The European Court of Justice to rule on fine issue in the Marine Harvest case

5.17.2018

In 2014, the European Commission ordered Norwegian Marine Harvest ASA to pay a EUR 20 million fine for having failed to notify the Commission of its acquisition of another Norwegian business and for having violated the prohibition of pre-implementation. Marine Harvest ASA appealed against the fine to the General Court, which upheld the Commission’s decision at the end of 2017. An appeal is now pending before the Court.
Case C-10/18 P – Marine Harvest ASA vs the European Commission
By senior intern Mikkel Haugaard

Background

In December 2012, Norwegian salmon farmer Marine Harvest ASA acquired 48.5% of the shares in Morpol ASA, another Norwegian company active in the same industry. Following the acquisition, Marine Harvest announced its contemplated public takeover bid for the remaining shares in Morpol. After completion of the takeover bid in March 2013, Marine Harvest had an ownership interest of 86.1% in Morpol. In November 2013, Marine Harvest purchased the remaining 12.9% of the shares.

Marine Harvest did not notify the Commission before it acquired the first stake in 2012, but relied on an exemption that allows implementation of a public bid or of a series of transactions in listed securities by which control of an undertaking is acquired before Commission clearance, provided that the concentration is notified to the Commission without delay, and that the acquirer does not exercise its voting rights in the target company.

Following notification, the transaction was cleared in September 2013 subject to Marine Harvest's divestment of approx. 3/4 of its Scottish salmon farming capacity. However, this clearance is not affected by the imposition of the fine which was only related to procedural issues.

The European Commission’s decision

Marine Harvest notified the Commission of the first acquisition in December 2012 according to the above rule and undertook not to exercise its voting rights before the Commission had approved the transaction. Nevertheless, the Commission found that Marine had breached the competition rules by:

 

  • not having notified the Commission of the acquisition with a view to clearance
  • having implemented the transaction before clearance (so-called “gun jumping”). 

The Commission therefore imposed a fine of EUR 20 million on Marine Harvest, finding that Marine Harvest had gained sole control of Morpol in December 2012 with its acquisition of 48.5% of the shares from a single seller. Accordingly, the link to the subsequent public bid could not be used as an argument for relying on the above exemption as the change of control had already taken place.

 

The ECJ case

Marine Harvest initially brought the action before the General Court, insisting that the rule applying to public takeover bids and series of transactions in listed securities was applicable and claiming cancellation of the fine. The General Court upheld the Commission’s decision, however. Marine Harvest has subsequently appealed the decision to the European Court of Justice where it is still pending.

Read EU’s press release on the appeal.

Read also our previous news on other pre-implementation proceedings: