The wholesale company Metro has violated the Danish Competition Act by retaining information about a potential buyer of the company in a contemplated merger between Metro and the wholesale supplier Euro cater. This was established by a District Court in Denmark on 21 April 2017. Metro was imposed a fine of DKK 50,000.

This case shows how important it is that the information, which is submitted to the competition authorities, is correct and fully answers the questions from the authorities.

The merger case, which ended with a police report

The case took its beginning in October 2014, when Metro Cash & Carry Danmark ApS and Euro Cater A/S contacted the Danish Competition and Consumer Authority to have Euro Cater’s acquisition of two of Metro’s shops approved. The parties requested a prompt case handling, as Metro alternatively would close its shops in Denmark, if the merger was not completed. Based on this, the authority initiated the assessment of the merger despite the fact that notification was not complete.

On 17 October 2014, the authority sent a number of questions to the parties. The authority asked Metro, whether they had received other indications of interest in acquisition of the company. Such information is used to analyse what would happen with/without a merger (the counter-factual scenario), in order for the authority to assess if the merger will affect the competition. The question was especially important as Metro had declared that the company would leave the market, which the authority wanted to examine the consequences of.

Metro submitted information about negotiations with two other potential buyers. Based on a newspaper article, the authority became aware of the fact that Metro omitted to submit information about another potential buyer, who was also interested.

In November 2014, the Danish Competition and Consumer Authority informed the parties that the merger could not be subject to a fast track procedure as the merger could restrict competition significantly. Thus, further investigations were necessary. Following the Competition and Consumer Authority’s notification, the parties decided not to merge.

In January 2015, the Competition and Consumer Authority filed a police report against Metro for having retained information of vital importance for the merger.

The judgment about illegal retention of information

In court, the prosecution claimed that Metro had violated section 23 (1) no. 12 of the Danish Competition Act, by providing incorrect information or concealing matters of importance for the case at hand. The violation concerned Metro’s omission to inform the Danish Competition and Consumer Authority about an indication of interest in acquisition of the company in their response.

Representatives from the Danish Competition and Consumer Authority gave testimony in the case, where it was stated that “expressions of interest” cover all kinds of contact, including contact prior to genuine sales negotiations and the signing. Consequently, telephone calls or meetings, which do not result in anything further, are also comprised of the concept.

The expression of interest that Metro did not mention consisted in a number of preliminary discussions with a potential buyer, which Metro contacted themselves. The discussions resulted in a short e-mail from the potential buyer with a non-committal offer. It appears from the explanations that Metro in Denmark did not consider it a realistic or serious offer, which was relevant mentioning. Furthermore, it seems as if there were some miscommunication between Metro in Denmark, who discussed the non-committal offer with the potential buyer, and Metro in Germany, who handled the merger process.

The District Court in Glostrup convicted Metro in accordance with the indictment and found that Metro had violated the Danish Competition Act by retaining information about the potential buyer.

Considering the purpose of the merger control, the court found that the contact with the potential buyer was of such an extent and character that Metro should have provided this information in the reply to the Danish Competition and Consumer Authority. In this connection, the court pointed out that it is not up to the applicant to choose, which information is to be submitted in connection with the merger control.

Furthermore, the court notes that it the company’s responsibility to observe the duty of disclosure. Consequently, Metro in Denmark could not plead that they did not have knowledge of the information submitted in connection with the merger due to the group’s internal administrative procedures.

Significance for other companies

The prohibition against submitting incorrect and misleading information to the authorities applies in many jurisdictions and not only in relation to merger cases.

The case demonstrates that companies have to be thorough and deliberate in their responses to questions from the competition authorities. Especially in connection with merger control, where the process can be under time pressure.

Consequently, in a merger process it is necessary to have internal procedures securing that all information of relevance to the response is communicated properly and fast to the team handling the merger. The merger team can then assess whether the information shall be incorporated in the response together with the adviser, who is in charge for the dialogue with the authorities.


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