Gun-jumping rules prevent companies, subject to the obligation to notify, from completing a merger or acquisition, in whole or in part, prior to obtaining the approval from the relevant Competition Authorities.
In May 2014, Ernst & Young (EY) acquisition of KPMG’s Danish unit was approved by the Danish Competition Authority. Subsequently, the Danish regulator investigated the decision of KPMG to terminate the affiliation with its parent company, which preceded the merger and concluded that this transaction had breached the stand still obligation established under Danish Competition Law. EY appealed this decision before the Danish Maritime and Commercial High Court.
In this context, the court decided to refer a preliminary ruling to the Court of Justice of the EU in order to ascertain the scope of article 7(1) of Regulation 139/2004 on suspension of concentrations, so as to interpret the homologue national provision.
In his Opinion, Advocate General (AG) Wahl has concluded that EY did not disregard merger rules when it required KPMG’s Danish unit to put an end on the affiliation that existed with its parent company as part of an acquisition that took place in 2013. According to AG Wahl, such practice did not breach the rules because it took place before and was severable from the transaction.
AG Wahl has come to the conclusion that, even if the termination of the affiliation was linked to the acquisition, it did not result in EY gaining control over KPMG. Indeed, KPMG continued to be a competitor of EY. In AG Wahl’s view, the potential of the termination of the affiliation in the market was not relevant for the application of gun-jumping rules.
AG’s opinions are not binding. Therefore, it will be for the Court of Justice of the EU to decide whether to follow AG’s Wahl reasoning or not.
