New fine by the Commission for providing misleading information

The European Commission (the “Commission”) has fined Kingspan €40 million for providing incorrect and misleading information during the review of its planned acquisition of Trimo. Both companies are active in the market for mineral fiber sandwich panels used to construct, renovate and insulate industrial and commercial buildings.

The transaction

In March 2021, Kingspan notified the Commission its proposed acquisition of Trimo, a competing manufacturer and distributor of mineral fiber sandwich panels. One month later, the Commission started Phase II in-depth investigation of the transaction.

In March 2022, the Commission issued a statement of objections (“SO”) warning that the transaction could lead to higher prices, reduced quality of products and fewer options for clients. In April 2022, the parties abandoned the transaction.

The investigation

Despite both parties abandoning the transaction, in November 2022, the Commission opened a separate investigation to determine whether Kingspan had supplied incorrect or misleading information during the merger review. The outcome of the investigation resulted in a SO, in the framework of separate infringement proceedings, where the Commission identified several alleged infringements of Regulation (EC) no.139/2004 on the control of concentrations between undertakings (the EU Merger Regulation).

The decision

• The Commission identified four infringements, linked to the provision of incorrect or misleading information that the company had provided in the merger control procedure:Misleading information about how Kingspan tracks penetration rates for mineral fiber sandwich panels, a metric used to show how much a product is used compared to competitors.
• Incorrect and misleading information about the availability of “bidding data” (i.e., records about the bids it won and lost), which are generally used to assess the competitive dynamics in a certain sector.
• Incorrect information regarding the involvement of members of Kingspan’s board of directors in matters including: (i) the proposed acquisition of Trimo; (ii) other acquisitions contemplated by Kingspan; and (iii) industry trends and business strategy.
• Incorrect and misleading information with respect to Kingspan's research and development for mineral fiber sandwich panels.

According to the Commission, this information was necessary to assess Kingspan’s market position and could only have been provided by Kingspan itself (i.e., there were no alternative sources of information).

As a result, the Commission fined Kingspan €10 million for each infringement, and considered that the overall fine amount was both deterrent and proportionate.

Comments

In recent years, the Commission —and competition authorities in general— have been scrutinizing more closely the accuracy and precision of the information that companies provide in connection with mergers subject to approval. The notification form and the responses to requests for information are the main sources of information the Commission relies on to analyze the transaction’s potential impact on the market and take a decision accordingly. This explains the rigor, accuracy, and thoroughness that competition authorities expect in the information provided and requested by them.

The decision in Kingspan follows several recent precedents and represents the fourth fine that the Commission has imposed for this type of conduct in the last ten years. A significant earlier precedent was the 2017 Facebook/WhatsApp decision, where the Commission fined Facebook €110 million for providing incorrect or misleading information about its ability to match Facebook and WhatsApp user accounts.

In Spain, the Spanish Markets and Competition Commission has also taken action against the provision of incorrect and misleading information in merger control procedures. In May 2024, it fined Rheinmetall AG €13 million for (i) omitting information regarding markets affected by its merger with Expal Systems S.A.; and (ii) providing an incomplete and misleading response to a request for information regarding the omitted markets.

In short, information management in a merger control procedure constitutes a source of regulatory risk that requires the same level of care as the substantive analysis of the transaction. Companies may be sanctioned for providing incorrect or misleading information in the notification form or in response to information requests. This applies regardless of whether the transaction is ultimately completed. Intent to conceal or falsify information is not required, as negligence alone is sufficient to give rise to liability.

For more information, please contact our Knowledge and Innovation Area specialists.