When does a takeover deemed to be temporary constitute a notifiable concentration?

tempory concentration

In a decision dated 17 March 2022, the Dutch Competition Authority (ACM) imposed a fine on the Stichting Verenigde Nederlandse Apotheken (VNA) for wrongfully failing to notify the acquisition of four pharmacies. The VNA initially thought that the acquisition did not need to be notified, as part of one of the pharmacies to be taken over would be sold on to a third party within a year.

The case at hand

The VNA enables young pharmacists to start their own pharmacy. It also helps pharmacists with the transfer of their pharmacy, in case they want to stop their pharmacy. These activities are performed by purchasing pharmacies, through Farmaceutisch Beheer B.V., a VNA subsidiary, and then transferring them to other (young) pharmacists over time.

In 2019, VNA informed the ACM that it intended to acquire the shares in 4 pharmacies. The baxter activities of one of these pharmacies, Apotheek De Reeshof, would be transferred to another party within one year. As a result of this transfer, the turnover threshold as referred to in Article 1, paragraph 1 of the Decree on the temporary expansion of the scope of concentration control for undertakings providing health care would not be exceeded. Consequently, notification would not be necessary. The VNA informed the ACM in 2020 that the intended transfer of the baxter activities had failed, but that the other activities of Apotheek De Reeshof had been transferred.

Subsequently, in 2021, the ACM started an investigation into the acquisition of the four pharmacies. Following that, the VNA notified the acquisition after all. In a decision dated 2 December 2021 the ACM concluded that the takeover qualified as a concentration subject to notification which did not require a permit.

Decision by ACM

Temporary takeover

In view of marginal 28 – 33 of the Consolidated Jurisdictional Notice, the turnover of the baxter activities was irrelevant to the question of whether a concentration was notifiable only if, at the time the concentration was implemented:

(i)the purchase and transfer of the baxter activities of Apotheek De Reeshof to a third party had been agreed in a legally binding manner and
(ii)there was also no uncertainty (in an objective manner) regarding the fact that this transfer would take place within a maximum of one year after the realisation of the concentration In that case, there would have been a temporary change of control to which merger control does not apply (marginal 18).  

The VNA had only concluded a temporary agreement of intent with the prospective buyer of the baxter business. Furthermore, the purchase price had not yet been determined and, in addition, it had to be determined which movable and immovable assets belonged to the baxter business. Therefore, the VNA should not have excluded the turnover of these activities when calculating the relevant turnover.


Under article 34(1) of the Competition Act (Mw), it is prohibited to implement a concentration that is subject to notification before the intention to do so has been notified to the Authority for the Consumer and Market and four weeks have subsequently lapsed. For violations of this prohibition, the ACM can impose an administrative fine in accordance with Section 74(1) of the Mw.

According to the ACM, the premature implementation of a concentration that requires notification constitutes a serious violation (marginal 22). Therefore, the ACM sets the basic fine in accordance with the ACM Fine Policy Rule 2014 (as amended by the Policy Rule of 28 June 2018) at 7.5% of the annual Dutch turnover achieved by the VNA in 2020. With an annual turnover of EUR 202.4 million, this resulted in a basic fine of EUR 1,518,000.–.

The ACM sees room for a 35% reduction of the basic fine because the VNA:

(i)informed the ACM about the intended takeover of its own accord and in advance
(ii)notified the acquisition after all, following its own observation that this had been wrongly omitted
(iii)co-operated “fully” with the investigation of the ACM
(iv)co-operated in a simplified process by acknowledging the infringement and accepting the fine imposed

This resulted in a fine of € 986,700.– (margins 27-28).

Finally, in view of the relative size of the basic fine in relation to the value involved in the transaction, as well as the total turnover of the acquired pharmacies, the fine is further reduced to EUR 350,000.– for reasons of proportionality.


Change of control on a lasting basis

A transaction which only brings about a temporary change of control does not qualify as a concentration. If, for example, shares are acquired in order to be subsequently resold to a third party, the first step (the purchase) is not considered to be a concentration, provided that the temporary nature of the first step is legally binding and there is no uncertainty as to whether the second step (the resell) will actually take place within one year. The second step (the resale) should then be examined as to whether it might constitute a notifiable concentration.

Far-reaching and special cooperation

In view of the fine reduction for proportionality reasons, the fine reduction for extensive and special cooperation does not really matter. Nevertheless, the latter fine reduction contains a number of aspects that are worth discussing. First of all, the fact that the VNA informed the ACM in 2019 of its own accord about the intended takeover constitutes a ground for reduction of the fine. It is unfortunate that this aspect is not further elaborated upon. All the more so since the General Court of the EU ruled in the Altice judgment in respect of a more or less similar conduct that this is a circumstance that “must be taken into account in assessing the seriousness of the breach of the obligation to notify” in Article 4(1) of the European Merger Regulation (marginals 364-365). According to marginal 5 and footnote 3 of the Guidelines on the Simplified Settlement of Fines, the ACM considers agreeing to a simplified settlement to be a ‘more far-reaching cooperation than that which the party concerned was legally obliged to provide’. In addition to this ‘more extensive cooperation‘. The VNA also ‘fully cooperated‘ with the ACM’s investigation ‘by providing all necessary information and confirming this, if requested‘ (marginal 27). This seems to qualify as a separate ground for reduction of a fine. Generally, this ground for a fine reduction requires the provision of information that has additional value for the ACM, i.e. information that has made a substantial contribution to the investigation, which has actually made it easier for the ACM to establish the infringement. See for instance the judgment of 25 March 2011 of the Trade and Industry Appeals Tribunal (marginal 3.3.4). Was it not possible for the ACM to establish the violation of the obligation of disclosure on the basis of the information already voluntarily submitted to the ACM by the VNA? Finally, the subsequent notification of the already implemented concentration also seems to be a separate ground for a fine reduction. The decision shows that the VNA notified the ACM of the concentration on 10 November 2021 (marginal 15). At that time, however, the ACM had already informed the VNA that it would draw up a report on the failure to notify the acquisition in due time (marginal 9) and the VNA had subsequently asked the ACM in October 2021 to explore the possibilities of settling the case without drawing up a report (marginal 10). In light of this, the question is what made the notification of the concentration so special that it resulted in a reduction of the fine.

* photo by Rollstein via Pixabay.com

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