Brussels, 31 March 2014
Mergers: Commission informs Marine Harvest of objections against early implementation of its acquisition of Morpol
The European Commission has sent its objections to salmon farmer and processor Marine Harvest ASA for early implementation of its acquisition of competitor Morpol ASA, both of Norway. In December 2012 Marine Harvest had acquired a 48.5% stake in Morpol. This transaction was notified only in August 2013 and cleared subject to conditions in September 2013 (see IP/13/896). In the Commission's preliminary view, Marine Harvest has failed to notify its project to acquire Morpol to the Commission before it was implemented, in breach of the EU Merger Regulation. If the infringement is confirmed, the Commission may impose a fine of up to 10% of the company's annual worldwide turnover. The sending of a statement of objections does not prejudge the outcome of the investigation.
Marine Harvest notified its planned acquisition of control over Morpol on 9 August 2013 and the Commission cleared it subject to conditions on 30 September 2013. The Commission considers that by acquiring a 48.5% stake in Morpol on 18 December 2012, Marine Harvest took control over Morpol. The transaction was implemented only four days after it was signed, that is eight months before the notification to the Commission and ten months before the Commission cleared the transaction. The Commission therefore takes the preliminary view that thereby Marine Harvest has implemented the acquisition of Morpol prior to its notification and clearance by the Commission, in breach of Articles 4(1) and 7(1) of the EU Merger Regulation.
The prohibition of implementation of a concentration before it is notified and cleared by the Commission constitutes a cornerstone of EU merger control and of most merger control systems worldwide.
The early implementation of a concentration affects the structure of the market and may make it more difficult for the Commission to restore effective competition where necessary. In order to avoid any permanent and irreparable damage to effective competition, companies are obliged to give prior notification of concentrations exceeding certain thresholds, and not to implement these concentrations before having received clearance from the Commission. Any infringement of these obligations is serious, since it undermines the very essence of EU merger control.
On 14 December 2012, Marine Harvest entered into a Share Purchase Agreement (SPA) with Friendmall Ltd and Bazmonta Holding Ltd. Bazmonta is a fully-owned subsidiary of Friendmall, which is, in turn, controlled by Mr Jerzy Malek, founder and former CEO of Morpol. Pursuant to the SPA, Marine Harvest acquired a 48.5% shareholding in Morpol. The closing of this transaction took place on 18 December 2012.
On 15 January 2013, Marine Harvest submitted a mandatory public offer for the remaining 51.5% shares in Morpol pursuant to the Norwegian Securities Trading Act. Following the settlement and completion of the mandatory offer on 12 March 2013, Marine Harvest acquired 87.1% of the shares in Morpol. The acquisition of the remaining shares in Morpol was completed on 12 November 2013. On 28 November 2013, Morpol was delisted from the Oslo Stock Exchange.
The Marine Harvest/Morpol merger case
On 30 September 2013, the Commission cleared the proposed acquisition of Morpol, the largest salmon processor in the European Economic Area (EEA), by the leading EEA salmon farmer Marine Harvest. The clearance was conditional upon the divestment of the majority of Morpol's salmon farming activities in Scotland.
The proposed transaction, as originally notified, would have combined two of the largest farmers and primary processors of Scottish salmon. The merged entity would have had high market shares and its competitors would have been unable to exert a sufficient constraint on it. The acquisition would likely have led to price increases which could have ultimately harmed consumers.
In order to address the Commission's concerns, Marine Harvest committed to divest the largest part of Morpol's salmon farming operations in Scotland, based in Shetland and the Orkneys. The Commission concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns (see IP/13/896).
The present investigation of Marine Harvest's possible infringement of Articles 4(1) and 7(1) of the EU Merger Regulation has no impact on the Commission's decision to clear the transaction because it does not alter the Commission's analysis of the market.
A Statement of Objections is a formal step in an investigation, by which the Commission informs the companies concerned in writing of the objections raised against them. The companies can then examine the documents in the Commission’s file, reply in writing and request an oral hearing to present their comments on the case to representatives of the Commission and the national competition authorities.
The sending of a Statement of Objections does not prejudge the final outcome of the investigation.
There is no legal deadline to complete the inquiries. Their duration depends on a number of factors, including the complexity of each case, the extent to which the companies concerned co-operate with the Commission and the exercise of the rights of defence.