The German Act against Restraints on Competition (ARC) requires each company participating in the merger to report information on all the companies affiliated with it.  This includes intra-group relationships, controlling relationships and interests held by the affiliated companies.  This obligation also applies to the companies or shareholders controlling the notifying company.  Fines of up to €100,000 may be imposed, not only on the notifying company but also potentially on the individuals who control it, for the submission of incomplete, incorrect or late notifications.

The notification in question concerned plans by slaughterhouse operator Tönnies to merge with another independent slaughterhouse operator.  While the notification contained information on the affiliation of the notifying company itself, it did not contain information with respect to the majority shareholdings held, through a trustee, by Tönnies’ principal shareholder in Germany’s largest sausage manufacturer, Mühlen Group. 

After the notification had been submitted, the FCO sent to Tönnies and other slaughterhouse operators a request for information on the group structure of Tönnies.  Tönnies answered that no affiliations existed with respect to the wholesale pork and sausage manufacturing market.  The FCO had, however, obtained information that suggested links between Tönnies and the Mühlen Group.  When asked explicitly in another information request if such links existed, Tönnies admitted that its principal shareholder held majority shares in the Mühlen Group, and provided contractual agreements showing that the voting rights were exercised by a trustee who was responsible to the principle shareholder of Tönnies.  Since this principle shareholder controlled Tönnies, all the companies he controlled had to be added to the notification.  The FCO informed the notifying parties that it considered the notification to be incomplete as this information was missing.  The planned acquisition was ultimately prohibited in late 2012 by the FCO, although the appeal is still pending.

The principal shareholder—a natural person—is the addressee of the fine amounting to €90,000.  He agreed to a settlement and admitted to supplying the incomplete notification.  Because of this admission, the FCO did not impose the maximum fine that it could levy in connection with an incomplete notification. 

Administrative fines for incomplete information have been rare until recently.  The FCO has demonstrated, however, that the merger notifications it receives must be complete and correct.  Companies should therefore make sure that they submit all the information they are legally obliged to provide, and must ensure particularly that the entities controlling the notifying party also supply all the information pertaining to their controlling interests in other companies.