Tereos fined for failure to comply with CMA merger procedures
The CMA has found that Tereos failed to comply with a requirement to produce information in connection with its recent investigation into Tereos’ deal with T&L Sugars.
The Competition and Markets Authority (CMA) has imposed a fine of £25,000 on Tereos SCA and Tereos United Kingdom and Ireland Limited (together Tereos) for failing to provide relevant information in relation to the T&L Sugars/Tereos merger inquiry.
As part of the CMA’s phase 2 investigation, a notice was sent to Tereos under section 109 of Enterprise Act 2002 (the Act) requiring the production of certain minutes and internal documents in relation to its board and corporate governance. Tereos responded to the notice, however, following further enquires by the CMA it was found that Tereos failed, without reasonable excuse, to provide a full response.
In particular, the CMA Inquiry Group found that Tereos’ interpretation of the scope of the notice was unjustifiably narrow and untenable when viewed in the context of the object of the merger inquiry and that the failure was capable of having an adverse impact on the CMA’s investigation.
In order to reach sound decisions that benefit consumers and the UK economy as efficiently as possible, it is essential that the CMA is able to gather all the evidence it requires. Parties must therefore comply, on time and in full, with requests for information from the CMA during an investigation.
Richard Feasey, Chair of the independent inquiry group which led the investigation, said:
It’s important that firms respect the UK merger review process – which includes providing all the information we need to promptly progress our investigation.
Firms and their advisers must not apply their own narrow, artificial interpretation of our formal information gathering requirements– as Tereos has done so here. Had they responded properly then Tereos could have avoided this fine altogether.
Currently, where there is a failure to comply, without reasonable excuse, with a requirement of a notice under section 109 of the Act, the maximum fixed penalty the CMA is able to impose is £30,000. This is due to increase to 1% of the total value of a business’s worldwide turnover once amendments introduced by the Digital Markets, Competition and Consumers Act 2024 (DMCCA) come into force.
For more information, visit the T&L Sugars / Tereos merger inquiry page.
Notes to editors:
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A copy of the full notice is available via the case page.
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Tereos was represented in the CMA’s investigation by its solicitors, Squire Patton Boggs.
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The CMA received and considered the documents relevant to the notice under section 109 of the Act from Tereos in advance of clearing the merger on 3 September 2024.
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Where a party fails, without reasonable excuse, to comply with investigatory requirements such as a notice requiring the production of documents, the CMA may impose an administrative penalty on that party. The CMA has published guidance Administrative penalties: Statement of Policy on the CMA’s approach (CMA4) on the CMA’s approach and powers in relation to imposing administrative penalties. A draft version of an updated version of the guidance, incorporating changes by the DMCCA was recently consulted on and the CMA is currently analysing feedback following the consultation closing on 23 August 2024.
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The DMCCA received Royal Assent on 24 May 2024. It is currently anticipated that the relevant parts (Part 2, section 143(1) and Schedule 10 paragraph 17) of the DMCCA which relate to the amount of a penalty that can be imposed by the CMA under section 111 of the Act will enter into force in December 2024 or January 2025. These amendments to the Act increase the maximum penalty amount that can be imposed on a business for not complying, without reasonable excuse, with a notice under section 109 from £30,000 to 1% of the annual worldwide turnover in the case of a fixed penalty and from £15,000 to 5% of the daily worldwide turnover of the business in the case of a daily amount.
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