EU Antitrust Chief Says Handful of Companies May Have Misled Regulator to Obtain Merger Clearance
March 24 2017 - 1:32PM
Dow Jones News
By Natalia Drozdiak
BRUSSELS--The European Union's antitrust chief said Friday that
her department is reviewing a handful of recent merger clearances
because of suspicions that companies misled investigators to secure
approval.
The unusual reassessment of past mergers could lead to
significant fines for the companies or--though highly unlikely and
complicated--overturning the clearance.
It suggests that the regulator could be preparing charges
against other companies similar to the ones it leveled in December
against Facebook Inc.
In that case, the EU accused the social-media company of giving
incorrect or misleading information to investigators during the
probe of its purchase of chat app WhatsApp in 2014. Facebook said
it provided accurate information to the EU about its plans and
technical capabilities.
In an interview with The Wall Street Journal, Margrethe Vestager
said the European Commission was scrutinizing instances in which
company representatives from a range of different industries
intentionally or negligently misinformed regulators probing planned
mergers.
"In each and every individual case...we need correct
information, in order to have the very high quality of our casework
that we want to have, " Ms. Vestager said. "We have found in more
than one case, that there was a case of misleading
information."
The EU declined to identify the companies under the microscope,
but the cases involve mergers whose reviews took place no more than
five years ago. The commissioner said the EU was still deciding
whether it would formally accuse the companies in these other cases
as well.
If found guilty, Facebook and the other companies could face
fines of up to 1% of global revenue. In an unlikely scenario, the
EU could also revoke its decision to clear the merger, if the
misleading evidence would have fundamentally changed the outcome of
the merger's review.
The EU has already said its case against Facebook won't affect
its previous decision to clear the merger.
The commission suspects Facebook inaccurately claimed during the
2014 takeover that it was unable to reliably match user accounts
between Facebook and WhatsApp--something the company started doing
two years later when it began combining user data across the
services. The EU regulator is in the process of analyzing
Facebook's response to the accusations, Ms. Vestager said.
It is rare for companies to be charged with making misleading
statements during a merger-approval process in Europe, given the
potential for fines and other sanctions. Lawyers representing
companies in the merger-review process who are found to have lied
to regulators could also be stripped of their licenses to practice
law. The EU in December said it hadn't opened such cases since new
rules that boosted fines came into effect in 2004.
Ms. Vestager said the commission over the past year had been
looking at several cases involving misleading information, but that
they wouldn't all necessarily be formally opened or decided upon as
a package.
"We have to respect the flow of each individual case, even in
these areas where it's procedural concerns that we have," she
said.
Separately, the commission has been looking at whether it should
change its rules that would expand the number of mergers that fall
under its purview--to include companies with less revenue but which
may hold commercially valuable data or products under development.
That initiative, however, is unrelated to the procedural cases, the
commissioner said.
In the interview, the EU antitrust chief also spoke about three
open cases against Alphabet Inc.'s Google, including the case in
which the EU has formally accused Google of skewing its online
search results to favor its comparison-shopping service. Google
rejects the EU's accusations in all three cases.
On the shopping case, Ms. Vestager said the EU was approaching
"a final phase" of its investigation, adding that any negative
decision against Google likely would involve remedies that are
"future-proof" and therefore likely broader in scope.
"Instead of being specific on page design or screen design, I
think it's very important [for us] to focus on how to allow
competition," she said. "If you're very specific about what design,
you may very quickly be caught up in time."
In an additional statement sent last year setting out its
charges against Google in the shopping case, the EU already partly
sketched out its demands as to how Google should change its
business practices to assuage the bloc's antitrust concerns.
"Remedies may require Google to position and display
competitors' comparison shopping services in the same way as it
positions its own comparison shopping service in general search
results," the EU shopping charge sheet said.
The EU also has formally accused Google of violating the bloc's
rules by abusing its dominance with its Android mobile-operating
system as well as its advertising service Adsense. News Corp, owner
of The Wall Street Journal, has formally complained to the EU over
Google's alleged anticompetitive behavior.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
March 24, 2017 13:17 ET (17:17 GMT)
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