Summary of Commission Decision of 24 April 2018 imposing fines under Article 14(2) of the Merger Regulation on Altice N.V. for infringing articles 4(1) and 7(1) of the Merger Regulation (Case M.7993 — Altice/PT Portugal (Art. 14(2) procedure))
Date: 2018-04-24
Institutions: European Commission
Subjects: economic concentration, merger control, sanction (EU), telecommunications








C_2018315EN.01001101.xml










7.9.2018   


EN


Official Journal of the European Union


C 315/11






Summary of Commission Decision
of 24 April 2018
imposing fines under Article 14(2) of the Merger Regulation on Altice N.V. for infringing articles 4(1) and 7(1) of the Merger Regulation
(Case M.7993 — Altice/PT Portugal (Art. 14(2) procedure))
(2018/C 315/08)
I.   FACTUAL BACKGROUND

a.   The undertakings concerned and the concentration









1.


Altice N.V. (1) (‘Altice’, The Netherlands) is a multinational cable and telecommunications company. At the time of notification of the Transaction, Altice operated in Portugal via two subsidiaries active in the telecommunications sector, Cabovisão – Televisão por Cabo S.A. (‘Cabovisão’) and ONI Telecom – Infocomunicações S.A. (‘ONI’).












2.


PT Portugal SGPS S.A. (‘PT Portugal’ or the ‘Target’) is a telecommunications and multimedia operator with activities extending across all telecommunications segments in Portugal.












3.


On 9 December 2014, Altice S.A., the former holding company of Altice Group, and Altice Portugal S.A. (2) entered into a Share Purchase Agreement with the Brazilian telecom operator Oi S.A. (‘Oi’ or the ‘Seller’) whereby Altice S.A. (Luxembourg), through its subsidiary, Altice Portugal S.A., would acquire sole control of PT Portugal within the meaning of Article 3(1)(b) of the Merger Regulation by way of purchase of shares (the ‘Transaction’ and the ‘Transaction Agreement’) (3).












4.


On 25 February 2015, the Commission received notification of the Transaction pursuant to Article 4 of the Merger Regulation. Pre-notification contacts with the Commission had started on 18 December 2014. On 20 April 2015, the Commission adopted a decision under Article 6(1)(b) of the Merger Regulation in conjunction with Article 6(2) of the Merger Regulation, declaring the Transaction compatible with the internal market, subject to full compliance by Altice with the obligations and conditions annexed to the decision (the ‘Clearance Decision’).




b.   Background to the current procedings









5.


On 13 April 2015 the Commission contacted Altice following reports in the press regarding visits by Altice executives to PT Portugal (4) prior to the adoption by the Commission of the Clearance Decision.












6.


By virtue of a letter dated 11 March 2016, the Commission indicated that an investigation was being carried out into the possible infringement by Altice of the stand-still obligation laid down in Article 7(1) of the Merger Regulation and the notification requirement laid down in Article 4(1) of the Merger Regulation.












7.


On 12 May 2017, a state of play meeting was held between the Commission’s services and Altice; on 17 May 2017, the Commission issued a statement of objections (the ‘SO’) addressed to Altice pursuant to Article 18 of the Merger Regulation setting out the Commission’s preliminary conclusion that Altice had infringed Article 7(1) and Article 4(1) of the Merger Regulation; and on 21 September 2017, an oral hearing was held (the ‘Hearing’).












8.


On 16 November 2017, the Commission addressed a letter to Altice in which it drew Altice’s attention to additional evidence in the Commission’s file in support of the preliminary findings of the SO (the ‘Letter of Facts’).




II.   LEGAL FRAMEWORK









9.


Article 3(1) of the Merger Regulation states that:
‘A concentration shall be deemed to arise where a change of control on a lasting basis results from […]






(b)


the acquisition, by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings.’
















10.


Article 3(2) of the Merger Regulation further states that:
‘Control shall be constituted by rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on an undertaking, in particular by: (a) ownership or the right to use all or part of the assets of an undertaking; (b) rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.’












11.


The General Court has confirmed that: ‘according to Article 3(2) of Regulation (EC) No 139/2004, control is to be constituted, inter alia, by rights which confer the “possibility” of exercising decisive influence on an undertaking. The decisive influence is therefore the acquisition of that control in the formal sense, and not the actual exercise of such control’ (5).












12.


Article 4(1), first paragraph, of the Merger Regulation states that: ‘Concentrations with a [Union] dimension defined in this Regulation shall be notified to the Commission prior to their implementation and following the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest’.












13.


Article 7(1) of the Merger Regulation states that: ‘A concentration with a [Union] dimension as defined in Article 1, or which is to be examined by the Commission pursuant to Article 4(5), shall not be implemented either before its notification or until it has been declared compatible with the common market pursuant to a decision under Articles 6(1)(b), 8(1) or 8(2), or on the basis of a presumption according to Article 10(6).’












14.


While both Articles 4(1) and 7(1) of the Merger Regulation are fundamental to the ex ante EU merger control system structure, they enshrine distinct legal principles and thereby play distinct and complementary roles within the context of the control of concentrations exercised by the Commission.












15.


Finally, Article 14(2)(a) and (b) of the Merger Regulation states that: ‘The Commission may by decision impose fines not exceeding 10 % of the aggregate turnover of the undertaking concerned within the meaning of Article 5 on the persons referred to in Article 3(1)(b) or the undertakings concerned where, either intentionally or negligently, they:






(a)



fail to notify a concentration in accordance with Articles 4 or 22(3) prior to its implementation, unless they are expressly authorised to do so by Article 7(2) or by a decision taken pursuant to Article 7(3).










(b)



implement a concentration in breach of Article 7’.








III.   APPLICATION TO THE CASE









16.


In October 2014 Altice entered into negotiations with Oi to purchase PT Portugal, culminating in the signing of the Transaction Agreement on 9 December 2014.












17.


The Transaction Agreement set out the principles by which Altice and Oi had agreed how the Target should conduct its operations between signing and closing. The relevant provisions included both a positive obligation to carry out PT Portugal’s activities in the ordinary course of business and in accordance with past practice unless approved by Altice; and a negative obligation not to undertake a broad range of corporate, competitive, and commercial actions without Altice’s prior consent.












18.


The Transaction Agreement foresaw a process with the submission of notices to to facilitate obtaining these approvals. In addition to these communications, there was frequent and direct contact between Altice and PT Portugal via telephone calls, emails and meetings. PT Portugal sought consent from Altice on a wide range of issues; reported on the progress of various on-going matters as well as providing detailed and granular financial information. In addition, Oi sought Altice’s input and consent on matters that were not within the remit of the Transaction Agreement. Moreover, PT Portugal shared confidential information with Altice regarding many facets of its business during meetings in February and March 2015 and also provided Altice with detailed financial and weekly key performance indicator (‘KPI’) data. This information, which Altice accepted, was granular, non-historic and by its nature, individualised.












19.


The exchange of information took place between various PT Portugal and Altice executives without any safeguards — such as confidentiality agreements, non-disclosure agreements, or so-called clean team arrangements (6) - being put in place.












20.


Much of this conduct by Altice, Oi and PT Portugal took place against the backdrop of pre-notification discussions and the Commission’s Phase I investigation of the Transaction following which the Commission concluded that the Transaction raised serious doubts as to its compatability with the single market. In order to remedy the concerns the Commission had regarding this merger between competitors, Altice ultimately committed to divest Cabovisão and ONI, which essentially constituted the whole of Altice’s businesses in Portugal.












21.


As set out in detail below, the Commission concludes that the elements described above granted Altice the possibility to exercise decisive influence and/or resulted in the actual exercise of control over PT Portugal prior to the adoption of the Clearance Decision and in some instances prior to notification, in breach of both Article 7(1) and Article 4(1) of the Merger Regulation.




IV.   BREACH OF ARTICLE 7(1) MERGER REGULATION

a.   The Transaction Agreement









22.


The Transaction Agreement constituted an agreement by Oi to not take certain actions regarding the PT Portugal business without Altice’s prior consent. The Commission concludes that the Transaction Agreement therefore conferred upon Altice the ability to determine PT Portugal’s actions with regard to the items listed in the Transaction Agreement.












23.


The Commission recognises that it is both common and appropriate for clauses aimed at protecting the value of an acquired business between the signing of a purchase agreement and closing to be included in sale and purchase agreements. Consequently, as noted by Altice, the Ancillary Restraints Notice (7) envisages that agreements to abstain from material changes to the target’s business until closing can be considered directly related and necessary to the implementation of a concentration. However, such an agreement between the seller and the buyer which grants the buyer the possibility to exercise decisive influence over the target prior to clearance is only justified if strictly limited to that which is necessary to ensure that the value of the target is maintained.












24.


The Commission concludes that the Altice’s veto rights contained in the Transaction Agreement over: (i) the appointment of the PT Portugal’s senior management staff; (ii) PT Portugal’s pricing policy and commercial terms and conditions with customers; and (iii) the ability to enter, terminate or modify a wide range of PT Portugal’s contracts; individually and collectively gave Altice a legal right to intervene in the Target’s business beyond that which was necessary to guarantee maintenance of the value of the Target between signing and closing and gave Altice the possibility to exercise decisive influence over the Target.




i.   The possibility for Altice to influence the appointment of the Target’s senior management staff









25.


Under Articles 6.1(b)(xviii) and (xx) of the Transaction Agreement, without Altice’s prior written consent, PT Portugal could not appoint any new director or officer, or terminate or amend the terms of their contracts.












26.


The Commission considers that the rights in the Transaction Agreement were extremely broad and covered an undefined class of personnel not all of whom are likely to be relevant to the value of the business. In addition, it afforded Altice the possibility to co-determine the structure of the senior management of the Target, such as the appointment of the members of the board.












27.


As such, the Commission considers that the veto rights contained in Articles 6.1(b)(xviii) and (xx), independently and together with the other veto rights discussed in this decision, conferred upon Altice the power to exercise decisive influence over the Target’s senior management and therefore its commercial policy. Such a provision went beyond simply protecting the value of the Target and gave Altice the possibility to exercise decisive influence over the Target.




ii.   The possibility for Altice to influence the Target’s pricing policies









28.


Under Article 6.1(b)(xxvi) of the Transaction Agreement, without Altice’s consent, PT Portugal could not modify its pricing policies or standard offer prices, or amend any existing standard terms and conditions with customers, subject to certain limitations.












29.


The requirement to obtain Altice’s consent prior to modifying its pricing policies and standard offer prices inherently reduced the Target’s discretion and ability to act independently on the market. The Commission therefore concludes that Altice’s veto right over the Target’s commercial decisions goes beyond what was necessary to guard against material changes to the Target’s business for the purposes of preserving its value. Moreover, the Commission notes that Article 6.1(b)(xxvi) was extremely broad and gave Altice a veto right over a large proportion of PT Portugal’s pricing decisions and terms of business with its customers.












30.


The Commission therefore considers that the veto rights contained in Article 6.1(b)(xxvi), independently and together with the other veto rights discussed in this decision, conferred upon Altice the power to determine the Target’s commercial policy. Such a provision therefore goes beyond simply protecting the value of the Target, and gave Altice the possibility to exercise decisive influence over the Target.




iii.   The possibility for Altice to influence the Target entering into, terminating or modifying contracts









31.


Under Articles 6.1(b)(ii), (iii) and (ix) of the Transaction Agreement, without Altice’s prior written consent, PT Portugal could not enter into any transaction or commitment, assume or incur any liability, or acquire any assets, if such transaction surpassed a certain monetary threshold. Under Articles 6.1(b)(vii) and (xxvii) of the Transaction Agreement, without Altice’s prior written consent, PT Portugal could not enter into, terminate or modify any agreement which fell within certain definitions.












32.


The Commission considers that the breadth of actions covered, as well as the definitions used and applicable monetary thresholds, meant that Altice had oversight of an extremely broad range of actions (including matters that fell within PT Portugal’s ordinary course of business), not all of which would have had a material impact on the value of the PT Portugal business.












33.


Accordingly, the Commission concludes that the veto rights contained in Article 6.1(b)(ii), (iii), (ix), (vii) and (xxvii), independently and together with the other veto rights discussed in this decision, conferred upon Altice the power to determine the Target’s commercial policy. Such a provision therefore goes beyond simply protecting the value of the Target, and gave Altice the possibility to exercise decisive influence over the Target.




b.   Altice’s influence over the target









34.


The Commission found that in a number of instances, as described below, the PT Portugal sought Altice’s instructions and agreed to implement, or actually implemented Altice’s instructions in relation to commercial decisions prior to the date of notification and/or prior to the date of the Clearance Decision.




i.   The Post-Paid Mobile Campaign









35.


Between January and March 2015, PT Portugal ran a promotional campaign (‘Post-Paid Campaign’) aimed at reducing customer churn in the B2C retail mobile segment. The Commission found that Altice was involved in the decision making process at PT Portugal as regards the Post-Paid Campaign which formed part of the Target’s commercial strategy on the market. Altice played an essential role in the approval, modalities and monitoring of the Post-Paid Campaign. Given the targets and the budget of the campaign, the Commission found that Altice’s involvement with the Campaign could not be justified on reasons of preserving the value of PT Portugal.




ii.   Porto Canal contract









36.


As of 18 December 2014 (8), PT Portugal commenced an internal assessment of a possible renewal of the distribution contract for the Porto Canal TV channel. The Commission considers that Altice was directly involved in setting the targets and the negotiating strategy regarding the renewal of PT Portugal’s contract with Porto Canal which formed part of the Target’s competitive strategy on the market, a market in which Altice was itself competing via its subsidiaries. The Commission found that Altice’s involvement with this contract, given its value and subject matter (renewal of a TV contract), could not be justified on reasons of preserving the value of PT Portugal.




iii.   Selection of RAN supplier









37.


PT Portugal had several radio access network (‘RAN’) suppliers. PT Portugal wished to reduce the number of suppliers. The Commission found that Altice was directly involved in establishing PT Portugal’s selection process for RAN suppliers, which formed part of the Target’s competitive strategy on the market. Altice interfered in PT Portugal’s negotiation strategy and gave instructions to PT Portugal to wait with the selection process and to exchange information on the matter, as a result of which PT Portugal changed its selection process strategy; and, PT Portugal implemented these instructions, notably by suspending the selection process and providing commercially sensitive information to Altice. The Commission considers that Altice’s involvement went beyond what could reasonably be considered as necessary for preserving the value of PT Portugal.




iv.   Video on Demand/Electronic sell through contract









38.


PT Portugal and Cinemundo planned on entering into a two-year agreement for the supply of various movies to PT Portugal’s video on demand (‘VOD’) platform. The Commission found that Altice was directly involved in defining the terms for the negotiation of a supply agreement between PT Portugal and Cinemundo, which formed part of the Target’s competitive strategy on the market, a market in which Altice was itself competing via its subsidiaries. Considering the value and subject matter of this contract, Altice’s involvement with this matter went beyond what could reasonably be considered as necessary for preserving the value of PT Portugal.




v.   DOG TV contract









39.


Since November 2014, PT Portugal considered whether it should sign a contract with World Channels, the distributor of DOG TV, a premium TV channel specifically dedicated to dogs. Altice’s consent in relation to this contract was requested by PT Portugal and Altice denied its consent and asked for more information on the contract. The Commission found that that Altice was directly involved in the decision whether to include the DOG TV channel in PT Portugal’s TV offering, which formed part of the Target’s competitive strategy on the market, a market in which Altice was itself competing via its subsidiaries. Considering the value and subject matter of this contract, Altice’s involvement with this matter went beyond what could reasonably be considered as necessary for preserving the value of PT Portugal.




vi.   SIRESP shares









40.


SIRESP is the operator of the National Network of Public Safety, a public-private partnership promoted by the Ministry of Interior in Portugal. At the relevant time, SIRESP was owned by PT Portugal, Galilei (a Portuguese investment fund), Motorola, and two other smaller shareholders. On 4 March 2015, one shareholder sent a letter of intent to each of the other SIRESP shareholders, including PT Portugal, setting out the terms on which it would be prepared to acquire the shares of each of the other shareholders. Oi informed Altice that it did not intend to sell PT Portugal’s shares in SIRESP, nor exercise its pre-emptive rights. Oi then enquired whether Altice had a different view on this issue. Altice indicated to Oi that it did not plan to sell the shares. The Commission does not take issue with this exchange, as this was a corporate matter which could have potentially affected the value of the Target.












41.


However, Altice went further and asked PT Portugal to get in contact with one of SIRESP’s shareholders in order to inquire whether it would be interested in selling its shares in SIRESP to Altice/PT Portugal. The Commission considers that by instructing PT Portugal to contact one of SIRESP’s shareholders in its name, Altice overstepped the boundaries of what could be considered appropriate conduct necessary to preserve the value of PT Portugal.




vii.   Contract with a customer









42.


On 23 December 2014 PT Portugal won a tender for the provision of outsourcing services and solutions to a customer. Oi/PT Portugal asked for Altice’s consent for the signing of the contract and Altice requested more information on the matter. The Commission found that that Altice was directly involved in the decision whether to conclude the contract, which formed part of the Target’s competitive strategy on the market, a market in which Altice was itself competing via its subsidiaries. Given the value and nature of this contract, the Commission considers that Altice’s involvement with this matter went beyond what could reasonably be considered as necessary for preserving the value of PT Portugal.




viii.   Considerations on the relevance of decisions on which Altice’s consent was not requested









43.


In the reply to the SO and at the Hearing, Altice claimed that between the signing of the Transaction Agreement and the Clearance Decision, it was consulted only on a minority of decisions taken by PT Portugal and a great number of critical decisions pertaining to PT Portugal’s strategic and commercial policies were taken without Altice being consulted or even informed thereof.












44.


The Commission considers that it is not necessary for Altice to have been asked to provide its consent on all or a majority of matters discussed by the PT Portugal Board of directors or taken by the management of PT Portugal between signing of the Transaction Agreement and the Clearance Decision for Altice’s behaviour to constitute early implementation in the form of instances of actual exercise of control. Evidence on the Commission’s file shows that Altice’s consent was requested on a large number of other matters during the signing of the Transaction Agreement and the Clearance Decision (9).




ix.   Exchanges of commercially sensitive information









45.


Between the signing of the Transaction agreement and the closing, and a couple of months after the due diligence phase, the management of Altice and representatives of PT Portugal met three times in Lisbon. The Commission found that during these meetings, PT Portugal made extensive and granular presentations to Altice regarding the business of PT Portugal. PT Portugal shared with Altice granular and up-to-date information regarding its retail and wholesale business, including key financial data for the B2C and B2B segments. Furthermore, following these meetings, Altice requested and received from PT Portugal detailed and up-to-date information on key performance indicators (‘KPIs’) and future pricing of the Target. These exchanges involved the extended operational management of Altice and were conducted without any non-disclosure agreements in place.












46.


The Commission considers that these information exchanges which were conducted outside the due diligence phase, contribute to showing Altice exercised decisive influence over aspects of the Target’s business prior to the Commission having declared the Transaction compatible with the internal market.




c.   Conclusion on breach of Article 7(1) of the Merger Regulation









47.


The Commission considers that Altice acquired the possibility to exercise decisive influence, and actually exercised control prior to adoption of the Clearance Decision, and in some instances prior to notification, leading the Commission to the conclusion that the Transaction was implemented prior to the date on which the Commission adopted the Clearance Decision, and in some instances prior to notification, in breach of Article 7(1) of the Merger Regulation.




V.   BREACH OF ARTICLE 4(1) MERGER REGULATION









48.


As noted above, Article 7(1) and Article 4(1) of the Merger Regulation enshrine distinct legal principles.












49.


For the reasons set out below, the Commission considers that Altice breached Article 4(1) of the Merger Regulation.












50.


First, the Commission concludes that Article 6.1(b) of the Transaction Agreement regarding Altice’s veto right over the appointment of the Target’s senior management staff (Articles 6.1(b)(xviii) and (xx)), the setting of the Target’s pricing policies (Article 6.1(b)(xxvi)) and the conclusion, modification and termination of contracts (Articles 6.1(b)(ii), (iii), (ix), (vii), and (xxvii)) granted Altice the possibility to exercise decisive influence over the Target as of the signing of the Transaction Agreement on 9 December 2014. Given that this action took place prior to notification of the Transaction to the European Commission on 25 February 2015, the Commission concludes that this constitutes a breach of Article 4(1) of the Merger Regulation.












51.


Second, as detailed above, the Commission concludes that actions which Altice took following signing of the Transaction Agreements, when taken together, demonstrate that Altice actually exercised control over PT Portugal. Certain of these actions took place prior to notification of the Transaction to the European Commission on 25 February 2015, namely:






(1)


The Post-paid Campaign: See paragraph 35 above;










(2)


The VOD/EST contract: See paragraph 38 above; and










(3)


The exchange of commercially strategic information at the meeting of 3 February 2015 between the management of Altice and the management of PT Portugal, as further described in paragraph 46 above.
















52.


Accordingly, the Commission concludes that Altice breached its notification obligations under Article 4(1) of the Merger Regulation.




VI.   PROCEDURE

a.   Altice’s arguments









53.


In the response to the SO Altice raised procedural claims, alleging a breach of the fundamental principles of due process, in particular the rights of the defence.












54.


First, according to Altice the Commission infringed Altice’s right to be heard and the duty of good administration by not taking Oi’s interpretation of the Transaction Agreement into account, given that Oi was the only party to the Transaction Agreement able to determine which matters should be submitted to Altice, whereas Altice’s role was ‘purely passive’.












55.


Second, according to Altice by imputing the alleged infringement to Altice, the Commission breached the fundamental principle of personal liability according to which a natural or legal person may be penalized only for acts imputed to it individually. Altice formally requested the Commission to consult Oi on its interpretation of the Transaction Agreement and to open proceedings against Oi.












56.


In the reply to the Letter of Facts, Altice criticised the Commission’s RFI to Oi (10) and claimed that the procedural breaches identified in the response to the SO were not solved by the RFI to Oi. In particular, Altice claimed that Oi’s reply would need to be verified and supported by documentary evidence.












57.


Third, according to Altice the Commission infringed the principles of necessity and proportionality as several RFIs represented an excessive burden for Altice: (i) the time-limits to answer certain RFIs were excessively short and disproportionate to the needs of the investigation; and, (ii) the Commission requested Altice to provide a number of documents in the RFI of 20 July 2016, most of which had already been included in the email data provided by Altice in response to previous RFIs.




b.   The Commission’s assessment









58.


The interpretation that Oi gave to the Transaction Agreement and the reasons for which Oi decided to seek the consent of Altice have no bearing on the existence of the infringements of Articles 4(1) and of Article 7(1) of the Merger Regulation which are based on actual conduct of Altice. The existence of the infringement could be validly established without obtaining the interpretation that Oi gave to the Transaction Agreement and the reasons for which Oi decided to seek the consent of Altice on certain matters.












59.


In fact, Altice had an active role in the drafting and implementation of the Transaction Agreement and had knowledge of the subject-matters on which its consent was requested. Altice negotiated and acted as a signatory of the Transaction Agreement which granted a legal right for Altice to deny its consent for Oi and PT Portugal to perform certain decisions. In practice, Altice reacted to Oi’s and PT Portugal’s approaches, inter alia, by: (i) accepting commercially sensitive information (rather than distancing itself from it); (ii) asking for further information where necessary; (iii) giving instructions to Oi and/or PT Portugal on how they should proceed; and (iv) monitoring implementation of matters brought to Altice’s attention. Altice’s conduct further indicates that it had sufficient knowledge of the subject-matters on which its consent was requested.












60.


In any event, in light of Altice’s claims in the response to the SO, and for the sake of completeness, the Commission has sought Oi’s views on the Transaction Agreement and its implementation (11). Therefore, Altice’s rights of the defense have been respected.












61.


Furthermore, on the basis of the documentary evidence presented in the draft decision (supported by the confirmations provided by Oi), the evidence is sufficiently precise and coherent to establish to the requisite legal standard that the infringement by Altice took place. The Commission therefore does not consider that it should have required Oi to support its reply by documentary evidence (12).












62.


Finally, the Commission is not penalising Altice for acts imputed to Oi. The infringement in this decision is based on the rights granted to Altice by virtue of the Transaction Agreement and/or Altice’s actual conduct between signing of the Transaction Agreement and the Clearance Decision and, Altice had an active role in the drafting and the implementation of the Transaction Agreement. As to Altice’s request that the Commission open proceedings against Oi, the Commission recalls that, even if an infringement were committed by Oi, the Commission has no obligation to pursue an infringement against Oi.












63.


The Commission granted Altice sufficient time to provide its response to the RFIs considering the scope of these RFIs. In addition, for certain RFIs Altice did not explore the possibility of seeking an extension of the deadline or challenge the requests for information by decision adopted on the basis of Article 11(3) of the Merger Regulation, before the EU Courts. In the RFI of 20 July 2016 the Commission requested Altice to provide explanations of the contents of some of the documents provided by Altice (13); however, the Commission did not ask Altice to provide the same documents already provided by Altice in response to previous RFIs.




VII.   FINES

a.   Nature of the infringement









64.


In line with EU case-law (14), the Commission considers that any infringement of Article 4(1) and Article 7(1) of the Merger Regulation is, by nature, a serious infringement.












65.


First, Altice implemented a concentration with a Union dimension as of 9 December 2014 in contravention of Articles 4(1) and 7(1) of the Merger Regulation. Second, violations of Articles 4(1) and 7(1) of the Merger Regulation occur irrespective of the positive outcome of the merger review procedure carried out by the Commission. Third, the legislator has determined that breaches of Articles 4(1) and 7(1) of the Merger Regulation may be as serious as breaches of Articles 101 and 102 TFEU by having set the same maximum fine thresholds in each of the applicable regulations (the Merger Regulation and Regulation (EC) No 1/2003).




b.   Gravity of the infringement









66.


The Commission concludes that Altice acted at least negligently infringed Article 4(1) and Article 7(1) of the Merger Regulation. First, Altice is a large European company with significant previous experience in merger transactions and, prior to the Transaction, had been involved in merger control proceedings at national level. Second, Altice carefully negotiated the Transaction Agreement with Oi and, according to Altice itself, it included the contested provisions in the Transaction Agreement specifically to safeguard its own financial interests. Third, the existence of similar precedents has no bearing on the gravity of the infringement. Fourth, the Commission considers that Altice knew or should have known that infringing behaviour would constitute an infringement of the notification requirement and/or the standstill obligation.












67.


The Commission considers that the fact that the Transaction gave rise to serious doubts as to its compatibility with the internal market is in itself a factor which makes the infringement more serious (15). Altice’s acquisition of PT Portugal was cleared following the submission of wide-ranging remedies to remove the serious doubts raised by the Transaction. In such cases, ensuring legal certainty and a high level of deterrence is important regardless of the merits of an ex post assessment.




c.   The duration of the infringement









68.


With regard to the infringement of Article 4(1), such an infringement is an instantaneous infringement, which is committed by failing to notify a concentration. Therefore, the infringement was committed on 9 December 2014.












69.


With regard to the infringement of Article 7(1) of the Merger Regulation, this is a continuous infringement which lasts for as long as the transaction is not cleared by the Commission. Therefore the infringement lasted from the signing of the Transaction Agreement on 9 December 2014 until clearance on 20 April 2015 (that is 4 months and 11 days).




d.   Mitigating and aggravating circumstances









70.


The Commission does not consider there to be any aggravating or mitigating circumstances in this case.




VIII.   AMOUNT OF THE FINES









71.


When imposing penalties, the Commission takes into account the need to ensure that fines have a sufficiently deterrent effect. In the case of an undertaking of the size of Altice, the amount of the penalty must be significant in order to have a deterrent effect. This is even more the case when the transaction which has been implemented before clearance raised serious doubts as to its compatibility with the internal market.












72.


In order to impose a penalty for the infringement and prevent it from recurring, therefore, and given the specific circumstances of the case at hand and, in particular, the nature, the gravity and the duration of the infringements discussed in Section 6 above, the Commission considers it appropriate to impose fines under Article 14(2) of the Merger Regulation of EUR 62 250 000 for the infringement of Article 4(1) of the Merger Regulation and of EUR 62 250 000 for the infringement of Article 7(1) of the Merger Regulation.






(1)  Altice S.A., a company incorporated in Luxembourg, was the notifying party in the case M.7499 – Altice/PT Portugal. On 6 August 2015, Altice S.A., the former holding company of Altice Group transferred substantially all assets and liabilities to its wholly owned subsidiary Altice Luxembourg S.A. On 9 August 2015, Altice S.A. merged with Altice N.V., the new holding company of Altice Group. As a result of the merger, Altice S.A. ceased to exist.

(2)  Altice Portugal S.A. was a wholly-owned subsidiary of Altice S.A. In the Transaction Agreement, Altice Portugal S.A. was identified as the ‘buyer’ and Altice S.A. was identified as the guarantor for the Transaction.

(3)  The Transaction had a Union dimension within the meaning of Article 1(2) of the Merger Regulation.

(4)  Article in Diário Económico of 26 February 2015: http://economico.sapo.pt/noticias/altice-ja-esta-na-pt-portugal-para-assumir-controlo-da-empresa_212789.html. ID[153]

(5)  Marine Harvest, paragraph 58.

(6)  The term clean team generally refers to a restricted group of individuals from the business that are not involved in the day-to-day commercial operation of the business who receive confidential information from the counter party to the transaction and are bound by strict confidentiality protocols with regard to that information.

(7)  Commission Notice on restrictions directly related and necessary to concentrations (OJ C 56, 5.3.2005, p. 24).

(8)  According to Altice, around the end of 2014 and beginning of 2015, Porto Canal approached PT Portugal in order to renegotiate its distribution contract.

(9)  The Commission also found that Oi had in fact requested Altice’s consent through formal notices/letters on seven of the decisions taken by PT Portugal on which Altice had claimed that it had not been consulted or even informed thereof.

(10)  On 6 October 2017, the Commission addressed an RFI to Oi. Oi responded on 20 October 2017. Oi’s reply was shared with Altice by the Commission in the Letter of Facts.

(11)  See para. 56 of this Note.

(12)  Furthermore, despite the investigatory steps that it has taken, the Commission has not identified and Altice has not provided any indication of the existence of any exculpatory evidence that would put the Commission’s conclusions into question.

(13)  To the extent that Altice considered that the relevant answer was in a document already provided, Altice could simply have referred to that document already provided as the Commission allowed Altice, if it wished to refer to documents already in the Commission’s possession, to make reference to these documents. Therefore, there was no obligation on Altice to submit documents already submitted.

(14)  Case T-704/14, Marine Harvest v. European Commission ECLI:EU:T:2017:753, paragraph 480; case Case T-332/09, Electrabel v European Commission ECLI:EU:T:2012:672, paragraph 235.

(15)  Case T-704/14, Marine Harvest v. European Commission ECLI:EU:T:2017:753, paragraphs 490 et seq.