WEBVTT - EU Takes Aim at GE, Merck, in Antitrust Probes (Correct) 0:00:00.160 --> 0:00:04.760 Just nine days after European Commission Competition Commission slap Google 0:00:04.800 --> 0:00:07.920 with a record breaking two point seven billion dollar fine, 0:00:08.240 --> 0:00:11.760 the Commission has added again, this time threatening three companies 0:00:11.760 --> 0:00:15.319 with healty penalties for breaking its merger rules. The EU 0:00:15.400 --> 0:00:19.599 has filed complaints against General Electric, Merk and Cannon, accusing 0:00:19.600 --> 0:00:23.239 them of providing misleading or incomplete information in order to 0:00:23.239 --> 0:00:28.040 push through mergers or acquisitions. Competition Commissioner Margareta Vesteyer has 0:00:28.080 --> 0:00:32.200 signaled zero tolerance for companies that break the EUSE rules, 0:00:32.320 --> 0:00:35.280 and for vesta Er, it's all about the rules here, 0:00:35.320 --> 0:00:38.879 she is in an interview with Bloomberg last month. And 0:00:39.280 --> 0:00:43.560 we do not circumvent rules. This is a question about 0:00:43.600 --> 0:00:47.519 how the rules actually work. That, of course, is the 0:00:47.560 --> 0:00:50.720 way that our rules were constructeds uh some years ago 0:00:50.760 --> 0:00:54.320 when they were made. And you can, of course obviously 0:00:54.920 --> 0:00:58.000 discussed the rules. But we work within the rules. This 0:00:58.160 --> 0:01:02.080 is our obligation. The companies deals have already been approved 0:01:02.120 --> 0:01:04.920 by the EU, but GE and Murk risk finds of 0:01:05.000 --> 0:01:08.600 as much as one percent of annual worldwide sales, while 0:01:08.720 --> 0:01:13.440 Cannon's penalty could climb to ten. Joining us are Spencer Waller, 0:01:13.440 --> 0:01:17.000 a professor at Loyola University Chicago Law School and Pin 0:01:17.120 --> 0:01:20.440 r Acman, a professor at the University of Leeds Law School. 0:01:21.040 --> 0:01:24.480 Spencer Cannon jumped the gun on a merger. But let's 0:01:24.520 --> 0:01:27.880 start with Ge and Murk, who are accused of giving 0:01:27.959 --> 0:01:35.400 incomplete or misleading information. Was that information critical? Um, well, 0:01:35.720 --> 0:01:38.200 I'm not sure that. What I've heard from the Commission 0:01:38.200 --> 0:01:40.960 and the public sources is that they don't expect to 0:01:41.000 --> 0:01:43.400 try to revisit the merits of the merger. What they're 0:01:43.400 --> 0:01:46.800 concerned about is that either incomplete or misleading information was 0:01:46.840 --> 0:01:48.840 provided to them in the course of the information the 0:01:48.880 --> 0:01:54.880 investigation of pen or what happens if, in fact, the 0:01:54.920 --> 0:01:59.520 European Commission finds that there was misleading information. The European 0:01:59.520 --> 0:02:02.960 Commission and has the power to impose a fine. In 0:02:03.000 --> 0:02:06.640 the case of misleading or incorrect information. That fine can 0:02:06.680 --> 0:02:09.760 be up to one percent of the company's annual worldwide turnover. 0:02:10.320 --> 0:02:13.040 In the case of jumping the gun, because that's a 0:02:13.120 --> 0:02:15.800 more serious infringement of the procedure rules to find, can 0:02:15.840 --> 0:02:19.720 be up to ten percent of the company's annual worldwide turnover. 0:02:19.840 --> 0:02:23.440 But the Spencer has mentioned already, the Commission has said 0:02:23.440 --> 0:02:28.440 they're not planning to revisit the substantive analysis in the merger, 0:02:28.600 --> 0:02:33.160 so the decisions will remain effective. Essentially, regarding the approval 0:02:33.200 --> 0:02:37.240 of the three transactions, Spencer tell us a little bit 0:02:37.240 --> 0:02:41.120 about what the European Commission is claiming that g E 0:02:41.200 --> 0:02:44.680 and MERC did not give right. So let me just 0:02:44.720 --> 0:02:47.680 back up for one second. Um, the EU has a 0:02:47.760 --> 0:02:51.680 system of premature notification, so does the United States, but 0:02:51.720 --> 0:02:54.359 the E use thresholds for when you have to file 0:02:54.440 --> 0:02:56.600 are much higher than in the two and a half 0:02:56.800 --> 0:03:00.760 billion to five billion dollar range, So it's smaller number 0:03:00.800 --> 0:03:03.720 of deals are notified, and when you notify, when you 0:03:03.760 --> 0:03:07.080 have to notify, it's the EU only rather than all 0:03:07.080 --> 0:03:09.720 the member states that review, so it's a smaller number 0:03:09.960 --> 0:03:13.840 of larger deals. Where this sort of preempts individual countries 0:03:13.880 --> 0:03:16.400 from looking at this. So it's one stop shopping and 0:03:16.480 --> 0:03:22.639 it's extremely important that the EU get complete information in 0:03:22.720 --> 0:03:26.359 the course. In other words, what are they alleging that 0:03:26.560 --> 0:03:30.799 g E did not give them? What kind of information? Well, 0:03:30.840 --> 0:03:33.959 I'm more familiar with the merk side of it, where um, 0:03:34.000 --> 0:03:37.320 it was a merger of companies that that have to 0:03:37.360 --> 0:03:40.880 do with laboratory testing services and The allegation is that 0:03:40.920 --> 0:03:43.920 they just failed to turn over to the Commission information 0:03:44.040 --> 0:03:48.640 about different innovation projects that would have been important to 0:03:48.720 --> 0:03:53.880 the investigation to determine whether these companies currently competed and 0:03:53.960 --> 0:03:58.360 whether the merger would eliminate competition as to either price, quantity, 0:03:58.520 --> 0:04:02.160 quality or innovation pinart. Is this kind of a new 0:04:02.240 --> 0:04:05.120 thing that the EU is really focusing on or have 0:04:05.240 --> 0:04:09.840 they been very strict about these sort of disclosures and 0:04:09.920 --> 0:04:13.080 information requests the entire time that they've been looking at 0:04:13.080 --> 0:04:16.280 this kind of issue. That's a very interesting question. So 0:04:16.360 --> 0:04:20.400 we haven't had many many of these UM types of 0:04:20.440 --> 0:04:23.520 investigations or find so I had to look at this 0:04:23.600 --> 0:04:27.400 today and if here's that the first such fine UM 0:04:27.520 --> 0:04:30.040 since the new merger regulation came into force in two 0:04:30.040 --> 0:04:34.000 thousand and four was the one important on Facebook actually 0:04:34.240 --> 0:04:38.200 in May two thousand and seventeen. So Facebook was find 0:04:38.240 --> 0:04:42.920 over one hundred million euros for providing misleading information. So 0:04:42.960 --> 0:04:47.200 in the last thirteen years, UM, the Facebook one was 0:04:47.320 --> 0:04:49.640 the first one, and we now have three of them 0:04:49.640 --> 0:04:51.800 all at the same time. If we look at the 0:04:51.880 --> 0:04:55.720 previous merger regulation again, we see that there haven't been 0:04:55.760 --> 0:04:58.920 too many of these. Maybe there were three or four 0:04:58.960 --> 0:05:02.280 of them, but it had been a UM procedure that 0:05:02.400 --> 0:05:05.440 the Commission has used in very many cases. But it 0:05:05.480 --> 0:05:12.400 appears that the Commission is increasingly pursuing this line of investigation. Spencer, 0:05:12.440 --> 0:05:16.080 the companies can seek a hearing to present their cases, 0:05:16.120 --> 0:05:17.919 and they have until the end of the summer to 0:05:17.960 --> 0:05:23.120 request that. Is it hearing a good idea? Uh? It 0:05:24.400 --> 0:05:27.880 really depends if if the fines are of a manageable 0:05:28.080 --> 0:05:30.760 nature UM, and the deal isn't going to be you know, 0:05:30.800 --> 0:05:34.800 revisited on the merits UM. It's oftentimes the companies, at 0:05:34.839 --> 0:05:37.000 least in the US does simply pay, pay the fine 0:05:37.000 --> 0:05:40.640 and move on, particularly if it's an inadvertent violation UM. 0:05:40.680 --> 0:05:43.440 I think Facebook in particular, even though the fine was 0:05:43.520 --> 0:05:45.200 very high, I think the last thing they want to 0:05:45.200 --> 0:05:48.800 do is go back into contentious negotiations and proceedings with 0:05:48.839 --> 0:05:51.560 the EU on and I trust grounds, so even they 0:05:51.600 --> 0:05:54.360 have some incentive to just pay this UM and and 0:05:54.440 --> 0:05:57.400 move on. But I completely agree with Penar that the 0:05:57.440 --> 0:06:02.000 gun jumping allegations, which is merging the company's operations before 0:06:02.040 --> 0:06:06.240 they have permission, is by far the most important of 0:06:06.400 --> 0:06:10.240 these allegations, and there's at least one precedent in the EU, 0:06:10.360 --> 0:06:13.599 where France in November of last year imposed an eighty 0:06:13.839 --> 0:06:18.400 million euro fine on a mobile mobile telephone company for 0:06:18.440 --> 0:06:21.120 gun jumping prior to getting permission to go ahead with 0:06:21.160 --> 0:06:24.440 the merger. We're talking with Spencer Waller, professor at Loyola 0:06:24.520 --> 0:06:27.760 University Chicago Law School, and Pinart Ackman, a professor at 0:06:27.760 --> 0:06:30.920 the University of Leeds Law School, about the EU filing 0:06:30.960 --> 0:06:35.120 complaints against General Electric, Merk and Cannon, accusing them of 0:06:35.160 --> 0:06:39.160 providing misleading or incomplete information in order to push through 0:06:39.240 --> 0:06:44.200 mergers or acquisitions. Pinar with the stayer, it seems to 0:06:44.200 --> 0:06:47.080 be all about the rules, and in their responses from 0:06:47.160 --> 0:06:50.320 GE and Merk, it was all about having acted in 0:06:50.440 --> 0:06:53.640 good faith. Is that going to make a difference to 0:06:53.720 --> 0:06:58.440 the EU? It certainly will so. For the European Commissions 0:06:58.480 --> 0:07:02.000 imposive fine for miss leading on or incorrect information, it 0:07:02.080 --> 0:07:05.320 has to be the case that the companies in question 0:07:05.480 --> 0:07:10.600 have provided this information intentionally or negligently. So if the 0:07:10.640 --> 0:07:14.400 companies can prove that they were neither intentional nor negligence 0:07:14.600 --> 0:07:18.800 in their information provision to the Commission, it is possible 0:07:18.840 --> 0:07:22.240 that they could escape as fine. Spencer a lot of 0:07:22.240 --> 0:07:25.840 the time. When we're talking about the EU VERSUS, you know, 0:07:26.280 --> 0:07:28.480 American companies, we're talking about the fact that they have 0:07:28.480 --> 0:07:31.320 different standards. It's a lot tougher on some of the 0:07:31.320 --> 0:07:33.960 anti competitive stuff than than here in the US. Is 0:07:34.000 --> 0:07:36.480 this what we're looking at in these cases or is 0:07:36.520 --> 0:07:39.920 this just bad corporate behavior? UM, I don't think it would. 0:07:40.040 --> 0:07:43.080 I don't think these allegations would play out very differently. 0:07:43.120 --> 0:07:46.600 In the US. We have similar rules about when transactions 0:07:46.640 --> 0:07:50.800 have to be notified for review in advance, and if 0:07:50.960 --> 0:07:52.920 if you're above a certain level, which is around three 0:07:53.000 --> 0:07:56.680 hundred million dollars right now, you have to notify and 0:07:56.760 --> 0:07:59.480 you can't close your transaction. You can't jump the gun 0:07:59.560 --> 0:08:02.360 and begin and cooperating with the company you're still competing with. 0:08:02.720 --> 0:08:05.480 You have to provide certain information with your filing in 0:08:05.520 --> 0:08:08.320 the US, and you have to provide certain additional information 0:08:08.360 --> 0:08:11.559 and testimony upon request. And you know if you don't, 0:08:11.800 --> 0:08:15.320 if you don't provide complete, accurate information or you jump 0:08:15.400 --> 0:08:18.640 the gun, there are penalties. Frankly, they're not as high 0:08:18.680 --> 0:08:21.920 as in Europe. But the companies shouldn't be surprised that 0:08:22.000 --> 0:08:25.080 the U S and the EU need complete information uh, 0:08:25.120 --> 0:08:27.440 and you have to keep your transactions on hold while 0:08:27.480 --> 0:08:32.040 they investigate penar Do you agree? Because the EU has 0:08:32.120 --> 0:08:36.440 been accused of taking a much more aggressive antitrust stance 0:08:37.080 --> 0:08:40.120 than the US, and you don't hear about these kind 0:08:40.160 --> 0:08:45.559 of penalties in the US. I think it's probably fair 0:08:45.600 --> 0:08:49.000 to say there might be a different perspective of what 0:08:49.200 --> 0:08:53.400 competition law should achieve and what's the ultimate purpose in 0:08:53.480 --> 0:08:56.480 the EU in comparison to that in the U. S UM. 0:08:56.520 --> 0:08:59.880 But I don't think these companies, or even in other 0:09:00.080 --> 0:09:03.960 cases where the companies involve our technology American technology companies, 0:09:04.000 --> 0:09:08.160 I don't think the companies have been targeted because they're Americans. 0:09:08.200 --> 0:09:10.800 I think in your competition was applied, it is strictly 0:09:10.840 --> 0:09:15.000 against the European companies as it is against American companies. 0:09:15.360 --> 0:09:17.960 But this is a debate that's been held and as 0:09:18.120 --> 0:09:21.079 an ongoing debate that's been held by commentators on both 0:09:21.080 --> 0:09:24.560 sides of the Atlantic as well. In that we I 0:09:24.600 --> 0:09:27.880 suppose in Europe might be coming from a different um 0:09:28.040 --> 0:09:31.400 starting point in the way the European competitions were adopted 0:09:31.400 --> 0:09:33.720 after the Second World War to open up the markets 0:09:33.760 --> 0:09:36.360 and so on, And there's a so called single market 0:09:36.400 --> 0:09:40.040 imperative in the EU, where the European is trying to 0:09:40.080 --> 0:09:42.760 turn the European market into one single market. So there 0:09:42.760 --> 0:09:45.760 are some concerns in Europe that don't exist in the US, 0:09:45.840 --> 0:09:49.120 and perhaps some of these lead to different approaches to 0:09:49.240 --> 0:09:52.640 the same cases on both sides of the Atlantic. Spencer 0:09:52.760 --> 0:09:55.520 one thing that sometimes appears to you you hear so much 0:09:55.559 --> 0:09:59.920 more about the EU taking these kinds of actions do come, 0:10:00.040 --> 0:10:03.680 but he's try to get around the EU more in 0:10:03.760 --> 0:10:06.240 the in their anti in their anti competition rules than 0:10:06.280 --> 0:10:09.400 they do in the US. Is there a compliance difference 0:10:09.760 --> 0:10:13.560 between the two arenas well, There's a big compliance difference, 0:10:13.720 --> 0:10:16.400 um and and and PENR is completely right. The EU 0:10:16.760 --> 0:10:20.200 is simply has rules that reach farther than the US 0:10:20.360 --> 0:10:23.959 and also is interested in applying it to areas that 0:10:24.200 --> 0:10:26.920 the US hasn't emphasized. That this is more on the 0:10:27.080 --> 0:10:30.280 on the monopoly side, on the abusive dominant position um 0:10:30.360 --> 0:10:34.760 and in mercery laws. Uh, they're pretty similar. Um But 0:10:37.080 --> 0:10:39.320 I agree with PENR that I don't think it's about 0:10:39.640 --> 0:10:43.040 discrimination as much as the EU having a more expansive 0:10:43.360 --> 0:10:45.720 set of rules, although I do note there are people 0:10:45.760 --> 0:10:48.920 in the current administration in the US who are looking 0:10:49.040 --> 0:10:51.440 very carefully at the question of whether there's targeting of 0:10:51.520 --> 0:10:55.160 US companies. Pinar in about thirty seconds, do you think 0:10:55.200 --> 0:11:00.280 these companies will be able to beat the fines? I 0:11:00.280 --> 0:11:03.160 think if they cooperate with the Commission, that would be 0:11:03.200 --> 0:11:05.840 a good start for them at least to have a 0:11:05.880 --> 0:11:09.360 reduction and a potential fine, because cooperation is something that 0:11:09.400 --> 0:11:12.960 the Commission takes into account as a mitigating circumstance to 0:11:13.080 --> 0:11:18.360 reduce the potential fine. And uh, Spencer fifteen seconds, do 0:11:18.360 --> 0:11:22.240 you agree? Um, yeah, I do. I think there's a 0:11:22.320 --> 0:11:24.599 chance they can walk away with no fine, but I 0:11:24.640 --> 0:11:27.120 think the most likely outcome is to do their best 0:11:27.160 --> 0:11:29.520 to persuade that this is all inadvertent and pay as 0:11:29.559 --> 0:11:32.080 little as possible. All right, thank you both for being 0:11:32.120 --> 0:11:36.080 on Bloomberg Law. That Spencer Waller, professor at Loyola University 0:11:36.200 --> 0:11:39.640 Chicago Law School, and pin R. Actment, a professor at 0:11:39.679 --> 0:11:43.800 the University of Leeds Law School. Coming up on Bloomberg Law, 0:11:43.920 --> 0:11:47.040 New York's top cop told the judge that an investigation 0:11:47.080 --> 0:11:51.719 into exce on mobiles public statements about climate change uncovered 0:11:51.880 --> 0:11:55.680 significant evidence the oil giant may have misled investors with 0:11:55.840 --> 0:11:59.320 two sets of numbers, one public and one secret.