Commission imposes record fine for “gun jumping”


Altice, a multinational cable and telecommunications company, has been fined EUR 125 million for having implemented its acquisition of Portuguese telecoms operator PT Portugal before the transaction had been cleared by the Commission and, in some instances, even before notifying the Commission of the contemplated merger.
The Commission’s decision of 24 April 2018
By assistant attorney Adrian Kielberg

In December 2014, Altice, which is based in the Netherlands, signed an agreement with Brazilian telecoms operator Oi to acquire sole control of Oi’s Portuguese subsidiary, PT Portugal. Altice notified the Commission of the acquisition in February 2015, and the Commission cleared the merger in April 2015.

At the time of the notification, Altice had two Portuguese subsidiaries, Cabovisão and ONI, which were both competitors to PT Portugal on the telecommunications market in Portugal. The Commission made its clearance subject to Altice divesting these subsidiaries, finding that, in the absence of the divestment, the merged entity would not be exposed to effective competition from the remaining players on the market.

In May 2017, the Commission announced that it suspected Altice of having completed the acquisition of PT Portugal before clearance and, in some instances, even before notification of the merger. The Merger Control Regulation prohibits implementation of a notifiable merger before it has been notified to, and cleared by, the Commission. This is referred to as “the standstill obligation”. Implementation of a merger before notification is commonly referred to as “gun jumping” and is punishable by a fine of up to 10% of the merging entities’ annual turnover.

Decisive influence

The Commission has now established that Altice breached its standstill obligation.

The acquiring company is generally allowed to exercise certain rights which are necessary to preserve the value of the target until closing. As an example, the purchaser can normally veto decisions that do not affect the target’s day-to-day business. However, in exercising these rights, the purchaser may not gain formal or de facto control of the target before the merger has been cleared.

The Commission found in its decision that the share purchase agreement had conferred rights on Altice that enabled Altice to exercise decisive influence over PT Portugal and even more rights  than was necessary to preserve the value of the target. The Commission also found that the agreement had granted Altice a veto right over a number of business decisions, including decisions to appoint management members, pricing decisions and contractual decisions above certain (low) thresholds, which are generally considered to be day-to-day business decisions. These rights were conferred on Altice upon signing.

The Commission noted that it was not decisive if the rights had actually been exercised as long as it was possible for Altice to exercise decisive influence over PT Portugal.  Nevertheless, the Commission held that Altice had been actively involved in PT Portugal’s day-to-day operations even from the date of signing, and that PT Portugal, although not required to do so, had consulted Altice on a number of issues. By way of example, Altice had been directly involved in PT Portugal’s marketing campaigns, the setting of its business targets, the renewal of its agreement with Porto Canal, and the negotiations for a supply contract with Cinemundo.

The Commission also concluded that Altice and PT Portugal had exchanged sensitive information on an ongoing basis, and that such exchange was not necessary in order to preserve the value of the target. Instead, the information exchanged had provided Altice with insight into PT Portugal’s business, including its day-to-day operations and long-term strategic considerations. The exchange had primarily taken place on Altice’s initiative, and the parties had failed to ensure that the information exchanged remained confidential, so that it could not be used by Altice in case the merger failed.


As a result of the breach of the standstill obligation, Altice was ordered to pay a fine of EUR 124,500,000 – the largest ever in a case involving gun jumping. The decision shows that gun jumping attracts increasing attention from both the EU and the national competition authorities. 

Read more about the case in our previous news article:
The European Commission accuses telecom multinational of "gun-jumping"

Read the European Commission’s decision.