What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?
Penalties for failure to notify, late notification and breaches of a prohibition on closing
The AML and the Merger Control Regulations have not set up separate legal liabilities for failures to notify, late notifications and breaches of a prohibition on closing, and they all belong to the situation of implementation of a notifiable concentration transaction without obtaining MOFCOM’s clearance decision.
Pursuant to Article 40 of the AML, where the business operators implement the concentration in violation of the AML, MOFCOM may impose a fine of no more than RMB 500,000, it may also issue an order to unwind the transaction, by ordering them to stop the concentration, to dispose of the shares or assets, transfer the business or adopt other necessary measures to return to the state prior to the concentration. MOFCOM has so far not imposed penalties other than fines for failures to notify. For those who take the initiative to report to MOFCOM about their failure to submit a filing, MOFCOM generally imposes reduced fines (if any), as is reflected in the penalty decisions published by MOFCOM on its official website.
Other adverse consequences for failures to notify, late notifications and breaches of a prohibition on closing
In addition to the above mentioned legal consequences, failure to notify of a transaction may also do harm to a business operator’s reputation, because the penalty decisions imposed on such business operators will be published on MOFCOM’s official website. Besides this, the future expansion of the concerned parties in China might also be affected, due to the fact that MOFCOM may pay special attention to filers with a history of non-compliance, and thus the length of the review procedures may be less predictable.
The parties will be punished with fines if they;
- fail to notify a merger;
- fail to submit a full-form notification within ten business days upon request from the DCCA when the DCCA revokes an approval of a merger filed under the simplified procedure due to the parties’ submission of incorrect or mis-leading information;
- implement a merger despite a prohibition against implementation;
- implement a merger prior to clearance;
- fail to comply with a condition imposed or order issued by the DCCA as a precondition for approving the merger; or
- fail to comply with a requirement to separate undertakings or assets that have been taken over or merged or a requirement of cessation of joint control or any other measure capable of restoring competition when the DCCA has decided to prohibit a merger which has already been implemented.
Failure to notify a notifiable merger or acquisition (and failure to supply information required under an RFI within the time period specified by the CCPC) is an offence under the Competition Act. An undertaking, or the person in control of an undertaking, convicted of such an offence may be liable on summary conviction to a fine not exceeding €3,000 or, on conviction on indictment, to a fine not exceeding €250,000.
In addition, if the failure continues one or more days after the date of its first occurrence, the undertaking or person concerned is guilty of a separate offence for each day that the breach occurs and may be liable on summary conviction to a fine not exceeding €300 or, on conviction on indictment, to a fine not exceeding €25,000.
For the purposes of these offences, the person in control of the undertaking is:
- In the case of a body corporate, any officer of the body corporate who knowingly and wilfully authorises or permits the offence to occur;
- In the case of a partnership, each partner who knowingly and wilfully authorises or permits the offence to occur; and
- In the case of any other form of undertaking, any individual in control of that undertaking who knowingly and wilfully authorises or permits the offence to occur.
Once a transaction is notified to the CCPC, there are no criminal sanctions for closing prior to receipt of clearance from the CCPC. However, if a transaction is put into effect prior to clearance it is void as a matter of Irish law, meaning it is legally unenforceable and ineffectual.
While closing prior to clearance does not attract criminal sanction, any person who fails to observe a determination of the CCPC or commitment decision (or any person who aids, abets or assists another person, or conspires with another person to contravene such determination or commitment decision) is guilty of an offence and may be liable:
- On summary conviction, to a fine not exceeding €3,000 or to a term of imprisonment not exceeding 6 months, or both; and
- On conviction on indictment, to a fine not exceeding €10,000 or to imprisonment for a term not exceeding 2 years, or both.
In addition, if the breach continues for one or more days after the date of its first occurrence, the person is guilty of a separate offence and may be liable on summary conviction to a fine not exceeding €300 and, on conviction on indictment, to a fine not exceeding €25,000.
The Competition Authority (the predecessor of the CCPC) published a notice on “gun jumping”, i.e. failing to notify a notifiable transaction and implementing the transaction prior to clearance, in which it outlined that it takes “gun jumping” very seriously. The CCPC has investigated a number of “gun-jumping” cases in recent years. In those cases, the parties agreed to notify the transaction in question and, in those circumstances, the CCPC did not pursue the imposition of fines for failure to notify. The CCPC will typically publish a press release when it becomes aware of a “gun jumping” incident.
Outlined below are the main sanctions and repercussions of the illegal consummation of a transaction which constitutes a notifiable "merger of companies" under the Israeli Antitrust Law. Similar repercussions and penalties apply to breaching a condition of a conditional merger approval. The offence under the Israeli Antitrust Law refers to both full and partial consummation of a merger. Hence, late notification will, in theory, be subject to the same penalties.
The Israeli Antitrust Authority has at its disposal several administrative enforcement measures.
Administrative Fines – "Primary Enforcement Measure"
An amendment to the Israeli Antitrust Law enacted in 2012 enables the Commissioner to impose significant fines through an administrative process, with reference to certain types of conduct, including the illegal partial or full consummation of a merger of companies. Administrative fines may be imposed on all the parties to the illegal merger transaction.
The maximum fine set by the Israeli Antitrust Law is 8% of a company's total sales turnover in the year prior to the violation, but not more than NIS 24,564,360 in total. For individuals and for companies that in the year prior to the violation had a sales turnover of less than NIS 10,000,000 the maximum fine is NIS 1,023,510.
In recent guidelines , the Israeli Antitrust Authority indicated that in case of conduct which constitutes a full or partial non-horizontal merger for which notification was not provided, it will generally apply administrative fines rather than criminal sanctions as the primary enforcement measure.
In recent draft guidelines , the Israeli Antitrust Authority offers a detailed method for calculating the specific fine to be imposed, beginning with the setting of a "base fine" for a certain breach, and then bringing in additional considerations for increasing this base fine by up to 20%, or decreasing it by up to 50%, with specific increase/decrease rates attached to each consideration.
The two main parameters for setting the base fine are the term of the breach and the breach's probable impact on competition. Notable parameters for increasing or decreasing the fine are the role of the specific entity or individual in the breach and the actions taken to prevent recurrence of the breach. External circumstances taken into account include the existence of former breaches, personal interest in the breach and personal or corporate economic circumstances, such as expected bankruptcy as a result of the fine, or a corporation with an exceptionally high turnover.
Due to the fact that the power to impose an administrative fine is relatively new and was only vested in the Commissioner in 2012, the Draft Opinion informs us that the Commissioner will decrease 50% of the base fine on breaches discovered before the end of 2017 and 25% of the base fine on breaches discovered before the end of 2019.
Administrative Declaration of Breach
The General Director may issue an Administrative Declaration stating that a "merger of companies" has been unlawfully consummated. Such a declaration serves as prima facie evidence in any legal proceedings, and may be used for civil lawsuits (including class actions), against the merging companies.
The Israeli Antitrust Authority may approach the Antitrust Tribunal requesting (i) a consent decree that provides, inter alia, for an amount of money to be paid by the parties to the state treasury in lieu of criminal procedures or an administrative declaration. The consent decree may include operative measures, such as the disgorgement of acquired assets. The consent decree may include a provision which provides that the parties do not admit that the "merger of companies" is considered a notifiable merger. The Israeli Antitrust Authority may also approach the Tribunal to request (ii) unconsented divestiture of the merged companies. This is a rare practice: to the best of our knowledge, the antitrust tribunal has considered the separation of merged companies in only two cases in Israel, both cases referring to local companies.
Failing to file a merger notification or taking action that is tantamount to a full or partial merger contrary to the Israeli Antitrust Law is a criminal offense. The maximum penalty is a three year jail sentence, or a five year sentence if the breach was performed under aggravating circumstances, including, e.g. high market shares or expected significant harm to the public. In addition, criminal fines may be imposed. Criminal sanctions may be imposed on all the parties to the illegal merger transaction and relevant officers.
In addition, the Israeli Antitrust Law sets strict liability management offenses with similar penalties for the active management of the company. Imprisonment sentences (including jail and public service) may only be imposed if negligence or intent is proven.
We will add that as a matter of past practice, criminal proceedings for illegally consummated mergers were extremely rare and only involved entities with very high market shares. The Israeli Antitrust Authority did not apply criminal sanctions to transactions which would have been cleared if they were filed with the Israeli Antitrust Authority, if the transaction as in accordance with the substantive test set by section 21 of the Israeli Antitrust Law: reasonable concern for significant harm to competition or injury to the public in terms of price, quality, quantity or regularity or terms of supply.
Criminal sanctions have also not been applied to non-Israeli entities, as will be elaborated upon below.
Civil Implications – Unenforceability and Civil Tort
Last but not least, the illegal consummation of a merger has repercussions in the civil realm. Illegal agreements are generally unenforceable (this is also relevant to restraints ancillary to the merger which have not been cleared under the Israeli Antitrust Law). In addition, the consummation of an illegal merger is a civil tort and is subject, even without administrative declaration, to civil law suits, including class actions. All parties of the merger transaction are exposed to civil actions.
Israeli Antitrust Authority's Attitude towards Foreign Transactions
In the past, the Israeli Antitrust Authority has normally refrained from taking action against foreign entities, even for severe cartels. The means employed with regard to foreign entities were administrative sanctions. The Israeli Antitrust Authority has mentioned in the past that it will not enforce the Israeli competition laws when the effect on competition in Israel is indirect or negligible.
For mergers, the Israeli Antitrust Authority has usually been interested in the connections created between the foreign entities in Israel. Where the foreign companies' nexus to Israel is doubtful or indirect, the Israeli Antitrust Authority is less likely to take interest in the transaction.
Failure to notify, late notification and implementation of the transaction during the waiting period can trigger a criminal fine of up to JPY 2 million. It can be imposed on the party and its representative, director, and/or employee who implemented the transaction on behalf of the party. Such fine may be imposed regardless of the fact that a transaction has not brought a substantial restraint of competition in any relevant market.
If the parties implement the transaction without obtaining necessary clearance, the JFTC may file a suit with the court to nullify any relevant merger, corporate split or joint share transfer.
In the event of a failure to notify, late notification or the supplying of incorrect, insufficient or misleading information, the DG may impose on the undertaking an administrative fine of between €1,000 and €10,000. Where an undertaking intentionally or negligently puts into effect a suspended concentration or one which has been declared unlawful, an administrative fine of up to 10% of the total turnover of the undertaking in the preceding financial year, shall also be due.
Where a concentration has already been implemented, the DG may also require the undertakings or assets brought together to be separated, the cessation of joint control or any other action that may be appropriate in order to restore effective competition.
Monetary fines for failure to notify or close before the Board’s approval
In the event that the parties to a merger or an acquisition which requires the approval of the Board realise the transaction without the approval of the Board, a turnover-based monetary fine of 0.1 per cent of the turnover generated in the financial year preceding the date of the fining decision would be imposed on the incumbent firms, regardless of the outcome of the Board’s review of the transaction. The minimum amount of this fine is set at TL 17,700 (approximately EUR 5,500 or US$ 6,000) for 2016, and is revised annually.
Invalidity of the transaction
A notifiable merger or acquisition which is not notified to (and approved by) the Board would be deemed as legally invalid with all of its legal consequences.
Termination of infringement and interim measures
Pursuant to Article 9(1) of the Competition Law, should the Board find any infringement of Article 7, it shall order the parties concerned, by a resolution, to take the necessary actions to restore the same status as before the completion of the transaction, and thereby restore the pre-transaction level of competition. Similarly, the Competition Law authorises the Board to take interim measures until the final resolution on the matter in cases where there is a possibility for serious and irreparable damages to occur.
Termination of the transaction and turnover-based monetary fines
If, at the end of its review of a notifiable transaction that was not notified, the Board decides that the transaction falls within the prohibition of Article 7, the undertakings could be subject to fines of up to 10 per cent of their turnover generated in the financial year preceding the date of the fining decision. Employees and managers (of the undertakings concerned) that had a determining effect on the creation of the violation may also be fined up to five per cent of the fine imposed on the undertakings as a result of implementing a problematic transaction without the Board’s approval.
In addition to the monetary sanction, the Board is authorised to take all necessary measures to terminate the transaction, remove all de facto legal consequences of every action that has been taken unlawfully, return all shares and assets (if possible) to the places or persons where or who owned these shares or assets before the transaction or, if such measure is not possible, assign these to third parties; and meanwhile to forbid participation in control of these undertakings until this assignment takes place and to take all other necessary measures.
Under Turkish merger control regime there is no criminal liability and/or imprisonment for failure to notify and implementation ahead of Board’s approval decision.
If the parties to a notifiable transaction violate the suspension requirement, the statute of limitation regarding the sanctions for infringements is eight years pursuant to Article 20(3) of Law on Misdemeanours No. 5326.
As explained above in detail, foreign-to-foreign mergers are covered by Law 4054 on Protection of Competition to the extent that they affect the relevant markets within the territory of Turkey. Regardless of the parties’ physical presence in Turkey, sales in Turkey may trigger the notification requirement to the extent that the turnover thresholds are met. To that end, penalties for failure to notify, late notification and breaches of a prohibition on closing do not differ in terms of foreign-to-foreign mergers.
The foreign-to-foreign nature of the transaction does not prevent imposition of any administrative monetary fine (either for suspension requirement or for violation of article 7) in and of itself. In case of violation of suspension requirement (i.e. closing before clearance or not notifying the transaction at all), foreign-to-foreign mergers are caught under Law No. 4054 so long as one of the alternate thresholds is exceeded (which is the case for our transaction at hand.)
For the sake of completeness, in the Simsmetal/Fairless decision (dated 16 September 2009, No. 09-42/1057-269), where both parties were only exporters into Turkey, the Board imposed an administrative monetary fine on Simsmetal East LLC (ie, the acquirer) subsequent to first paragraph of article 16 of Law No. 4054, totalling 0.1 per cent of Simsmetal East LLC’s gross revenue generated in the fiscal year 2009, because of closing the transaction before obtaining the approval of the Competition Board. Similarly, the Competition Board’s Longsheng (dated 2 June 2011, No. 11-33/723-226), Flir Systems Holding/Raymarine PLC (17 June 2010, No. 10-44/762-246) and CVRD Canada Inc. (8 July 2010, No. 10-49/949-332) decisions are examples whereby the Board imposed a turnover based monetary fine based on the violation of the suspension requirement in a foreign-to-foreign transaction.
Irrespective of the national scope of transaction (whether foreign-to-foreign, Turkish to Turkish or foreign to Turkish – vice versa), pursuant to Article 16 of Law No. 4054, if the parties to a notifiable transaction violate the suspension requirement (i.e., close a notifiable transaction without the approval of the Board or do not notify the notifiable transaction at all), a turnover-based monetary fine (based on the local turnover generated in the financial year preceding the date of the fining decision at a rate of 0.1 per cent) will be imposed on the acquirer in straight forward acquisitions. The wording of Article 16 of Law No. 4054 does not give the Board discretion on whether to impose a monetary fine in case of a violation of suspension requirement. In other words, once the violation of the suspension requirement is detected, the monetary fine will be imposed automatically.
For a failure to obtain the merger control clearance before closing the transaction, the AMC may impose penalties of up to 5% of the turnover of parties to the transaction from their worldwide sales for the year preceding the year when the penalties are imposed.
As a matter of practice, the AMC usually imposes penalties only on the purchaser.
If a JV is formed without a merger control clearance, the AMC will impose fines on all founders.
As a matter of the latest practice, the AMC imposes fines in accordance with its guidelines on the calculation of fines for violations of the competition law initially adopted in 2015. The guidelines, although non-binding, set a two-level system of fine calculation: basic amount and aggravating/extenuating factors. We are unaware of any cases when the AMC imposed the maximum permitted fines – the fines are usually of a much less scale.
Furthermore, a failure to obtain a merger control clearance of the AMC before closing the transaction may also result in the transaction being held invalid through the court proceedings, only if the transaction has resulted in the monopolisation or substantial restriction of the competition. To the best of our knowledge, the AMC has never resorted to this remedy in practice.
As the agency tasked with administering the HSR program, the FTC typically takes the lead on enforcement matters for failing to make a required HSR filing. The FTC can impose civil penalties of up to US$40,000 per day for every day a transaction is closed without the parties having complied with their HSR Act filing obligations. Although the penalties technically apply to both parties, historically the FTC has obtained civil penalties only from acquiring parties. The FTC has a “one free bite” policy, under which it may elect not to seek civil penalties from a party for its first failure to file, if the failure was inadvertent. However, the FTC will typically seek civil penalties for any subsequent failure to file by that party, even if the failure is inadvertent.
The agencies also frequently seek civil penalties for “gun-jumping,” or prematurely transferring beneficial ownership of the acquired company or assets prior to the expiration of the HSR waiting period. The HSR Act requires that the parties to the transaction remain separate and independent until after expiration of the HSR waiting period. The agencies have obtained gun-jumping settlements for conduct during the waiting period that is inconsistent with the parties’ independent status, such as the acquiring person approving pricing decisions for the seller, or involving itself in the negotiation of the seller’s ordinary-course contracts.
Russian law provides for three types of negative consequences for violations connected with the merger control regime. They are: fine, disqualification of the company’s official (in certain cases) and invalidation of the transaction.
The maximum fine for failure to submit a filing, perform the FAS’s order, closing before clearance, late notification, failure to provide the information requested by the authority or provision of inaccurate information amounts to RUB 500,000 for legal entities and RUB 20,000 for officials. The fine is usually imposed on the applicant or company that failed to provide the information requested by the authority or provided inaccurate information. Please note that, in practice, the maximum fine is rarely applied (only for repeat violations), so the actual amount is often lower.
Disqualification may be imposed on officials for failure to perform the FAS’s order only in certain exceptional cases (e.g. repeated violation or existence of several aggravating circumstances). The maximum term of disqualification is three years. Please note, however, that in practice disqualification is rarely used in Russia for such violations.
The limitation period for imposition of a fine and disqualification is one year from the date of the violation.
Along with imposition of a fine, in the event of failure to submit the filing, perform the FAS’s order, closing before clearance, late notification or even provision of misleading information (entailing a wrong decision), the FAS (not third parties) may also apply to the court for invalidation of the transaction if it proves to have a negative effect on competition. The limitation period for such a claim is one year after the FAS becomes aware of the violation.
Invalidation is rarely used in practice since most deals do not contain any competition implications. Consequently, for certain deals, such a risk is initially theoretical. Nevertheless, we always recommend undergoing the clearance procedure even with late filing, since a positive clearance decision eliminates the risk of invalidation of the deal in the future.
Please note that, if closing occurs before the clearance decision but the final decision is ultimately positive, it is almost impossible to invalidate the deal on these grounds. Yet a fine still might be imposed.
Also, we would like to draw your attention to the following practical consequences, which should be taken into account at the preparatory stage of the deal:
- In the event of direct acquisition of shares in Russian limited liability companies, the notary public (such deals should be notarised) might request the parties to provide the FAS clearance decision or confirmation that the deal does not require any consent from the authority (e.g., in the form of representation in the SPA);
- Since information on the relevant violation is often announced on the FAS website, this might have certain reputational consequences for the applicant and the target.
Regarding failure to notify and late notification, no such penalties apply, as there is no obligation to notify and no notification deadline. There is no prohibition on closing unless the CMA has issued an order to that effect, in which case failure to comply with the order would give rise to penalties.
The Belgian Competition Authority has the power to impose a range of penalties for breaches of the merger control rules.
If parties fail to notify a notifiable concentration, a fine of up to 1% of the previous year’s Belgian turnover may be imposed on the party or parties responsible for submitting the notification. If the parties notify a concentration but then implement it before they receive the Authority’s approval, a fine of up to 10% of the previous year’s Belgian turnover, and a daily penalty of up to 5% of the previous year’s average daily Belgian turnover, may be imposed. In addition, if the Authority concludes subsequently that the concentration creates a significant impediment to effective competition, it can order the transaction to be reversed or dissolved.
Parties can also be fined for failing to comply with conditions imposed by the Authority in order to approve a transaction, again up to 10% of the previous year’s Belgian turnover and a daily penalty of up to 5% of the previous year’s average daily Belgian turnover.
Concentrations which exceed the above mentioned thresholds have to be notified to the BWB and cleared before being implemented. In case of failure to notify or late notification, that is after implementation, the prohibition on closing (also ban on implementation or standstill obligation) is violated.
If the concentration was only cleared by imposing certain restrictions or commitments, the concentration must not be implemented in a way differing from those restrictions or commitments.
Upon application by the official parties, the Cartel Court is to impose fines amounting to up to 10% of the concerned group’s turnover in the preceding business year in so called gun jumping cases (violations of the ban on implementation). The imposition of a fine largely is a discretionary decision. When assessing the fine, the gravity and duration of the infringement, level of fault involved and economic performance of the infringing undertaking(s) are considered.
According to Austrian jurisprudence, violations of the prohibition on closing before clearance are generally regarded as a serious infringement. So far, fines in the range of some thousand Euros (following later notification in the undertakings own initiative) to EUR 1.5 million have been imposed.
Other sanctions such as cease orders do not play a significant role in practice. However, it should be noted that the law also foresees a nullity sanction in cases of infringements of the ban on implementations. This does not concern agreements preparing the concentration, but legal acts implementing the concentration or taken after an illegal implementation.
(i) failure to notify at all – a penalty of up to 10% of annual South African turnover payable by each of the parties to the merger (target, acquirer and seller). In practice, parties are generally jointly and severally liable for the imposed penalty.
(ii) late notification – not applicable
(iii) breach of any applicable prohibition on closing – up to 10% of annual South African turnover payable by each of the parties to the merger.
Any penalties must be confirmed by the Tribunal. The Tribunal may also order divestiture or declare void any provision of an agreement to which the merger was subject.
If parties fail to notify a transaction (Article L.430-8, I of the FCC) or if the parties implement a transaction in breach of the FCA’s prohibition decision (Article L.430-8, V of the FCC), the FCA may (a) order the parties either to notify the transaction or to demerge, subject to a daily penalty payment of a maximum of 5% of their average daily turnover; and/or (b) impose on the parties liable for notification a fine of up to 5% of the previous financial year’s French turnover for corporate entities, and/or a fine of up to €1.5 million for individuals. Failure to notify has been fined several times by the FCA (e.g., the FCA imposed a €250 million fine on SNCF in 2008 for failing to notify the acquisition of Novatrans and a €400 million fine on the Reunica group in 2013 for failing to notify the acquisition of the Arpège group).
If parties notify a concentration but then implement it before they receive the FCA’s approval (“gun jumping”), they may incur the same fine of up to 5% of the previous financial year’s French turnover for corporate entities, and/or a fine of up to €1.5 million for individuals (Article L.430-8, II of the FCC). Such a practice was sanctioned for the first time in France on 8 November 2016. Altice Luxembourg and SFR Group were fined €80 million for the premature completion of two mergers notified in 2014.
In case of non-compliance with remedies imposed by the FCA, the notifying parties may also be fined, again up to 5% of their French turnover during the last financial year, or up to €1.5 million for individuals. The FCA may also (a) withdraw the decision authorising the operation (the parties will have to notify the transaction a second time within one month of the withdrawal of the decision); (b) enjoin the parties, subject to a periodic penalty – of a maximum of 5% of their average daily turnover – to comply with the orders, injunctions or commitments breached; or (c) enjoin the parties, subject to the same daily penalty, to comply with new injunctions or orders replacing the initial injunctions or orders breached (Article L.430-8, IV of the FCC). In the Vivendi/Canal Plus case (2011) the FCA withdrew its authorisation and imposed a fine of €30 million because of a breach of several remedies by Canal Plus. In the Bigard/Socopa case (2011), the FCA reviewed the initial injunctions imposed on the parties in order to clear the transaction, replacing the obligation to license a specific trademark by the obligation to sell such trademark.
The fact that a transaction is foreign-to-foreign is not relevant in any of the situations described above and sanctions may be applied in the same circumstances.
Failing to file a transaction reaching the thresholds may result in significant fines for the parties. Therefore, if during the investigation process it is determined that the transaction is an illegal concentration (meaning it was notified after closing), additional fines may be imposed, as well as conditions (e.g. undoing of specific legal acts) or the order to divest or unwind the corresponding concentration. Penalties may be imposed to both parties under the transaction, as well as to those individuals ordering or executing the transaction.
In addition, specific monetary sanctions for failing to notify include a fine that could be equivalent to 8% of each party annual income and the obligation to fully or partially divest what has been illegally concentrated.
Also, a transaction may be investigated and challenged after it has been approved only if:
- When the approval was obtained based on false information; or
- When approval was subject to conditions to be complied after closing, and those conditions are not complied with in terms of the corresponding resolution.
Finally, it is important to highlight the fact that parties are bound to act independently as long as clearance and closing does not occur. Therefore, exchange of sensitive information among the parties (i.e. gun-jumping), is also prohibited and would be investigated as a cartel violation.
There are no penalties for late notification as there are no deadlines for filing.
Fines for failure to notify and for breaches of a prohibition on closing (gun jumping) are possible up to EUR 1 million or, as far as businesses are concerned, up to 10% of their annual total worldwide group turnover during the last financial year. The fine will be imposed on the party responsible for making the filing (see question 6.1 above).
The FCO has imposed significant fines in recent years (up to EUR 4.5 million) for gun jumping violations.
In addition, transactions concluded in violation of a merger control clearance requirement are void under German law, and the FCO may also order their dissolution.
Failure to notify and late notification are punished with fines up to 1 per cent of the worldwide turnover of the notifying party (or parties) in the last financial year. On the basis of the decisional practice of the ICA, intentional failure is punished with more severe fines, whereas a spontaneous late notification is likely to receive a more favourable treatment.
There is no penalty for failing to notify as notification is voluntary.
If a transaction closes without clearance or authorisation and the ACCC forms the view that the acquisition would have the effect, or likely effect, of substantially lessening competition in a market in Australia, the ACCC may seek pecuniary penalties against the acquirer up to the greater of: A$10 million, three times the value of the benefit reasonably attributable to the contravention, or 10% of annual group turnover per contravention for a corporation, and up to A$500,000 for an individual.
The ACCC may seek an injunction to prevent the transaction completing (if it has not already completed), orders for the divestiture of acquired shares or assets, or an order that the transaction is void (if it has completed).
Any person who is knowingly concerned in, or a party to, the contravention or aided and abetted the contravention is also liable to pecuniary penalty and injunction. Accordingly, in some circumstances, ancillary liability could attach to the vendor as well as the purchaser.
Where formal clearance or authorisation has been sought, if a transaction closes before a determination is made the applicant would also be in breach of the (required) court enforceable undertaking.
In relation to a foreign-to-foreign merger, if the Tribunal (on application of the ACCC, Minister or any other person) makes a declaration that the acquisition has the effect, or likely effect, of substantially lessening competition in an Australian market and does not result in offsetting public benefits, and the affected corporation carries on business in Australia in breach of the declaration (that is, after the end of six months after declaration is made (unless extended)), the ACCC may seek orders for an injunction, divestiture of assets and/or pecuniary penalties.
Failure to notify is a criminal offence, punishable by a maximum fine of CAD $50,000 under the Act. To date there have been no convictions for failure to notify. In 2015, the Bureau published a news release identifying a party that had voluntarily informed the Bureau of its inadvertent failure to notify two transactions; the Bureau required that party to adopt a compliance policy that would prevent similar oversights from occurring in the future. If a party realizes that it has inadvertently failed to notify a transaction, it should consult Canadian legal counsel immediately to discuss how to proceed.
The Commissioner can apply to the court for a range of remedies against parties who close prior to the expiry of the waiting period, including fines of up to CAD $10,000 per day for each day the parties closed in advance of being legally permitted to do so.