Gun Jumping Research Articles

Recent Changes in the German Investment Screening Mechanism in Light of the EU Screening Regulation

In 2020 and 2021, the German investment screening laws, namely Außenwirtschaftsgesetz (AWG) and Außenwirtschaftsverordnung (AWV) were again subject to considerable reform induced by new legislation at the European level and a reshaped industry policy agenda at the national level. This article critically reviews the most significant changes brought about by one law (Erstes Gesetz zur Änderung des Außenwirtschaftsgesetzes und anderer Gesetze) and three ordinances (Fünfzehnte, Sechzehnte und Siebzente Verordnung zur Änderung der Außenwirtschaftsverordnung) and provides an overview of the reformed screening procedure. Although claims in this direction have been made, neither the reform nor the underlying Screening Regulation (EU) 2019/452 have altered the objective of review – the protection of public order or security – or bar for governmental intervention – actual and sufficiently serious danger. Both these were not ‘overwritten’ by secondary law and continue to be determined by the pertinent jurisprudence of the Court of Justice of the European Union. Notwithstanding this, the reform has considerably widened the ‘sensitive sectors’ in which pertinent investments must be notified to and cleared by the authorities. ‘Gun jumping’ is prohibited and parties moving forward nonetheless risk criminal prosecution. Reform has also standardised the deadlines for governmental intervention and brought about procedural clarity. What the many and frequent changes reveal on a more fundamental level is a progressing politicisation and securitisation of investment screening law.

Procedural developments in EU merger control

To deliver accurate decisions in tight timelines, the EU merger control system has procedural rules regarding gun jumping (i.e., no implementation of concentrations before notification/clearance) and provision of correct/non-misleading information. Recently, the Court issued two judgments and the Commission adopted three decisions applying these rules. The Courts’ judgments provide guidance on the concepts of partial implementation; single concentration; and fines for gun-jumping. The Commission’s decisions concerned gun-jumping through warehousing schemes (Canon), through veto rights in agreements and during integration discussions (Altice). In $\mathit{GE}$ /LM Wind, the Commission emphasized the need for precise information in merger notifications, including on parties’ pipeline activities.

Canon/Toshiba Medical Systems: questions raised on the legitimacy of warehousing and further enforcement of gun jumping

The long awaited publication of the decision of the European Commission in Canon/Toshiba Medical Systems Corporation provides insight into the Commission's standpoint on the use of warehousing structures in transactions that are notifiable under the EU Merger Regulation and guidance on potential concerns relating to these arrangements. The decision is also a further illustration of the Commission's strict enforcement of procedural infringements (a fine of EUR 28 million was imposed in this case). The US and China also imposed fines for gun jumping in this case, with Japan also issuing a warning to the parties of a potential violation.

Gun Jumping in Selected SEE Countries – an Obvious Risk in M&A Transactions

Gun jumping is a term which describes the premature realization of a merger before obtaining a merger clearance from the relevant competition authorities. In the last years, the European Commission and national competition authorities have demonstrated an increased interest in investigating and punishing gun jumping cases. Recognizing this interest and the need for practical guidance, the article first gives an overview of gun-jumping evolution through case law. It then points to different merger filing thresholds in the region, and implications they could have for gun-jumping issues, to show that despite the commercial and historical common ground in the region, merger filing thresholds do differ significantly between the countries, in a way which requires a cautious and sometimes challenging structuring of M&A activities with regional reach. Based upon an overview of individual gunjumping cases in the region, but taking into account the EU precedents, the article provides recommendations how to avoid gun-jumping risks.

Revealed Proprietary Information Disclosure

I propose a methodology to study proprietary information firms disclose prior to Seasoned Equity Offerings. I assess proprietary information disclosures by the magnitude of association between a private information-based proxy and stock returns. Using a difference-in-differences design around the Securities Offering Reform of 2005 that relaxed restrictions on disclosures, I find that equity-issuing firms disclose more than twice as much proprietary information as non-issuing control firms. I corroborate my findings using major customer identity disclosure and three ex ante measures of proprietary information risks. Results are robust after controlling for information flow from insider trading and financial analysts. I also document that disclosure of proprietary information leads to 10–23 percent lower underpricing. Finally, this paper sheds light on unintended consequences of disclosure regulation. While prior regulation constrained managerial disclosure practices to prevent gun jumping, it also restrained legitimate corporate disclosures that may have limited firms’ ability to raise capital.

Gun jumping in Brazil

Gun jumping in Brazil

Gun Jumping in the European Union: An Analysis in Light of Ernst & Young

Gun Jumping in the European Union: An Analysis in Light of Ernst & Young

“After Thunder Comes Rain”: The ECJ Finally Rules on the Boundaries of the EUMR Standstill Obligation

In its judgment of 31 May 2018, case C-633/16, the European Court of Justice ruled on the preliminary questions referred by the Danish Maritime and Commercial Court in the context of a merger notified to the Danish Competition and Consumer Authority by KPMG DK and EY DK. The referring court asked the ECJ to clarify on the scope of the so-called standstill obligation imposed on the parties of a notifiable transaction by article 7 of the Council Regulation (EC) No. 139/2004 (EUMR). The decision was long awaited, since after having imposed several fines for gun jumping practices in recent times, it is the first case ever in which the Court has been asked to take position on the matter through a preliminary ruling. As for substance, the European Court of Justice stated that article 7, paragraph 1 of the EUMR must be interpreted as meaning that a concentration is implemented only by a transaction which contributes to the change in control of the target undertaking. In doing so, the Court gives a broad overview of the EU merger control system, recalling the fundamental concepts of concentration, control and standstill in order to give a systematic interpretation of the provisions at stake.

Gun jumping in Brazil

Gun jumping in Brazil

Jumping the gun: lessons learnt from recent EU cases

In most jurisdictions, the parties to a merger are not allowed to implement the transaction prior to receiving clearance from the relevant competition authority. Competition authorities have become increasingly vigilant about enforcing this standstill obligation. Recent high profile cases involving record fines provide some insight into which activities may be regarded as impermissible ‘gun jumping’ and which measures are permitted in preparing to implement a merger. This article analyses the European Commission's decision in Altice and the Court of Justice's judgment in Ernst & Young and draws conclusions, in particular, on the implications for information exchange between merging parties and the identification of ‘ordinary business’, which must remain unaffected until closing of a prospective concentration.

GUN JUMPING IN BRAZILIAN ANTITRUST LAW: A CASE STUDY IN THE OIL INDUSTRY

This article presents some of the main changes introduced in the Brazilian antitrust system with the publication of Law no. 12.529, 2011, which introduced important changes in the control of acts of economic concentration - mergers, acquisitions, formation of joint ventures – which now began to be performed by the competent authority prior to the act of concentration, avoiding the consummation of transactions without the consent of CADE and analyzes the concept of Gun Jumping. The legislative change imposes a challenge for the Brazilian antitrust system: to define the boundaries between a lawful process of economic concentration and a Gun Jumping practice. In particular, a study was conducted on these impacts on the national oil industry in order to evaluate the performance of CADE in the implementation of the legislation.

GUN JUMPING IN BRAZILIAN ANTITRUST LAW: A CASE STUDY IN THE OIL INDUSTRY

This article presents some of the main changes introduced in the Brazilian antitrust system with the publication of Law no. 12.529, 2011, which introduced important changes in the control of acts of economic concentration - mergers, acquisitions, formation of joint ventures – which now began to be performed by the competent authority prior to the act of concentration, avoiding the consummation of transactions without the consent of CADE and analyzes the concept of Gun Jumping. The legislative change imposes a challenge for the Brazilian antitrust system: to define the boundaries between a lawful process of economic concentration and a Gun Jumping practice. In particular, a study was conducted on these impacts on the national oil industry in order to evaluate the performance of CADE in the implementation of the legislation.

GUN JUMPING IN BRAZILIAN ANTITRUST LAW: A CASE STUDY IN THE OIL INDUSTRY

This article presents some of the main changes introduced in the Brazilian antitrust system with the publication of Law no. 12.529, 2011, which introduced important changes in the control of acts of economic concentration - mergers, acquisitions, formation of joint ventures – which now began to be performed by the competent authority prior to the act of concentration, avoiding the consummation of transactions without the consent of CADE and analyzes the concept of Gun Jumping. The legislative change imposes a challenge for the Brazilian antitrust system: to define the boundaries between a lawful process of economic concentration and a Gun Jumping practice. In particular, a study was conducted on these impacts on the national oil industry in order to evaluate the performance of CADE in the implementation of the legislation.

Case T-704/14 – Marine Harvest v Commission: On ‘Gun Jumping’ and Public Bids

Case T-704/14 – Marine Harvest v Commission: On ‘Gun Jumping’ and Public Bids

Information exchanges between competitors from a competition law perspective – the problem of premature exchanges of sensitive information in the context of merger control (Gun Jumping)

The topic of information exchanges between competing undertakings is central to competition law. These are practices that enhance market transparency and, as such, can generate significant efficiencies. However, they can also give rise to serious competition concerns, often because they afford competitors the possibility of reaching focal points of coordination. The analysis of information exchanges has traditionally taken place in the context of the legal framework that prohibits cartels. This article reviews, at first, the approach taken in Europe by competition authorities and courts, firmly grounded in the Commission Guidelines and in the most recent case law of the European Court of Justice. After discussing the relevant legal framework and the main criteria for the assessment of information exchanges in detail, the article elaborates on the specific problem that premature exchanges of information between competitors can create in the context of a merger transaction. As the competitors that they are, at least until closing of the deal, it is essential that contracting parties ensure that their due diligence exercise and the planning of the integration of their businesses are carried out in a manner that is consistent with competition rules, avoiding behaviour that can be interpreted as gun-jumping or as a cartel practice and, as a consequence, financial penalties and judicial claims.

Gun jumping in India: lessons from Competition Commission of India’s enforcement activities

This article discusses the jurisprudential practice of the Competition Commission of India (CCI/‘Commission’) when it comes to the issue of gun-jumping. Although the Indian merger control regime has only been in effect for half a decade, the CCI has found the parties guilty of violating the standstill obligation imposed by India’s competition law. These decisions have clarified the Commission’s view with respect to issues such as the target exemption, trigger document, interconnected transactions, and control and penalty imposition. This article also compares the Indian experience to the decisions of more mature competition law institutions such as the European Commission/General Court/European Court of Justice (ECJ), where necessary, to compare their approaches.

The French Competition Authority's Altice Decision: Record Fine for the First ‘Genuine’ Gun Jumping Case in Europe

The French Competition Authority's Altice Decision: Record Fine for the First ‘Genuine’ Gun Jumping Case in Europe

Caution Ahead: High and Unpredictable Fines for Gun Jumping

On 8 November 2016, the French Competition Authority (Autorité de la concurrence) imposed a fine of €80 million on the telecom investment company Altice Luxembourg and the French telecom operator SFR for having implemented two concentrations before obtaining merger authorisation. The Authority discovered that prior to its approval of the acquisitions by Altice of both SFR and the OTL telecom group, Altice had been exchanging strategic information with SFR in relation to SFR operations and the integration of OTL. The scale of the fine is unprecedented in Europe for a ‘gun jumping’ offence and its imposition marks a turning point in the enforcement of merger control in France, with possible knock-on effects in other EU Member States, and possibly at the EU level as well. This decision should therefore be seen as a warning signal for all companies engaged in mergers and acquisitions, notably in light of insufficient guidance for the way in which such fines are being calculated.

Gun jumping risks in the Brazilian upstream oil and gas industry

Gun jumping risks in the Brazilian upstream oil and gas industry

GUN JUMPING IN BRAZILIAN ANTITRUST LAW: A CASE STUDY IN THE OIL INDUSTRY

This article presents some of the main changes introduced in the Brazilian antitrust system with the publication of Law no. 12.529, 2011, which introduced important changes in the control of acts of economic concentration - mergers, acquisitions, formation of joint ventures – which now began to be performed by the competent authority prior to the act of concentration, avoiding the consummation of transactions without the consent of CADE and analyzes the concept of Gun Jumping. The legislative change imposes a challenge for the Brazilian antitrust system: to define the boundaries between a lawful process of economic concentration and a Gun Jumping practice. In particular, a study was conducted on these impacts on the national oil industry in order to evaluate the performance of CADE in the implementation of the legislation.