EU Commission imposes fine on Kingspan
The European Commission has imposed a fine totaling EUR 40 million on Kingspan. According to the Commission, the company provided incorrect and misleading information during the merger control review of the intended acquisition of Trimo in 2021. The basis of the proceedings is the EU Merger Regulation (EU-Fusionskontrollverordnung, EU merger control regulation).
Kingspan, based in Kingscourt, County Cavan, Ireland, notified the Commission of the planned acquisition of Trimo in March 2021. In April 2022, the company abandoned the project after the Commission had raised, among other things, competition concerns regarding possible price increases as part of its review.
Four separate infringements sanctioned with EUR 10 million each
The Commission imposed four separate fines of EUR 10 million each. This results in the total amount of EUR 40 million, equivalent to approximately USD 44.7 million.
According to the information published by the Commission, the established infringements concern information in various areas:
- information on the recording of penetration rates for mineral fibre sandwich panels,
- information on the availability of bidder data,
- information on the involvement of board members in acquisition and strategy matters,
- information on research and development.
According to the Commission, the contested information was allegedly provided either in the notification form or in responses to requests for information under Art. 11(2) and Art. 11(3) of the EU Merger Regulation. The Commission bases its findings on the fact that Kingspan acted at least negligently.
Course of the Commission’s proceedings
Formal opening after abandonment of the merger project
The fine proceedings for incorrect information were formally opened in November 2022. By that time, the original merger project had already been abandoned.
The sanction comes at the end of an investigation by the Commission lasting around four years. The fine proceedings are being conducted under case number M.10962.AP.
Statement of objections and reduced allegations
On 19 March 2024, the Commission sent a statement of objections in which it initially alleged six infringements. Following a supplementary statement of objections, two of these allegations were dropped. The fine now imposed therefore relates to four infringements established by the Commission.
When the Commission first contested the information in March 2024, Kingspan stated that the company had cooperated fully with the European authorities during the Trimo project.
Legal framework under the EU Merger Regulation
Under the EU Merger Regulation, the Commission may impose fines on undertakings if they provide incorrect or misleading information in the context of merger control. The possible fines may amount to up to 1% of the aggregate turnover of the undertaking concerned.
According to the reported information, the EUR 40 million imposed on Kingspan remains significantly below this upper limit. In its communication, the Commission emphasized the importance of accurate and complete information for the merger control review. Competition Commissioner Teresa Ribera stressed that there could be no compromise on disclosure and transparency, and referred to the Commission’s determined action in the event of infringements.
Kingspan announces challenge to the decision
Kingspan has announced that it will challenge the decision in full. The company stated, in substance, that it looked forward to the opportunity to contest the decision in its entirety.
It should therefore be noted that the findings made by the Commission may be the subject of further proceedings following the announced challenge. To the extent that the decision has not yet been finally determined, the further course of the proceedings remains to be seen. This account is based on the published information from the European Commission as well as the additionally reported company statements.
Already during the ongoing proceedings, Kingspan had challenged decisions of the Hearing Officer before the General Court of the European Union (Gericht der Europäischen Union). That action was dismissed as inadmissible.
Further proceedings in the company’s environment
Independently of the EU fine, reports have been made of a claim by more than 60 institutional investors against Kingspan. The claims asserted are said to amount to more than EUR 100 million. This information concerns separate proceedings and does not allow any conclusion to be drawn as to their outcome.
Significance for merger control proceedings
The decision highlights the central role of information that companies provide to the Commission in the context of a merger control review. In assessing a merger project, the Commission relies on robust information, particularly where market structure, price effects, internal strategy documents or innovation activities are being evaluated.
For companies, merger control communications with the Commission can have considerable economic significance. This applies not only to the decision on clearance of a merger, but also to possible procedural consequences if information is later assessed as incorrect or misleading.
Frequently asked questions
Why did the EU Commission impose EUR 40 million on Kingspan in the Trimo proceedings?
The Commission imposed the fine because, according to its account, Kingspan provided incorrect and misleading information during the review of the planned Trimo acquisition. The sanction consists of four separate fines of EUR 10 million each.
Which rule permits fines for incorrect information under the EU Merger Regulation?
Under the EU Merger Regulation, the Commission may impose fines if undertakings submit incorrect or misleading information in merger control proceedings. Fines of up to 1% of the aggregate turnover of the undertaking concerned are possible.
What practical consequences can the Kingspan case have for companies in EU merger control proceedings?
The case shows that information in the notification form and in responses to the Commission’s requests for information can be of considerable importance. If information is later assessed as incorrect or misleading, independent fine proceedings may follow in addition to the substantive review of the merger.
Competition law assessment by MTR Legal
Merger control proceedings, requests for information from the Commission and the assessment of competition risks require a careful legal assessment of the relevant factual and procedural situation. MTR Legal Rechtsanwälte advises companies, investors and high-net-worth private individuals on commercial law matters with an international dimension. If you have questions regarding merger control proceedings, official requests for information or sanctions under competition law, you can find further information at Legal advice in competition law.
