Misleading competition authorities during merger review in the spotlight

In 2017, the European Commission imposed a €110 million fine on Facebook for providing incorrect information during the merger review of its WhatsApp acquisition. Earlier this year the EC fined General Electric €52 million for providing incorrect or misleading information in the context of a merger review. A further case, Merck/Sigma Aldrich, is pending. These are the first such cases since 2004.

The EC is not alone in punishing companies for this type of procedural infringement. In the past few years we have seen a significant increase in enforcement, particularly by EU national competition authorities, against companies who mislead authorities during merger control investigations.
We consider why the recent increase in enforcement has occurred and also how companies can mitigate the risk of falling foul of the rules.

Too much information

Companies can be found guilty of misleading authorities during merger review either negligently or intentionally. One reason for the increased number of negligent or unintentional cases is the nature of merger review in the digital era. Given the sheer volume of information, data and documents disclosed, the risk of error has become higher. The number and intensity of information requests sent to merging parties has increased exponentially in recent years and the time-frames for responding are no less tight.

Using the right forensic tools and teams of experts is important when extracting data and documents requested by authorities. In the UK, during a recent merger review by the Competition and Markets Authority, the CMA found that AL-KO failed to comply with information requests. The documents were eventually produced, but some months after the original deadline for production. AL-KO argued that this was due to a non-deliberate human error relating to the inadequacy of the search tool that it used on its databases. The CMA found that the errors were negligent but not caused by an event beyond the control of AL-KO. The CMA fined AL-KO £15,000 for failing to provide the information requested at the right time.

Impact of the breach

Misleading authorities during merger review, whether intentionally or negligently, can impact the review in different ways. It may give rise to an inaccurate view of the substantive competition issues or delay the timeline.

Misleading the substantive review

In the past two years the Hungarian competition authority (HCA) has been involved in two cases where incorrect information was provided during the course of a merger review. These cases led to the imposition of fines (both around €250,000) and a reversal of the original clearance decision. In the first case the HCA found that Infineon had provided incomplete information relating to the size of affected markets and, consequently, also about market shares. In the second case the HCA found that Digi had provided misleading information about competitive overlaps with Invitel.

Competition authorities in Denmark, Austria and Bulgaria have been active recently in fining companies for providing incorrect or misleading information in the context of merger review. Respectively, these infringements related to: (i) a failure to disclose another potential buyer while employing the failing firm argument; (ii) post-transaction plans to open a retail store right next to another retail store promised to be closed as part of the remedy package; and (iii) information about a previous deal of which the authority was not aware.

The fines were not particularly high in any of these cases, compared to recent fines by the EC, for example. However, there are other undesirable consequences for companies, as discussed below.

Timing counts

The time-frame of the infringement is important. Companies can be fined for providing incorrect information as part of their merger notification form, but also for providing incorrect information in response to an information request by the authority, even if the failure to provide information was ultimately rectified.

In the UK, during the CMA’s review of HungryHouse/JustEat, HungryHouse failed to comply on time with an information request, resulting in a delay in the inquiry timetable. This was the first time the CMA used its power to impose a penalty for failure to comply with an information request in a merger inquiry.

Similarly, in Al-KO/Bankside Patterson Limited, the late production of the documents had an adverse impact on the conduct of the review, requiring the CMA to extend the statutory timetable.


Other than fines, penalties include reputational damage, possible re-notification of the transaction and in some cases even criminal charges for egregious violations.

In the U.S, the Antitrust Division of the DOJ brought criminal charges against a South Korean man who altered HSR documents. He pleaded guilty and settled on an agreed prison term of five months. And the Federal Trade Commission has imposed civil penalties against firms that withhold required Item 4 documents from the HSR filing. For example, the FTC required Blackstone to refile its HSR filing and fined the company $3 million. This was based on daily gun-jumping fines for the period between when the transaction initially closed and when the review of the refiled transaction was completed. Notably, the liability was also imposed on the individual responsible for preparing the document.

Mitigating the risk
  • Use experts: Employ forensic technology to carry out searches, reviewed by experienced in-house and external counsel.
  • Take responsibility: For information requests, ensure that the responsible business head reviews the final draft of the response and that no information is missing.
  • Sign off: For the final merger notification, a senior member of the company must review the notification in detail before submission to ensure it is complete and accurate.
  • Come clean: If a mistake has been made, come clean as soon as possible and provide a full explanation. This may not be enough to escape a fine but being as proactive as possible will cause the least disruption to the timeline and may reduce the level of the fine.