On 25 February 2014, the EU Commission announced that it had sent a Statement of Objections (“SO”) to two businesses for allegedly providing the Commission with misleading market shares and an incorrect assessment of the total market.
The companies, Ahlstrom Corporation and Munksjo Oyj of Norway and Munksjo AB of Sweden, notified a merger to the Commission for the transfer of their respective label and processing business for sandpaper and other abrasive papers to a new entity, Munksjo Oyj in October 2012.
They later in January 2013 supplied internal documents to the Commission which contradicted their previous assessment of the size of the market for abrasive paper backings and their parties respective shares in it. Regardless of this, the Commission did however approve the merger on the grounds that Ahlstrom sell its abrasive paper backing business in Germany. When it granted the conditional clearance, the Commission believes it was working with accurate market information.
The SO and investigation into the supplying of incorrect market information is separate to the merger approval and could constitute a serious offence with a fine of up to 1% of turnover for the parties. The Commission relies heavily on parties supplying accurate market assessments and any wrongdoing, if found, would undermine the system. The next step is for the parties to respond to the Commission’s SO and examine its evidence.
The case acts as a reminder that merging companies corresponding with the EU Commission need to be clear and consistent in their market assessment. Legal advice is always essential but in certain cases, economic assessment may also be required.