In an opinion delivered on 18 January 2018, Advocate General Wahl has taken a clear position against too broad an interpretation of the "standstill obligation" in concentration cases.
If a merger or acquisition has to be notified to the European Commission or a national competition authority, the EU and most EU Member States prohibit the implementation of the transaction prior to having obtained approval from the competition authority. This is known as the "standstill obligation". Thus, an undertaking which acquires another undertaking cannot exercise control over that undertaking prior to approval of the transaction.
To date, the EU Court of Justice has not ruled in detail on the scope of the standstill obligation. This could change because of a Danish case: in Denmark, the local offices of audit companies KPMG and Ernst & Young decided to merge. The merger agreement provided that KPMG Denmark had to terminate its cooperation agreement with KPMG International immediately after signing the merger agreement, and thus prior to clearance by the Danish Competition Authority. According to that authority, the termination constituted an implementation of the merger and thus a violation of the standstill obligation. Ernst & Young Denmark did not agree and submitted an appeal. The judge in appeal referred a preliminary question to the Court of Justice.
In his conclusion, Advocate General Wahl holds that the termination of the cooperation agreement does not violate the standstill obligation. The Advocate General is of the view that the termination was a necessary preparatory measure for the merger, but did not amount to the exercise of control by Ernst & Young Denmark over KPMG Denmark.
It is now up to the Court of Justice, which is not bound by the Advocate General's conclusion, to adopt a position on this matter in a preliminary ruling.