GE decision shows potential for reduced fines in EU merger procedure cases
27 January 2020 by Andrew Boyce
Companies charged with breaking EU merger procedures may get fine reductions if they agree to cooperate with investigators.
That's the lesson from a European Commission probe into General Electric for supplying incorrect information during its takeover of Danish turbine blade maker LM Wind Power.
GE ultimately declined the commission's offer and was fined 52 million euros ($57 million), but the commission's 36-page decision, which was published on 21 January 2020, shows how the US conglomerate and the EU executive discussed the possibility of a "cooperation procedure" on at least four occasions.
This isn't the first time companies and the commission discussed cooperating during an EU merger procedure probe.
Facebook, for example, was involved in a "cooperation process" in a 2017 probe into charges that it supplied "incorrect or misleading information" when seeking approval for its purchase of WhatsApp.
But the GE-LM Wind Power decision gives the clearest indication yet that the EU regulator is open to using "cooperation procedures" — so far mainly used by companies in antitrust probes in return for lower fines — in probes of merger rule breaches as well.
Companies should take note as EU antitrust officials step up their scrutiny of businesses suspected of playing fast and loose with the rules — in the past three years the commission has fined Altice, Canon, Facebook and GE, and still has cases pending against Merck KGaA and Telefónica Deutschland.
Last April, the commission sanctioned GE for "negligently" supplying incorrect information during an EU investigation of its takeover of LM Wind Power in 2017. The fine highlighted the EU regulator's continued determination to crack down on companies breaking merger rules, even in cases involving negligence.
The full text of the decision, published last week, details how the "possibility of a cooperation procedure" was discussed "as early as" April 4, 2017, and "again during subsequent meetings" on June 30 and Oct. 27 the same year.
GE then submitted information on "alleged mitigating circumstances" on its potential infringement on Aug. 23 and Dec. 7 before a meeting was held on Feb. 7, 2018, at which the commission "communicated the range of fines and the reduction offered to GE in case of cooperation."
According to the decision, GE informed the regulator on March 12, 2018 that it had declined the offer of cooperation and would reply to the charges in full, after which the infringement case "reverted to the standard procedure."
The new normal?
Whether the use of "cooperation procedures" to this extent is exceptional or the norm will become clearer when the commission closes cases into charges that Germany's Merck supplied incorrect or misleading information when seeking to buy Sigma-Aldrich, and allegations that Telefónica Deutschland broke promises the company made to secure approval for its takeover of E-Plus.
Commission officials appear not to have explored a possible "cooperation procedure" when fining Canon for implementing its acquisition of Toshiba Medical Systems before securing merger approval. The text of that decision, published last October, makes no mention of such an olive branch.
GE's procedural investigation came after the company said in its merger filing in January 2017 that it wasn't developing wind turbines for offshore use that were more powerful than its 6-megawatt models.
The commission then learned that the US company was "simultaneously offering a 12-megawatt offshore wind turbine to potential customers." GE withdrew its notification of the $1.65 billion deal and refiled it with "complete information on its future project."
The commission approved the deal without conditions in March 2017.