On February 1, 2023, the Court of Justice held a hearing in Altice’s appeal against the General Court’s decision in 2021 to largely uphold the Commission’s record fine for gun-jumping in the Altice/PT Portugal transaction.[1]  Altice’s defense at the hearing hinged on three claims: (i) the Commission wrongly fined Altice twice for failure to notify and for breaching the standstill obligation; (ii) Altice did not acquire veto rights, and therefore control, by signing the Share Purchase Agreement (“SPA”); and (iii) the Commission breached the principle of proportionality by failing to explain its reasoning in setting the fines.

The General Court Ruling Upholding the Fine

On September 22, 2021, the General Court largely upheld the Commission’s decision imposing a fine of  €124.5 million on Altice for exercising control over PT Portugal before the acquisition had received merger control clearance.[2]  In particular, the General Court dismissed Altice’s arguments that the Commission had erred in law and fact by finding that Altice had acquired sole control of PT Portugal.

First, the General Court found that the SPA gave Altice the possibility to “co-determine the structure of the senior management of PT Portugal” which effectively amounted to veto rights conferring decisive influence over the target’s commercial policy.[3]

 Second, the General Court found that the SPA included “extremely broad” provisions on pricing policies, including standard terms and conditions that obliged PT Portugal to request Altice’s consent to revise its pricing policies and make changes to customer contracts.[4] 

Third, the General Court ruled that PT Portugal’s obligation to obtain Altice’s consent to enter into, terminate, or modify a broad range of its contracts enabled Altice to determine PT Portugal’s commercial policy—an opportunity “which went beyond what was necessary to protect the value of PT Portugal.”[5] 

The General Court concluded that the veto rights provided by the SPA went beyond what was necessary to preserve the value of PT Portugal’s business.[6]  In addition, the General Court noted that Altice and PT Portugal exchanged competitively sensitive information before they signed the SPA and before the transaction’s approval.  Therefore, the General Court agreed with the Commission that the information exchanges “contributed to demonstrating that the applicant had exercised decisive influence over PT Portugal.”[7]

The General Court took into account that Altice had informed the Commission of the transaction before the SPA was signed and had sent a case-team allocation request three days after signing, followed by a draft notification form.[8]  Accordingly, the General Court reduced the fine relating to the breach of Article 4(1) EUMR by 10% based on the principle of proportionality.[9]

The Hearing Before the Court of Justice

On February 1, 2023, the Court of Justice heard Altice in relation to its appeal against the General Court judgment.  At the hearing, the Commission argued that Altice was aware of its conduct when it interfered in PT Portugal’s business and that it acquired competitively sensitive information prior to clearance.[10]

First, Altice claimed that the Commission infringed the principles of proportionality and double jeopardyby imposing fines for: (i) failure to notify; and (ii) a breach of the standstill obligation.  Altice argued that both obligations protect the same legal interest and should not, as such, be sanctioned independently and cumulatively.[11]

Second, Altice distinguished the Altice case from the Court of Justice’s precedent in Ernst & Young, arguing that it did not obtain veto rights in signing the SPA.[12]  It argued that the conditions for change in control were not fulfilled because the SPA did not confer on Altice the power to block commercial decisions—it only required Altice’s consent on certain actions.[13]  In fact, if Altice objected to any actions, it could only require PT Portugal to indemnify it for potential resulting losses, which did not amount to obtaining veto rights.[14]

Finally, Altice argued that the Commission breached the principle of proportionality in failing to abide by the requirement to disclose its reasoning for setting fines in a clear and unequivocal way.  Advocate General Collins also noted that, while it was clear what factors the Commission took into account, it should also have been clear how these factors were balanced out for the applicant to defend their interests and for the court to review the legality of its decision.[15]  The Reporting Judge, Küllike Jürimäe, also questioned how the Commission actually calculated the fine.[16]  In response, the Commission argued that it need not engage in an “arithmetical exercise” to detail how it arrived at the fines, as the Court of Justice confirmed in previous cases. Advocate General Collins will deliver his opinion on April 27.

[1]              Altice Group Lux v. Commission (Case C-746/21 P).

[2]              Altice v. Commission (Case T-425/18) EU:T:2021:607; See our August 2021 EU Competition Law Newsletter and our Alert Memo “Gun Jumping in M&A: General Court Judgment Affirms Strict Approach in Altice,” November 19, 2021 for a detailed analysis of the General Court’s judgment.

[3]              Altice v. Commission (Case T-425/18) EU:T:2021:607, paras. 109-114.

[4]              Ibid., para. 115.

[5]              Ibid., paras. 117 and 121.  This obligation applied to a broad range of PT Portugal’s contracts subject to       a monetary threshold of €1 million.  See Altice, para. 109.

[6]              Ibid., para. 131.

[7]              Ibid., para. 235.

[8]              Ibid., para. 367.

[9]              Ibid., para. 368.

[10]             GCR, “EU defends record-breaking Altice gun-jumping penalty before Court of Justice” (February 1, 2023).

[11]             Ibid.

[12]             Ernst & Young (Case C-633/16) ECLI:EU:C:2018:371.

[13]             Ibid., para. 59.  The judgment established that a “concentration is implemented only by a transaction which, in whole or in part, in fact or in law, contributes to the change in control of the target undertaking.”  In particular, the termination of an agreement may be regarded as the implementation of a concentration.

[14]             GCR, “EU defends record-breaking Altice gun-jumping penalty before Court of Justice” (February 1, 2023).

[15]             Ibid.

[16]             MLex, “Altice’s merger gun-jumping fine based on faulty reading of early ‘implementation,’ top EU court hears” (February 1, 2023).