Speaker 1: Just nine days after European Commission Competition Commission slap Google
Speaker 1: with a record breaking two point seven billion dollar fine,
Speaker 1: the Commission has added again, this time threatening three companies
Speaker 1: with healty penalties for breaking its merger rules. The EU
Speaker 1: has filed complaints against General Electric, Merk and Cannon, accusing
Speaker 1: them of providing misleading or incomplete information in order to
Speaker 1: push through mergers or acquisitions. Competition Commissioner Margareta Vesteyer has
Speaker 1: signaled zero tolerance for companies that break the EUSE rules,
Speaker 1: and for vesta Er, it's all about the rules here,
Speaker 1: she is in an interview with Bloomberg last month. And
Speaker 1: we do not circumvent rules. This is a question about
Speaker 1: how the rules actually work. That, of course, is the
Speaker 1: way that our rules were constructeds uh some years ago
Speaker 1: when they were made. And you can, of course obviously
Speaker 1: discussed the rules. But we work within the rules. This
Speaker 1: is our obligation. The companies deals have already been approved
Speaker 1: by the EU, but GE and Murk risk finds of
Speaker 1: as much as one percent of annual worldwide sales, while
Speaker 1: Cannon's penalty could climb to ten. Joining us are Spencer Waller,
Speaker 1: a professor at Loyola University Chicago Law School and Pin
Speaker 1: r Acman, a professor at the University of Leeds Law School.
Speaker 1: Spencer Cannon jumped the gun on a merger. But let's
Speaker 1: start with Ge and Murk, who are accused of giving
Speaker 1: incomplete or misleading information. Was that information critical? Um, well,
Speaker 1: I'm not sure that. What I've heard from the Commission
Speaker 1: and the public sources is that they don't expect to
Speaker 1: try to revisit the merits of the merger. What they're
Speaker 1: concerned about is that either incomplete or misleading information was
Speaker 1: provided to them in the course of the information the
Speaker 1: investigation of pen or what happens if, in fact, the
Speaker 1: European Commission finds that there was misleading information. The European
Speaker 1: Commission and has the power to impose a fine. In
Speaker 1: the case of misleading or incorrect information. That fine can
Speaker 1: be up to one percent of the company's annual worldwide turnover.
Speaker 1: In the case of jumping the gun, because that's a
Speaker 1: more serious infringement of the procedure rules to find, can
Speaker 1: be up to ten percent of the company's annual worldwide turnover.
Speaker 1: But the Spencer has mentioned already, the Commission has said
Speaker 1: they're not planning to revisit the substantive analysis in the merger,
Speaker 1: so the decisions will remain effective. Essentially, regarding the approval
Speaker 1: of the three transactions, Spencer tell us a little bit
Speaker 1: about what the European Commission is claiming that g E
Speaker 1: and MERC did not give right. So let me just
Speaker 1: back up for one second. Um, the EU has a
Speaker 1: system of premature notification, so does the United States, but
Speaker 1: the E use thresholds for when you have to file
Speaker 1: are much higher than in the two and a half
Speaker 1: billion to five billion dollar range, So it's smaller number
Speaker 1: of deals are notified, and when you notify, when you
Speaker 1: have to notify, it's the EU only rather than all
Speaker 1: the member states that review, so it's a smaller number
Speaker 1: of larger deals. Where this sort of preempts individual countries
Speaker 1: from looking at this. So it's one stop shopping and
Speaker 1: it's extremely important that the EU get complete information in
Speaker 1: the course. In other words, what are they alleging that
Speaker 1: g E did not give them? What kind of information? Well,
Speaker 1: I'm more familiar with the merk side of it, where um,
Speaker 1: it was a merger of companies that that have to
Speaker 1: do with laboratory testing services and The allegation is that
Speaker 1: they just failed to turn over to the Commission information
Speaker 1: about different innovation projects that would have been important to
Speaker 1: the investigation to determine whether these companies currently competed and
Speaker 1: whether the merger would eliminate competition as to either price, quantity,
Speaker 1: quality or innovation pinart. Is this kind of a new
Speaker 1: thing that the EU is really focusing on or have
Speaker 1: they been very strict about these sort of disclosures and
Speaker 1: information requests the entire time that they've been looking at
Speaker 1: this kind of issue. That's a very interesting question. So
Speaker 1: we haven't had many many of these UM types of
Speaker 1: investigations or find so I had to look at this
Speaker 1: today and if here's that the first such fine UM
Speaker 1: since the new merger regulation came into force in two
Speaker 1: thousand and four was the one important on Facebook actually
Speaker 1: in May two thousand and seventeen. So Facebook was find
Speaker 1: over one hundred million euros for providing misleading information. So
Speaker 1: in the last thirteen years, UM, the Facebook one was
Speaker 1: the first one, and we now have three of them
Speaker 1: all at the same time. If we look at the
Speaker 1: previous merger regulation again, we see that there haven't been
Speaker 1: too many of these. Maybe there were three or four
Speaker 1: of them, but it had been a UM procedure that
Speaker 1: the Commission has used in very many cases. But it
Speaker 1: appears that the Commission is increasingly pursuing this line of investigation. Spencer,
Speaker 1: the companies can seek a hearing to present their cases,
Speaker 1: and they have until the end of the summer to
Speaker 1: request that. Is it hearing a good idea? Uh? It
Speaker 1: really depends if if the fines are of a manageable
Speaker 1: nature UM, and the deal isn't going to be you know,
Speaker 1: revisited on the merits UM. It's oftentimes the companies, at
Speaker 1: least in the US does simply pay, pay the fine
Speaker 1: and move on, particularly if it's an inadvertent violation UM.
Speaker 1: I think Facebook in particular, even though the fine was
Speaker 1: very high, I think the last thing they want to
Speaker 1: do is go back into contentious negotiations and proceedings with
Speaker 1: the EU on and I trust grounds, so even they
Speaker 1: have some incentive to just pay this UM and and
Speaker 1: move on. But I completely agree with Penar that the
Speaker 1: gun jumping allegations, which is merging the company's operations before
Speaker 1: they have permission, is by far the most important of
Speaker 1: these allegations, and there's at least one precedent in the EU,
Speaker 1: where France in November of last year imposed an eighty
Speaker 1: million euro fine on a mobile mobile telephone company for
Speaker 1: gun jumping prior to getting permission to go ahead with
Speaker 1: the merger. We're talking with Spencer Waller, professor at Loyola
Speaker 1: University Chicago Law School, and Pinart Ackman, a professor at
Speaker 1: the University of Leeds Law School, about the EU filing
Speaker 1: complaints against General Electric, Merk and Cannon, accusing them of
Speaker 1: providing misleading or incomplete information in order to push through
Speaker 1: mergers or acquisitions. Pinar with the stayer, it seems to
Speaker 1: be all about the rules, and in their responses from
Speaker 1: GE and Merk, it was all about having acted in
Speaker 1: good faith. Is that going to make a difference to
Speaker 1: the EU? It certainly will so. For the European Commissions
Speaker 1: imposive fine for miss leading on or incorrect information, it
Speaker 1: has to be the case that the companies in question
Speaker 1: have provided this information intentionally or negligently. So if the
Speaker 1: companies can prove that they were neither intentional nor negligence
Speaker 1: in their information provision to the Commission, it is possible
Speaker 1: that they could escape as fine. Spencer a lot of
Speaker 1: the time. When we're talking about the EU VERSUS, you know,
Speaker 1: American companies, we're talking about the fact that they have
Speaker 1: different standards. It's a lot tougher on some of the
Speaker 1: anti competitive stuff than than here in the US. Is
Speaker 1: this what we're looking at in these cases or is
Speaker 1: this just bad corporate behavior? UM, I don't think it would.
Speaker 1: I don't think these allegations would play out very differently.
Speaker 1: In the US. We have similar rules about when transactions
Speaker 1: have to be notified for review in advance, and if
Speaker 1: if you're above a certain level, which is around three
Speaker 1: hundred million dollars right now, you have to notify and
Speaker 1: you can't close your transaction. You can't jump the gun
Speaker 1: and begin and cooperating with the company you're still competing with.
Speaker 1: You have to provide certain information with your filing in
Speaker 1: the US, and you have to provide certain additional information
Speaker 1: and testimony upon request. And you know if you don't,
Speaker 1: if you don't provide complete, accurate information or you jump
Speaker 1: the gun, there are penalties. Frankly, they're not as high
Speaker 1: as in Europe. But the companies shouldn't be surprised that
Speaker 1: the U S and the EU need complete information uh,
Speaker 1: and you have to keep your transactions on hold while
Speaker 1: they investigate penar Do you agree? Because the EU has
Speaker 1: been accused of taking a much more aggressive antitrust stance
Speaker 1: than the US, and you don't hear about these kind
Speaker 1: of penalties in the US. I think it's probably fair
Speaker 1: to say there might be a different perspective of what
Speaker 1: competition law should achieve and what's the ultimate purpose in
Speaker 1: the EU in comparison to that in the U. S UM.
Speaker 1: But I don't think these companies, or even in other
Speaker 1: cases where the companies involve our technology American technology companies,
Speaker 1: I don't think the companies have been targeted because they're Americans.
Speaker 1: I think in your competition was applied, it is strictly
Speaker 1: against the European companies as it is against American companies.
Speaker 1: But this is a debate that's been held and as
Speaker 1: an ongoing debate that's been held by commentators on both
Speaker 1: sides of the Atlantic as well. In that we I
Speaker 1: suppose in Europe might be coming from a different um
Speaker 1: starting point in the way the European competitions were adopted
Speaker 1: after the Second World War to open up the markets
Speaker 1: and so on, And there's a so called single market
Speaker 1: imperative in the EU, where the European is trying to
Speaker 1: turn the European market into one single market. So there
Speaker 1: are some concerns in Europe that don't exist in the US,
Speaker 1: and perhaps some of these lead to different approaches to
Speaker 1: the same cases on both sides of the Atlantic. Spencer
Speaker 1: one thing that sometimes appears to you you hear so much
Speaker 1: more about the EU taking these kinds of actions do come,
Speaker 1: but he's try to get around the EU more in
Speaker 1: the in their anti in their anti competition rules than
Speaker 1: they do in the US. Is there a compliance difference
Speaker 1: between the two arenas well, There's a big compliance difference,
Speaker 1: um and and and PENR is completely right. The EU
Speaker 1: is simply has rules that reach farther than the US
Speaker 1: and also is interested in applying it to areas that
Speaker 1: the US hasn't emphasized. That this is more on the
Speaker 1: on the monopoly side, on the abusive dominant position um
Speaker 1: and in mercery laws. Uh, they're pretty similar. Um But
Speaker 1: I agree with PENR that I don't think it's about
Speaker 1: discrimination as much as the EU having a more expansive
Speaker 1: set of rules, although I do note there are people
Speaker 1: in the current administration in the US who are looking
Speaker 1: very carefully at the question of whether there's targeting of
Speaker 1: US companies. Pinar in about thirty seconds, do you think
Speaker 1: these companies will be able to beat the fines? I
Speaker 1: think if they cooperate with the Commission, that would be
Speaker 1: a good start for them at least to have a
Speaker 1: reduction and a potential fine, because cooperation is something that
Speaker 1: the Commission takes into account as a mitigating circumstance to
Speaker 1: reduce the potential fine. And uh, Spencer fifteen seconds, do
Speaker 1: you agree? Um, yeah, I do. I think there's a
Speaker 1: chance they can walk away with no fine, but I
Speaker 1: think the most likely outcome is to do their best
Speaker 1: to persuade that this is all inadvertent and pay as
Speaker 1: little as possible. All right, thank you both for being
Speaker 1: on Bloomberg Law. That Spencer Waller, professor at Loyola University
Speaker 1: Chicago Law School, and pin R. Actment, a professor at
Speaker 1: the University of Leeds Law School. Coming up on Bloomberg Law,
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