It is no secret that merger control regimes have now proliferated to all corners of the globe. Identifying and complying with filing requirements is a key component of any multi-jurisdictional M&A transaction. But, despite this apparent proliferation, for much of the past decade there had been relatively little enforcement against transaction parties for failing to make the necessary notifications.

Was 2022 the year in which that narrative turned a corner? Our review of publicly announced decisions shows that authorities around the globe issued more than 70 fines for missed notifications (so called “gun jumping”) throughout 2022. Most interestingly, no region was spared and the quantum of fines was relatively consistent across geographies.

These increasing levels of enforcement raise the stakes for transaction parties when assessing merger control filing requirements (and potential applicability) across the world.

Global trend: gun jumping enforcement in 2022

The 70 gun jumping fines we identified in 2022 resulted in total fines of more than €36 million being imposed, which averages approximately €500,000 per fine. The highest fine of more than €11 million was issued by the Brazilian competition authority (CADE) in the water and waste management sector. Competition authorities across Europe, North Africa, and Central America also issued several fines above €1 million:

• In the Americas, the Brazilian and Argentinian authorities fined companies for gun jumping infringements across a range of industries from the automotive to the housing sectors (six and seven fines respectively). Most eye-catchingly, CADE issued the highest gun jumping fine of the year, of more than €11 million, to a company in the water and waste management industry. Additionally, the Mexican authority issued a fine of approximately €2.4 million for a merger in the entertainment industry.
• In Africa, the competition authorities in Morocco and Mozambique each issued their first ever gun jumping fines. Notably, the Moroccan Competition Council issued three fines of €1 million or more in three different transactions (highlighting the increasing enforcement ambition of regulators in the region).
• In Asia, the Chinese SAMR issued an impressive number of 32 gun jumping fines, but with a relatively modest average fine amount of approximately €68,000. India’s Competition Commission and Taiwan’s Fair Trade Commission also actively enforced gun jumping laws, imposing three and two fines respectively.
• Across Europe, national competition authorities issued a total of 11 fines for separate gun jumping infringements. Even though this total number is less than in Asia and in South America, the average European fine amounted to a hefty €1.2 million. The French and the Portuguese authorities issued noteworthy fines of €7 and €2.5 million in the liquor and healthcare sectors respectively.

As noted, several individual fines amounted to €1 million or more. The table below highlights the eight largest fines issued in 2022 and the countries where they were issued.

What to watch out for in 2023

A statistic to be wary of is that the highest fine of the most active enforcer, the Chinese SAMR, amounted to ‘only’ €71,000 because of a cap on its fines.  However, the Chinese Anti Monopoly Law was amended last year, so now the maximum possible fine has increased from approximately €70,000 to approximately €720,000 if the merger does not harm competition, or up to 10% of annual revenue if the merger is deemed to harm competition. Consequently, we expect future fines in China to be more substantial (and more in line with the global average).

A particular area of caution, following on from the European Commission’s enforcement action against Canon, is competition authorities’ increased wariness of multi-step transactions. The two highest fines in 2022 concerned minority share acquisitions in a two-step transaction in Brazil, and in a gradual equity stake increase leading to de facto control in France. It is important to keep in mind that minority acquisitions may still trigger notifications in certain countries.

Equally, as observed in the European Commission’s Altice infringement decision, acquirers need to be careful with their involvement in the target’s business pre-closing. A major factor in the €7 million fine imposed by the French authority was the acquirer’s involvement in the target’s strategic and operational decisions before the notification was filed.