by Fatima Ghaddari | Jan 2, 2025 | Niet gecategoriseerd
Last year 2023, the Swedish Competition Authority (”the SCA”) conducted a major investigation into unfair trading practices, which resulted in several cases. Here is a summary of the most interesting case handled by the SCA so far.
Overview on unfair trading practices (in sweden)
The Swedish Act (2021:579) on the Prohibition of Unfair Trading Practices in the Purchase of Agricultural and Food Products (“LOH”) entered into force on 1 November 2021. The Act is based on UTP Directive.[1] The Directive sets a minimum level of protection against certain trading practices and contractual arrangements.
The Directive is based on the premise that imbalances in bargaining power between suppliers and buyers of agricultural and food products are common – which is the reason for legislative protection against the stronger trading partner.
Two provisions are central. The first concerns the so-called “black list”, which sets forth trading practices that are prohibited in all circumstances. The second concerns the so-called grey list, which contains trading practices that are prohibited unless clearly agreed in advance by the parties.
As supervisory authority for LOH, the SCA initiated a major investigation into unfair trading practices. The inquiry resulted in several cases, including the one below – which is of particular interest.
Prohibition of unilateral amendments
Following a complaint, the SCA investigated whether a buyer of egg had unilaterally amended the terms of price and payment with its suppliers, who in this case were farmers. More specifically, the buyer had introduced what was known as a “market-adjusted price”, which mean that prices were adjusted weekly. This implied that the buyer, based on its own sales, unilaterally adjusted the price paid to the supplier. The buyer bought directly from farmers, repacked the eggs and sold to both the retail and food industries, where the eggs were used in food processing.
The SCA investigated in detail how the supplier’s pricing model with the so-called market-adjusted price related to the prohibition of unilateral changes in LOH.
Assessment by the sca – no violation
In particular, the SCA analysed if the buyer had unilaterally enforced a change to the contractual terms. Under section 5(1)(3) of LOH, a buyer is prohibited from unilaterally modifying the terms of the contract regarding the interval, method, place, time or volume of delivery, quality requirements, payment or price. It is clear from the wording that the provision is aimed at modifying the terms of an existing contract.
The SCA concluded that it was the buyer who contracted the supplier for a certain period. The buyer also amended standard contracts, but that there was no particular term as to how often the price would be communicated to the farmer. Instead, according to the SCA, it was the buyer who set the price and could independently raise or lower it in relation to the egg producers, depending on market developments. The price was communicated to the farmer prior to delivery. The farmer was free to opt out and not supply the eggs to “market-adjusted price”. Against this background, the SCA closed the case without investigating the matter further.
[1] DIRECTIVE (EU) 2019/633 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 April 2019 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain.
Danowsky & Partners
by Eric Janssen | Nov 12, 2024 | Niet gecategoriseerd
In a decision of 4 September 2024 (Dutch only) the Dutch Authority for Consumers and Markets (ACM) imposed a cease and desist order on cheese producer Royal Lactalis Leerdammer B.V. for violating the Unfair trading practices in the agricultural and food supply chain Act (UTP Act). Royal Lactalis Leerdammer B.V. had not agreed in advance on a transparent price-fixing system with its suppliers (Dutch dairy farmers), but unilaterally set the monthly remuneration after the lapse of each month.
The UTP Act
In the agricultural and food supply chain, producers of primary agricultural products are often the weakest link. In order to protect their market position against unfair trading practices (UTP), the European legislator listed in the UTP Directive a number of trading practices that are deemed to be always unfair. The Dutch transposition of this directive, the UTP Act (Dutch only), entered into force on 1 November 2021.
The ACM is the designated enforcement authority as referred to in Article 4 UTP Directive. In connection with this, the ACM has the power, inter alia, to impose fines and cease and desist orders. The ACM can act not only on its own initiative, but also in response to complaints. In Dutch administrative law, a complaint from an interested party is regarded as a request for enforcement. A complaint from a third party is considered a tip-off.
The ACM took the first two decisions (Dutch only) based on the UTP Act early this year. Both decisions concerned unilateral price adjustments by Vion Food Group (Vion), an internationally operating Dutch food conglomerate with mainly slaughterhouses and meat processing plants for pork and beef. Of the three complaints lodged by an interested party, two complaints, according to the ACM, did not relate to a UTP but a commercial dispute. The requests for enforcement were therefore rejected. The third complaint concerned a practice that did qualify as a UTP. However, Vion offered to adjust that practice in line with the ACM’s requirements. That commitment was declared binding by the ACM. Consequently, a breach of the UTP Act was not determined and the complaint was dismissed as well.
The case at hand
The parties involved
Royal Lactalis Leerdammer B.V., a subsidiary of French multinational dairy company Lactalis (Lactalis), produces a Gouda style cheese under the name Leerdammer. Lactalis pays the dairy farmer who supply milk for the production of this cheese a monthly remuneration based on the quantity and the composition (protein and fat content) of the milk delivered. The dairy farmers concerned are united in the Leveranciersvereniging Leerdammer Collectief (LVLC).
Compliants by LVLC regarding Lactalis
On 5 July 2022 LVLC submitted several complaints with the ACM. LVLC alleged that Lactalis violated the UTP Act in various ways. According to LVLC Lactalis:
1. determined the remuneration unilaterally
2. demands payments not related to the sale of milk
3. changes unilaterally the terms of delivery
4. obtains and uses trade secrets unlawfully
Regarding the first complaint, LVLC claimed that Lacatalis’ retrospective and unilateral determination of the monthly remuneration based on fat and protein content qualified as a UTP. The remuneration changes from month to month without any influence from dairy farmers. Moreover, a dairy farmer cannot verify whether the right price is paid to him, as there are no parameters on the basis of which the remuneration is actually determined.
Lactalis argued that it never changed the pricing mechanism and therefore it does not violate the UTP Act. The dairy farmers allegedly agreed to Lactalis’ pricing system consisting of Lactalis fixing the remuneration in retrospect. Thus, Lactalis does not change the terms when it sets the remuneration monthly. It is merely giving effect to an upfront agreement made with the dairy farmers, namely that the remuneration is based on the price that fat and protein have fetched in the market. In this regard, Lactalis referred to a decision of 4 July 2023 (Swedish only) by the Konkurrensverket, the Swedish competition authority. This authority reportedly ruled in a seemingly similar case that the contested trading practice did not qualify as a UTP.
With respect to the second complaint LVLC argued that dairy farmers have to pay various payments and surcharges not related to the sale of milk. In any case, dairy farmers cannot check whether this relation exists. Lactalis claimed that its monthly charges include milk sample testing, quality assurance, administration and preparation of the milk remuneration settlement.
Regarding the third complaint, LVLC alleges that Lactalis unilaterally changed the terms of supply in 2022 and 2023. Despite objections from both the LVLC and individual dairy farmers, Lacatalis implemented the amended terms of delivery. Lacatalis argued that there was agreement on the amended terms of delivery, as dairy farmers continued to supply milk.
The fourth complaint concerned the use of farm data that dairy farmers are required to provide to Lactalis to enable it to verify whether the individual dairy farmer meets contractual quality requirements. According to the LVLC, Lactalis shares this farm data with third parties, including Statistics Netherlands (CBS). Lactalis argued that dairy farmers authorise it to share the said data. Each authorisation specifies the purpose for which this data is requested and to whom it is disclosed.
The ACM’s assessment
Review of the complaints
The ACM agrees with the LVLC that Lactalis unilaterally changes the terms of supply by unilaterally determining fat and protein prices (and thus the amount of remuneration) on a monthly basis, without a transparent system agreed with the dairy farmer in advance. In doing so, Lactalis violates the UTP Act. The ACM notes that the prices for protein and fat are not fixed and that it is not transparent how these prices are determined on a monthly basis. In addition, a dairy farmer cannot negotiate fat and protein prices with Lactalis. Consequently, there is no transparent price-fixing system and there are no guarantees to prevent arbitrariness. Thus, in the opinion of the ACM, it cannot be said that Lactalis and its suppliers have agreed on a price or price mechanism.
The Konkurrensverket’s decision referred to by Lactalis, related to the supply of eggs. The buyer, Dava Foods, introduced so-called “market-adjusted” prices in 2022. This meant, among other things, that prices were adjusted weekly based on market conditions. In its decision, the Konkurrensverket concluded that there is no unilateral price change when Dava Foods pays egg producers a new price every week during the period of the agreement. The ACM does not share the interpretation adopted by the Konkurrensverket. In the ACM’s view, the Konkurrensverket merely interpreted Swedish law in a specific case. According to the ACM, this does not detract from its own reasoning and conclusion.
Regarding the payments and surcharges, the ACM considers that these do relate to the supply of milk. However, Lactalis should clarify certain components in its terms of delivery in order to make the relationship with the delivery of milk more transparent.
With respect to the unilaterally changed supply conditions, the ACM agrees with Lactalis that dairy farmers are given the opportunity to object to the changes. The agreement can be tacit, which the UTP Act does not prohibit.
As regards the fourth complaint, the ACM sides with Lactalis as well. According to the ACM the dairy farmers share their farm data with Lactalis to demonstrate compliance with legal and sectoral requirements. The ACM has no indications that Lactalis has obtained, used or disclosed farm data in an unlawful manner.
Decision
Only the complaint relating to unilateral fixing of the monthly remuneration hits the mark. The ACM orders Lactalis to change the terms of delivery insofar as these relate to the calculation of the monthly remuneration and to present the new system to its suppliers. The price system should be transparent, so that it is clear to milk farmers in advance how the remuneration is calculated and that this can be verified by the individual mil farmer. The LVLC’s request to formulate the cease and desist order more concretely in the sense of explicitly stating the requirements to be met by the milk price or pricing system to be used is not honoured. Based on a separate decision dated 28 October 2024 (Dutch only), Lactalis has been given until 4 April 2025 to comply with the cease and desist order. If it fails to comply, Lactalis will become subject to a periodic penalty.
The ACM’s decision is subject to objection and appeal. It cannot be ruled out that LVLC and/or Lacatalis will have made use of this possibility.
Concluding remarks
What stands out about the decision under discussion is first of all that Lactalis apparently has not been able to clarify how the remuneration was determined in actual practice. While Lactalis indicated that the remuneration was calculated based on the monthly prices of protein and fat, it was not able to make clear which prices it exactly used. Was it at all clear what exactly the parties had agreed on with regard to fixing the monthly remuneration? If the agreement was unclear, was there not simply a commercial dispute? In the Vion case, the ACM did not qualify such a dispute as a UTP
It is furthermore unfortunate that the ACM does not explain in more detail why the lack of a contractual system to calculate the monthly remuneration qualifies as a UTP. Perhaps the comparison can be drawn with a unilateral change clause that allows the buyer to unilaterally modify the contract. Such a clause is most likely to be prohibited by Article 3(1)(c) UTP Directive. According to the Commission’s proposal for the UTP Directive, parties are not allowed to contractually deviate from the UTP’s listed in Article 3(1) UTP Directive. These UTP’s are not subject to parties’ contractual discretion due to their “as such” unfair nature (p. 13). In any case, the absence of a contractual price-fixing system makes a formal unilateral change clause de facto redundant. Materially, the absence of a price-fixing system seems to have a similar effect to a unilateral change clause. After all, it allows the buyer to unilaterally set the price to be paid to the supplier.
On top of this, it is likewise a pity that the ACM does not address the substance of the Konkurrensverket decision cited by Lactalis. Without any content-related argumentation, the ACM states that the Konkurrensverket applied its national law in a specific case. It does not explain whether and if so where the Swedish legal framework and the Dava Food case differ from the Dutch legal framework and the Lactalis case the ACM had to rule on. From the Konkurrensverket ’s similarly cursory decision, it would seem that although Dava Foods unilaterally set the new prices, it then communicated them to egg farmers in advance. By then continuing to deliver, these farmers may have tacitly agreed to the new price. Lactalis on the other hand fixed the remuneration after delivery. This seems to be a relevant difference. Either way, the brief substantiation in the ACM decision is a miss for day-to-day practice. As noted above, the ACM has assessed only two cases since the introduction of the UTP Act in 2021. Thus, the number of examples is extremely limited. Leaving several questions unanswered.
This blog is partly based on the blog ACM legt last onder dwangsom op aan Lactalis vanwege eenzijdige prijsbepaling (Dutch only) written by my colleague Rémon van Wingerden.
by Nina Methens | Sep 26, 2024 | Niet gecategoriseerd
On 28 March 2024, the Belgian Federal Chamber of Representatives adopted a new act implementing Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (“Digital Markets Act”), as well as amending various provisions related to the organisation and powers of the Belgian Competition Authority (the “Act”). The Act primarily grants more powers to the Belgian Competition Authority (the “BCA”) to improve its efficiency and allow it to adequately support the European Commission (“EC”) when the latter applies and enforces the DMA. The Act will enter into force ten days after its publication in the Belgian Official Gazette.
Introduction
The Act pursues four different objectives.[1] First, it aims to implement the Digitial Markets Act (the “DMA”) into Belgian law. Although the DMA is in principle directly applicable in all EU Member States, certain provisions must be implemented in national law to ensure legal certainty. Second, the Act aims to improve the efficiency of the BCA’s procedures, for example by providing a duty to cooperate for individuals requesting immunity, clarifying the starting point of the one-month period to reply to the draft decision submitted by the BCA’s prosecution service and giving the parties the right to copy, from the BCA’s file, preexisting documents on which a leniency request is based. Third, the Act adds a fifth member to the BCA’s Management Committee, namely the Planning and Budget Director, who will, however, not have any decision-making powers on the application of competition law. Finally, the Act excludes mergers between approved hospitals within the meaning of the coordinated law of 10 July 2008 on hospitals and other care institutions from prior merger control by the BCA, except for mergers between approved hospitals that meet specific notification thresholds.
To achieve these ends, the draft Act amends Books I and IV of the Code of Economic Law (“CEL”) as well as other relevant legislation. The present contribution focuses on the Act’s provisions related to the DMA’s implementation into Belgian law. (more…)
by Moritz Lorenz | Sep 23, 2024 | Niet gecategoriseerd
German case law has so far been skeptical of the pursuit of large portfolios of antitrust damages claims under the so-called assignment model. This development now seems to have been stopped and Germany is once again becoming a more attractive forum for antitrust litigation.
Previous development
Many German plaintiffs assert their claims for damages against cartel members under the so-called assignment model (Abtretungsmodell). In this model, a group of consumers or companies assign their claims to a third party (debt collection service provider). This third party then asserts the claims in or out of court on a bundled basis and usually receives a contingency fee. For a long time, the admissibility of this type of collective redress was disputed in Germany, and courts denied the right of debt collection service providers to sue because of alleged violations of the German Legal Services Act (Gesetz über außergerichtliche Rechtsdienstleistungen, RDG). The Federal Court of Justice ruled in favour of the assignment model in two landmark decisions in 2021 (II ZR 84/20) and 2022 (VIa ZR 418/21) but lower instance courts were reluctant to receive these judgments. The main reason given was that the complexity of antitrust law would require special expertise which debt collection service providers typically do not have. The courts referred to corresponding provisions in the RDG, which requires legal service providers to have sufficient expertise in certain core areas of law. However, this development now seems to have been stopped. Both the Higher Regional Court of Munich (OLG München) and the Higher Regional Court of Stuttgart (OLG Stuttgart) follow the view expressed by the Federal Court of Justice and affirmed the legality of the assignment model.
Truck Cartel (Higher Regional Court of Munich)
The earlier judgment of the Regional Court of Munich, which declared the assignment model to be invalid, has been set aside by the Higher Regional Court of Munich (judgment of 28 March 2024 – 29 U 1319/20). Contrary to the Regional Court’s view, the assignment model is considered to be permissible. It is expressly recognized by the Higher Regional Court that a debt collection service provider may very well enforce claims in any area of law, including antitrust law. The action relates to the truck cartel. The European Commission imposed fines totaling almost four billion euros on truck manufacturers DAF, Daimler, Iveco, Scania and Volvo/Renault for price-fixing between 1997 and 2011. MAN was granted immunity from fines for voluntarily disclosing the cartel. In the action, claims for approx. 70,000 trucks are bundled totaling EUR 560 million in damages plus interest. In the first instance, the action had failed because the Regional Court of Munich denied t that the claims has been validly assigned to the debt collection service provider. The court cited alleged violations of the Legal Services Act in its reasoning. On appeal, however, the Higher Regional Court of Munich came to a different conclusion. The Higher Regional Court held that the plaintiff’s actions are permissible under the Legal Services Act and that the claims were validly assigned to the debt collection service provider. The Higher Regional Court rules that the claims are founded and referred the case back to the Regional Court of Munich for quantification of the damages. The defendant has filed an appeal on points of law against the judgment which is now pending in front of the German Federal Court of Justice.
Log cartel (Higher Regional Court of Stuttgart)
In addition, and most recently, the 2nd Civil Senate of the Higher Regional Court of Stuttgart (OLG Stuttgart) also ruled in favour of a claim for damages from the assigned rights of 36 sawmills (judgement of 15 August 2024 – 2 U 30/22). The case concerns 36 sawmills that assigned their cartel damages claims to a legal service provider. The sawmills see themselves as victims of the so-called “log cartel”, which allegedly fixed log prices for itself and other forest owners between 2005 and 2019. Specifically, the lawsuit seeks compensation for damages incurred by the sawmills as a result of purchasing logs at prices allegedly inflated by the cartel. Contrary to the Regional Court of Stuttgart, the Higher Regional Court of Stuttgart denied that the assignment model per se violated the Legal Services Act in the field of antitrust law. The assignment model and the assertion of claims do not constitute an inadmissible debt collection service. This is therefore possible in principle, and the assignments are therefore effective, provided that the assignment is sufficiently proven.
Conclusion
‘Due to the fundamental importance’ of the case, both the Higher Regional Courts of Stuttgart allowed an appeal on points of law to the Federal Court of Justice. However, it is expected that the Federal Court of Justice will adhere to its previous case law and confirm the validity of the assignment model also in antitrust cases, thus paving the way for companies and consumers harmed by cartels to assert antitrust damages claims more broadly and possibly more quickly in Germany. In addition, the German Verbandsklagegesetz, which is based on the Representative Actions Directive (EU) 2020/1828, may also cover antitrust damages claims, as it is also intended to allow small companies to bring collective actions for damages.
Moritz Lorenz & Lars Hettstedt
by Fatima Ghaddari | Jun 3, 2024 | Niet gecategoriseerd
On 14 May 2024 the Competition Council of the Republic of Lithuania fined Capital Realty (acting as a franchisor) and 20 of its franchised real estate agencies with a total fine of EUR 710,751 for price fixing agreement. Capital Realty and other members of “Capital” franchise network were found to have colluded to enforce a minimum commission fee of 3 percent for brokerage services, thus restricting mutual competition. This is the first case in Lithuania’s competition law practice where a franchise network was fined for anticompetitive actions.
The Competition Council’s investigation revealed that from February 2015, Capital Realty and an initial group of 10 agencies agreed to charge a minimum 3 percent commission fee for brokerage services to their clients. By 2017, an additional 10 agencies joined this agreement.
According to the Competition Council, regular meetings between February 2015 and December 2020, email communication between the managers of agencies, as well as general meetings of “Capital” franchise network members confirmed that these agencies collectively decided to maintain this minimum commission level, preventing any competitive price reductions. The investigation revealed that various additional measures helping to uphold the agreement were implemented (i.e. evidence collected by the Competition Council shows that managers agreed to introduce price monitoring and shared pricing data; internal audits and trainings were organized during which the “standard” pricing level within the “Capital” network was communicated).
Capital Realty and other agencies disagree with the agreement and claims that the commission fee discussed between the members was a price recommendation provided by Capital Realty. According to Capital Realty, by providing its agencies with price recommendations and other guidelines it sought to preserve the integrity of the “Capital” network and the quality of services. However, the Competition Council dismissed Capital Realty’s arguments entirely.
The decision is not final yet as it is open for appeal at the Regional Administrative Court within a month of its delivery. It is expected that Capital Realty and other members of “Capital” franchise network will challenge the decision in court. Nevertheless, the Competition Council’s ruling sends a clear message to businesses that franchisees are competitors and must be allowed to compete freely even within the franchise network.
Edita Daukšienė, Associate Partner
Darius Miniotas, Partner
WALLESS Lithuania
by Eric Janssen | Apr 18, 2024 | Niet gecategoriseerd
Since 1 July 2023, the Belgian rules on the screening of foreign direct investments (“FDI”) have been in force. As the decisions of the Interfederal Screening Commission (“ISC”) are not published, the rules’ application and interpretation still raise a lot of legal uncertainty. On 4 April 2024, the ISC published guidelines to provide further clarification.
Since 1 July 2023 a mandatory notification procedure has been in place in Belgium for transactions involving a non-EU investor investing in a Belgian target active in certain specific sensitive sectors. This notification procedure is in addition to other, already existing, requirements like mandatory merger notification to and approval by the competition authorities. In particular, transactions by a foreign investor acquiring either control over or 10% or 25% of the voting rights in a Belgian target – depending on the target’s activities – must be notified to and approved by the ISC before they can be implemented. This screening system applies to foreign investments in Belgian targets active in a number of exhaustively-listed sensitive sectors, like defence (including dual-use goods), healthcare, energy, telecoms, transport, critical technology and raw materials, critical infrastructure (whether physical or virtual), food security, private security, media, cybersecurity, access to sensitive information and personal data, and biotechnology. More information on the introduction of the Belgian FDI rules is available in our dedicated blog post
On 30 June 2023 – right before the entry into force of the Belgian FDI system – the ISC published some guidelines on the rules’ application and interpretation, but it was explicitly indicated that this guidance merely concerned a proposal of guidelines.
On 4 April 2024, the ISC has now shed some more light onto this new and non-public screening process by publishing finalised (as they are no longer called a “proposal”) and expanded guidelines.
While the system still raises a lot of questions, the new guidelines at least provide some very welcome clarity on at least some elements. The following are some examples of such clarifications.
According to the new guidelines, prior notification and approval is also required:
- For an asset deal, if it leads to a change of control;
- For the sale of a company division;
- For internal restructurings, even if the Belgian target ultimately remains owned or controlled by the same non-European company;
- If the number of voting shares that eventually exceeds the thresholds is acquired spread over multiple occasions;
- If the foreign investor’s voting rights before the entry into force of the Belgian FDI rules (i.e. 1 July 2023) did not exceed the threshold, but his/her share of voting rights exceeds the threshold due to an investment after that date;
- For an investment through which the foreign investor’s existing control increases;
- For an investment through which the foreign investor’s veto rights increase.
According to the new guidelines, no prior notification and approval is required:
- For greenfield investments (as only investments into existing Belgian targets are notifiable);
- For public tenders (except if a notifiable investment occurs in the context of such a public tender);
- For the reduction in the number of joint controlling shareholders (unless, as a result, the voting share thresholds are exceeded or if this leads to a change of control);
- If the foreign investor’s voting rights before the entry into force of the Belgian FDI rules (i.e. 1 July 2023) already exceeded the threshold (which, however, was irrelevant at that time), and then his/her share of voting rights further increases due to an investment after that date. While the draft guidelines indicated that a notification was required in this situation, the new guidelines now indicate that no notification is required, except if the foreign investor acquires control over the Belgian target due to the new investment;
- For an investment through which the foreign investor’s existing control decreases;
- For an investment through which the foreign investor’s veto rights decrease;
- For an investment in a Belgian target that is not itself active in one of the sensitive sectors, even if a non-Belgian entity belonging to the same group is active in a relevant sector;
- For corrections of material errors or purely formal amendments to investment agreements signed before 1 July 2023 (though substantial changes could be notifiable).
According to the new guidelines, the following elements are irrelevant to determine whether or not prior notification and approval is required:
- The size of the investment;
- The Belgian target’s turnover (with two specific exceptions);
- The Belgian target’s market share, whether in Belgium or abroad;
- The Belgian target’s number of employees;
- Whether or not the transaction is notifiable in other jurisdictions;
- The identity and the activities of the Belgian target’s clients (although this information can be relevant for the transaction’s substantive assessment);
- The fact that the Belgian target has a Belgian public authority as its client (although that could mean that the target has access to sensitive information, which could justify a requirement to notify).
The guidelines give a reminder that it is up to the foreign investor to determine whether or not a filing is required – there is no possibility in that regard to ask for some preliminary decision or ruling on the notification requirement. No further clarification is given on the interpretation of the sensitive activities and sectors – the guidelines are limited to a general note that the activities and sectors have to be interpreted on the basis of the purpose of the screening mechanism, i.e. to safeguard national security, public order and strategic interests.
In general, the guidelines encourage always notifying an investment in case it is uncertain whether it falls within the scope of application. While the notification process of course has timing consequences for the deal, at least notification before the ISC is free of charge, while administrative fines (up to 10% of the investment’s value) may be imposed for lack of or an incomplete notification.
In that regard, the guidelines also advise including in the transactional documents a solution to potential problems linked to the target’s unwillingness to provide certain information or the target’s provision of incorrect information – as even in such a situation the foreign investor is the one responsible for the notification and thus can be fined.
Moreover, the guidelines confirm that the ISC can – in the context of a negative decision following an ex officio investigation when no prior notification was made – order a divestment. It is thus key in any transaction involving a foreign investor to carefully study the notification requirement and, if required, to diligently prepare the filing documents.
