LEGAL PRACTICE: MERGERS - EUROPEAN UNION - REGULATION - STANDSTILL OBLIGATION - GUN JUMPING

Scope and implications of the standstill obligation in European merger control

This article intends to illustrate the multiple issues raised by Article 7 of Regulation No. 139/2004, and in particular the scope of the standstill obligation resulting from Article 7(1) and the derogation provided by Article 7(2). In the context of the increasingly stringent approach by antitrust authorities with respect to “gun jumping,” it aims at setting out the applicable analytical framework by reviewing a number of recent decisions issued by the European Commission and the Court of Justice, namely, Veolia/Suez, Marine Harvest, Canon/Toshiba, Ernst & Young, Altice or, less recently, Ryanair/Aer Lingus. By putting these decisions into perspective, it identifies the categories of behaviours that are likely to be covered by the standstill obligation, whether they consist of successive transactions aimed at transferring the ownership of the shares of the target or of other contractual arrangements that may entail a transfer of control. Conversely, it reviews the types of decisions that, although taken in light of an anticipated merger, escape the prohibition laid out by Article 7(1).

1. This article discusses the types of behaviours that may lead to a breach of the standstill obligation laid down in Regulation No. 139/2004 [1] (“EUMR”) and offers practical guidance to avoid “jumping the gun” for companies engaging in M&A processes in the European Union. The mandatory and suspensory European merger control regime imposes a strict prohibition on any early implementation of a concentration. The enforcement of this standstill obligation has emerged as a priority area of action for the European Commission (“Commission”). The potential implications for businesses are high, given the substantial fines companies face if they “jump the gun”, even by mere negligence. It is, however, fair to say that the legal landscape has become somewhat clearer as a number of recent decisions

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David Tayar, Éléonore Lejeune, Scope and implications of the standstill obligation in European merger control, September 2021, Concurrences N° 3-2021, Art. N° 101232, www.concurrences.com

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