What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?
Pursuant to Article 52 of the AML, business operators that provide incomplete or misleading information to MOFCOM may be ordered to: make rectification, pay a fine of less than RMB100,000 (for individuals), and a fine of less than RMB 1,000,000 (for legal entities). The fine imposed on such business operators shall depend on the seriousness of its violation, if such violation is not serious, the fine imposed on individuals and legal entities shall be no more than RMB 20,000 and RMB 200,000 respectively, and MOFCOM has wide discretion to decide whether a wrongdoing is serious or not.
To date, MOFCOM has not published any penalty decisions for providing incomplete or misleading information.
If the parties provide insufficient information, the DCCA will usually grant the parties a deadline to submit the relevant information.
If the parties deliberately provide incomplete or misleading information, or fail to com-ply with an obligation to submit a full-form notification, this may result in the rejection of the notification and the imposition of a fine upon the parties.
The Competition Act provides that where the information contained in a notification is false or misleading in any material respect, or the CCPC is of the opinion that the full details required in the notification (or subsequently specified) have not been provided, the notification is invalid and any determination made by the CCPC on foot of such a notification is void.
Where the CCPC issues an RFI, failure by the parties to whom the RFI is addressed to provide the information required within the 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 details of the concept of “a person in control of an undertaking”, please see above.
If the parties received merger clearance based on misleading information, this might constitute the illegal consummation of a merger transaction, subjecting the parties to all of the above mentioned penalties and repercussions. It may also constitute the receipt of clearance under false pretences, punishable by up to three years in jail (five years under aggravating circumstances). This situation has yet to arise in practice, while a party which did not know about the false representations will likely be exempt from sanctions and penalties.
In addition, if information was officially required according to the Commissioner's legal power to issue requests for information under the Israeli Antitrust Law, providing incomplete or misleading information may be a separate breach. In this case, administrative fines may be imposed amounting up to 3% of a company's total sales turnover in the year prior to the violation, but not more than NIS 8,188,120 in total. For individuals and for companies that in the year prior to the violation had a sales turnover of less than NIS 10M, the maximum fine of NIS 307,050. Such breach is also punishable by a criminal sanction of up to one year imprisonment and criminal fines.
Providing incomplete or misleading information in the notification or in response to the JFTC’s questions 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.
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.
As per Article 10(3) of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, if any change occurs during the Competition Board's review of a transaction regarding the information submitted in the filing, the parties have a legal duty to inform the board immediately. As a general rule, the parties are obliged to file correct and complete information with the Competition Authority. If the information requested in the notification form is incorrect or incomplete, the notification is deemed to have been filed only on the date when such information is completed following the Competition Board’s request for further data. In addition, the authority will impose a turnover-based monetary fine of 0.1% of the Turkish turnover generated in the financial year preceding the date of the decision (if this is not calculable, the turnover generated in the financial year closest to the date of the decision will be taken into account) on natural persons or legal entities which qualify as an undertaking or an association of undertakings, as well as the members of these associations, in cases where incorrect or misleading information is provided by the undertakings or associations of undertakings in a filed notification.
For providing incomplete or misleading information in the merger control notification or in response to the AMC’s additional request, the AMC may impose penalties of up to 1% of the worldwide turnover of the party, which provided incomplete or misleading information.
Filings under the HSR Act must be complete and accurate and are submitted under penalty of perjury. The agencies have obtained substantial civil penalty settlements from filing parties that failed to produce all required documents with their HSR filings, and have also obtained settlements from individuals for certifying incomplete HSR forms.
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.
A person is liable to imprisonment for a term not exceeding two years, and/or to a fine if they:
- supply any information to the CMA which is false or misleading in a material respect and which they know to be false or misleading in a material respect (or if a person is reckless as to whether information is false or misleading in a material respect); or
- intentionally alter, suppress or destroy a document that the CMA has required to be produced.
In addition, the CMA can impose a fine of a fixed amount of up to £30,000, as well as daily fines of up to £15,000 for failure to comply with a binding CMA request for information, documents or attendance of witnesses, without reasonable excuse, or for intentionally obstructing the CMA from taking a copy of a document that is provided to it. This could apply, for example, if incomplete information is provided, or if information is not provided by the deadline specified in the request for information.
In addition, failure to provide information within the required timeframe may result in an extension of the CMA's first-phase or second-phase deadlines (see paragraph 5.4 above) and an extension of its four month deadline for jurisdiction to review completed mergers (see paragraph 2.3 above).
The Belgian Competition Authority may impose a fine of up to 1% of the previous year’s Belgian turnover on any persons who:
- Provide incorrect or misleading information in a notification or in response to a request for information.
- Provide incomplete information.
- Fail to provide information within a prescribed time limit.
- Hinder the investigation of a concentration.
Undertakings which provide intentionally or negligently incorrect or misleading information in a notification may upon application by the official parties be fined by the Cartel Court up to 1% of their (group’s) total turnover in the preceding business year.
Information is incorrect or incomplete in case that it gives a distorted picture of reality in significant aspects. Significant aspects concern the minimum requirements regarding the content which notifications have to comply with. According to jurisprudence, in case of minor fault and insignificant consequences, the imposition of a fine can be refrained from if the fine is not deemed necessary on special or general preventive grounds.
In a recent case, the Cartel Court fined an undertaking with EUR 50,000 for failure to provide the (relevant) identity of two of three executives.
- Suspending and restarting the time periods for approval
- Revocation of merger approval if based on incorrect information for which a party to the merger is responsible
- It is an offence to knowingly provide false information to the Commission – punishable by a fine not exceeding ZAR 2,000, imprisonment not exceeding 6 months or both.
If the parties provide incomplete or misleading information in the notification, the FCA may (a) impose the same fines as noted above in Section 8.1 (i.e., 5% of the previous financial year’s French turnover for corporate entities, and €1.5 million for individuals); and/or (b) withdraw the decision authorising the concentration. In this case, the parties must notify the transaction a second time within one month of the withdrawal of the decision (Article L.430-8, III of the FCC).
Moreover the FCA may (a) enjoin parties that have failed to reply on time to a request for information to do so, subject to a daily penalty of up to 5% of their average daily turnover; and/or (b) impose a fine of up to 1% of its highest worldwide turnover during the latest financial years on any company that has obstructed the investigation by providing incomplete or incorrect information (Article L.464-2, V of the FCC).
The consequences of providing incomplete information would not necessarily result in the imposition of sanctions, but rather that the enforcers might not have enough information for their analysis, which would affect a potential positive outcome.
However, as explained, providing misleading information would allow the enforcers to challenge approved transactions and potential sanctions include:
- Fine that could be equivalent up to MEX $13 million pesos; and
- Criminal charges that might include up to 8 years imprisonment sanctions.
The most immediate “penalty” for incomplete information is a declaration of incompleteness which prevents the review period from running until the parties have provided all missing information. Fines indicated in question 8.1 apply to misleading information.
Failing or refusing to provide information requested by the ICA may be punished with fines up to € 25,823, while providing false or misleading information may be punished with fines up to € 51,645.
In respect of informal clearance, if the ACCC becomes aware of new information it may re-open its investigation of the transaction, even if the transaction has closed.
Formal clearance or authorisation granted on the basis of information that is false or misleading in a material particular may be revoked.
If the ACCC uses its compulsory information gathering powers to obtain information, documents or evidence from the merger parties, refusal or failure to comply with the notice issued, or knowingly furnishing false or misleading information or evidence to the ACCC, is an offence punishable on conviction by a fine up to A$3,600 or imprisonment for 12 months.
If a notification or a supplementary information request response is considered incomplete by the Bureau, then the notifying party will be advised and the applicable statutory waiting period will not commence until all required information is received.
Any person who provides misleading information to the Bureau could be subject to criminal sanctions, including a fine in the discretion of the court and a term of imprisonment of up to ten years.