension prior to their implementation (Article 4(1)); and (ii) the obligation not to implement such concentrations until they have been approved (Article 7(1)); the Commission has granted a derogation from the standstill obligation (Article 7(3)); or the prescribed time limits have expired, and no decision has been issued (Article 10(6)).

While most jurisdictions have adopted mandatory pre-notification and standstill obligations, some have mandatory pre-merger notification but no standstill obligations (Italy, Latvia) and others have systems of purely voluntary notification (UK, Australia and New Zealand). In these jurisdictions, no sanctions for closing can apply, unless the authorities have previously issued a hold-separate interim order.

Gun-jumping has become a hot topic in the EU, as the Commission has adopted an increasingly stringent and formalistic interpretation of the EUMR, and fines that were not imposed in early cases and then were initially relatively low (€33,000 in Samsung/AST (1998) and €229,000 in A.P. Møller (1999), skyrocketed to €20 million in Electrabel (2009) and Marine Harvest (2014); €28 million in Canon (2019) and €124.5 million in Altice (2018). NCAs normally impose substantially lower fines, although the French Competition Authority slapped Altice with an €80 million fine (2016), and the Slovenian authority fined Agrokor with €54 million (2019).

Procedural gun-jumping may occur primarily in three scenarios. First, it may result from an erroneous application of the notification thresholds. The risk of such infringements is greater in jurisdictions that use thresholds requiring subjective evaluation by the merging firms, as is the case in Spain with the market share threshold. But it may also occur with more objective thresholds such as turnover, as in A.P. Møller (1999). Second, when there are disputes on whether there is a “concentration”. Such disputes can occur as most jurisdictions, instead of defining mergers based on objective facts such as requiring a minimum stockholding, apply a definition leaving ample room for interpretation: the “change of control on a lasting basis” (Article 3(1) EUMR) which occurs when an undertaking can influence strategic decisions of another undertaking. The risk of gun-jumping has significantly increased as competition authorities have interpreted that change of control may occur on a purely de facto basis and that it does not require the acquirer to exercise such control; the mere “possibility” of exercising decisive influence suffices (Electrabel; Marine Harvest; Marine Harvest, T-704/14, para. 58). Thirdly, lack of notification may be intentional, to avoid delaying the implementation of the merger, as could have occurred in Canon (2019), where the parties agreed to a “warehousing” two-step transaction structure to ensure that the seller could secure full consideration for its subsidiary by a certain date, while Canon would not formally acquire it before obtaining clearance. The Commission, however, concluded the merger occurred already with the first step. The parties may also want to avoid competition scrutiny; a risky strategy as, even though the infringement for not notifying is instantaneous and has a three-year limitation period, the standstill obligations is continuous and lasts until the transaction is cleared (Marine Harvest, T-704/14, paras. 304 and 355) or control is abandoned (Electrabel T-332/09, para. 212). For instance, even though its infringement for not notifying was time barred, Electrabel was nevertheless fined €20 million for breaching its standstill obligation.

Substantive gun-jumping can occur as the scope of the standstill obligation remains nebulous. There is no legal definition of “implementation” and the Court had never addressed this question until its EY ruling. The Court concluded that Article 7 only prohibits transactions “which, in whole or in part, in fact or in law, contribute[s] to the change in control of the target undertaking”, whereas transactions that do not present “a direct functional link” with the implementation of a concentration, even if they are ancillary or preparatory to the merger, do not fall within the scope of that provision (paras. 49 and 59). The Court added that having effects on the market is in itself insufficient to apply Article 7, but measures having no effect might nevertheless contribute to the change in control (paras. 50-51). Finally, the Court rejected the Commission’s view that Article 7 and Article 101 TFEU apply in parallel; the former should not apply to measures that give rise to coordination between undertakings if they do not contribute to the implementation of a concentration, as it would unduly extend the scope of Article 7 and reduce that of Regulation 1/2003 and Article 101 TFEU.

The risk of incurring fines in substantive gun-jumping has significantly increased following the Commission’s Altice decision. This decision has created great turmoil amongst practitioners, as practices that so far were common in M&A, such as including pre-closing covenants in the SPAs requiring the seller to obtain the buyer’s consent on certain transactions, and post-merger implementation planning discussions and information exchange, were deemed contrary to Article 7. The appeal that is pending should clarify how to distinguish practices ancillary or preparatory to the concentration form its implementation.

The eye-watering fines totalling €124.5 million imposed on Altice also highlight a singularity in the Commission’s gun-jumping fining policy, which is reflected in the table of decisions attached hereunder: except in Electrabel, where the infringement of Article 4 was time-barred, the Commission imposes in each case not one but two fines, in most cases identical, for one and the same infringement: implementing the concentration before it has been notified and cleared. Since the current EUMR removed the obligation to notify within a specific deadline, any infringement of Article 4 automatically results in an infringement of Article 7. In Marine Harvest, the AG concluded that the latter infringement subsumes the former and proposed to annul the Article 4 fine. The CJEU however confirmed both fines based on a formalistic interpretation of the principle of ne bis in idem and arguing that the obligation to notify is positive, whereas the standstill obligation is negative. The appellant had not raised the validity of Article 4 EUMR in those proceedings. The legality of such “unusual” legal framework (Marine Harvest T-704/14, p. 306) will again be examined by the General Court in the pending appeal against the Altice Decision. It will have to rule on an objection of illegality and on the proportionality of two fines that are identical notwithstanding the duration of the alleged infringements being radically different: the infringement of Article 4 is instantaneous and lasts the day the transaction is closed, whereas the infringement of Article 7 is continuous and lasts until the concentration is cleared.

In the US, Section 7A of the Hart-Scott-Rodino Act (HSR Act) requires parties to mergers exceeding certain thresholds to notify the FTC and the DOJ before closing. The acquirer must not exercise "substantial operational control" over the target prior to the expiration of the waiting period, which is typically 30 days but can be extended if the agencies issue a “Second Request”.

Gun-jumping infringements can be brought under both Section 7A HSR and Section 1 of the Sherman Act, and may result in civil fines, injunctive relief, and disgorgement of illegally obtained profits. Cases are often settled.



Rafael Allendesalazar, Gun jumping, Global Dictionary of Competition Law, Concurrences, Art. N° 86381

Visites 11363

Publisher Concurrences

Date 1 January 1900

Number of pages 500


Institution Definition

The notification requirement is laid down in Article 4(1) of the Merger Regulation, which states that a concentration with a Union dimension must be notified prior to its implementation. It is complemented by the standstill obligation in Article 7(1) of the Merger Regulation, which prevents companies from implementing a concentration with a Union dimension until it has been declared compatible with the internal market by a Commission decision, or in the absence of a decision, by expiry of the legal deadline. The notification requirement and the standstill obligation are cornerstones of the EU merger control system, as they enable the Commission to carry out ex ante control of all concentrations with a Union dimension. This prior scrutiny is a key safeguard that protects the structure of competition and ultimately consumers from any permanent and irreparable damage to effective competition that could emerge from an anti-competitive transaction. The importance of these provisions is confirmed by the fact that the Commission can impose a significant fine (up to 10% of the turnover of the undertakings concerned) in the event of an infringement of the notification requirement or the standstill obligation. A violation of the standstill obligation through early implementation of a transaction is also known as “gun jumping”. © European Commission

The expression “gun-jumping” has a wide connotation and includes pre-merger coordination between the merging parties. Gun-jumping can occur when the merging parties fail to observe mandatory pre-merger notification requirements (i.e. the situation discussed in the previous section) and/or fail to observe the waiting period requirements under applicable merger control laws, so that they execute the transaction after having filed it but before they have obtained the merger clearance. Gun-jumping has also substantive connotations, as it can entail an antitrust offence under the general competition provisions against anti-competitive agreements between competitors if the parties coordinate their competitive conduct prior to the actual consummation of the transaction. Defining what constitutes an anti-competitive gun-jumping activity is a delicate exercise, since many forms of pre-merger coordination between the merging parties represent a reasonable and necessary collaboration during the merger negotiations. The due diligence process, for example, includes the exchange of a certain amount of information, and competition agencies recognise that due diligence is an essential part of any transaction. However, the parties to the merger should not act as a single business unit with the idea that the transaction will proceed even after the deal-closing documents are signed. The tendency of merging parties to align the incentives as soon as possible increases the risk of gun-jumping. Examples of gun-jumping may include any of these activities taking place prior to the approval of the merger: (i) coordination between merging parties on prices or terms to be offered to customers, (ii) allocating customers for sales, (iii) coordination of negotiations with customers for sales to be made after the merger is approved (e.g., negotiations of long-term contracts); (iv) plans made regarding products, distributors or employees (e.g. the appointment of new directors), and in some cases, also (v) the exchange of detailed information concerning customers, prices, and product plans, despite the fact that this is often part of pre-closing due diligence. © OECD

On this topic see the e-Competitions special issue "Gun jumping in Europe: An overview of EU and national case law"