A party that plans to transfer control of (part of) a company no longer has to worry about notifying the NMa (Netherlands Competition Authority) of this plan for the time being. In an interesting decision of 13 January 2011 (LJN: BP0781), the District Court of Rotterdam ruled that only the party that is acquiring (exclusive) control of another company has a notification obligation in the sense of the Competition Act.
The case was as follows. Y bought the shares in X from Z, after which, as a result of the transfer of 80% of these shares, Y acquired exclusive control of X (the remaining 20% was to be transferred later). Y therefore took X over from Z. Since the threshold values from the Competition Act were exceeded, a concentration in the sense of the Competition Act was created. The plan to enter into this concentration was not reported to the NMa (on time), which is a violation of Section 34 of the Competition Act. Section 34 of the Competition Act stipulates that ‘a concentration may not be established before the proposal to do so has been reported to the board and four weeks have then passed’. The NMa imposed a fine on both Y (the buyer of X) and Z (the seller of X) because of the violation of this notification obligation. The NMa therefore found that Section 34 of the Competition Act gives rise to a notification obligation for both the buyer and the seller.
Z did not agree with the fact that it (too) had been imposed a fine and appealed the fine before the District Court of Rotterdam. It asserted (with an appeal to European competition rules) that only the acquiring party in a takeover is subject to a notification obligation. The District Court of Rotterdam found in Z’s favour and based its ruling on ‘a reasonable, systematic and historical legal interpretation, and in connection with that, also on European competition law.’ After all, in drafting the Competition Act, the legislator explicitly took into account the European rules for cross-border merger control (the Merger Regulation). This Merger Regulation stipulates in fact that only the party or parties acquiring control must report the plan for the takeover. Added to this is the fact that the notification obligation was created in order to enable assessment of the effects that the concentration will have on the market. From that standpoint as well it is not logical, according to the District Court of Rotterdam, that the selling party (in this case Z) should be subject to a notification obligation. After all, the seller is the party who surrenders control and therefore loses interest on the market.
In short, the selling party that transfers control is no longer subject to a notification obligation according to current case law. This does not alter the fact that all parties to a concentration are subject to a notification obligation if the situation does not involve a takeover, but rather a merger or the establishment of a joint venture in the sense of the Competition Act.
Sjaak van der Heul