The Authority for Consumers & Markets (“ACM”) has imposed a 1.85 million Euro fine on the international construction group Modulaire for its failure to notify a takeover.
Algeco, the subsidiary of Modulaire, took over its competitor BUKO in October 2019, without notifying ACM of this. Since the group sales of the Modulaire group exceed the ‘turnover thresholds’ for merger notifications, a notification requirement applied, as well as a ‘standstill obligation’ until ACM would have approved the takeover.
Eventually, Modulaire discovered by itself that it should have notified ACM, and almost two years later it did notify ACM of the transaction, on 7 May 2021. Because the takeover had already been concluded at that time, ACM imposed a penalty. After that, ACM still reviewed and approved the notification.
This penalty of ACM is a useful reminder to directors to consider in good time whether an intended takeover must be notified to ACM (or to the European Commission, or another supervisory authority).
When must a merger, takeover or incorporation of a (full-function) joint venture be notified to the ACM?
In short, two conditions apply:
- together, the companies concerned have a worldwide annual turnover of 150 million Euro or more, and
- at least two of the companies concerned each have a worldwide annual turnover in the Netherlands of 30 million Euro or more.
Here are a few points of attention:
- When calculating the turnover, the turnover of the entire group must be taken into account.
- When a business unit is taken over from another company, only the turnover of the target has to be considered, not that of the selling company. The group turnover of the buyer has to be considered still.
- It is also important to mention that conditions are different in the health care sector and for pension funds.
- Other conditions apply for notifications to the European Commission and other (non-Dutch) supervisory authorities.
Standstill obligation
If a transaction must be notified, the transaction can only be completed after ACM has approved the concentration. Reporting a transaction late or not at all (also known as “gun jumping”) may result in a penalty (as has happened with Modulaire).
More information
For a more detailed explanation on the notification of transactions and the standstill obligation, please refer to this article from 2018. If you require current information about notifying mergers, acquisitions and the incorporation of joint ventures, please feel free to contact Martijn van Bemmel.
