13.3 Legal Requirements and Legal Constraints 439have as their object or effect the prevention, restriction or distortion of competi-
tion within the common market”.
The EC Merger Regulation prohibits at least some forms of “gun jumping”, i.e. the imple-
mentation of the concentration prior to any clearance decision.^30 In December 2007, the
Commission confirmed that it had carried out “dawn raids” under Article 13 of the EC
Merger Regulation on two unnamed S PVC manufacturers in the UK on such grounds.
On the other hand, there is no prohibition of due diligence per se, as this practice
does not always have a harmful purpose or effect. On the contrary, due diligence
can be objectively necessary for a successful acquisition and permitted to the ex-
tent that it is necessary (non-competition clauses raise similar questions, see sec-
tion 16.3 and Remia v Commission).^31
In some cases, the exchange of information is not necessary. The risk is particu-
lary high when the information relates to “purchase or selling prices or any other
trading conditions” and it is made available to people responsible for such matters
or sales.
The parties can therefore mitigate risk by limiting the exchange of information
in the following ways:
- Buyer due diligence and the disclosure of competitively sensitive information
should be delayed until the likelihood of closing increases. - The parties should share information only if it is objectively necessary for due
diligence. - It is therefore necessary to limit the information exchanged in due diligence
(data room). - It is necessary to limit the people having access to information. Effective Chi-
nese walls should be used. - Only high-level executives with no day-to-day responsibility for sales and pri-
cing decisions should have access to information. - Purchase or selling prices or other trading conditions should only be disclosed
in an aggregated form or by using averages. - In particular, purchase or selling prices or any other trading conditions should
not be disclosed in a detailed form to people responsible for sales, pricing stra-
tegy, or pricing decisions. - Sensitive information can be disclosed to a limited due diligence team con-
sisting of external intermediaries who analyse information, disclose the results
in an aggregated form, and owe a duty of confidentiality (a “clean team” in a
“clean room”). - Usually, it is less necessary for the buyer to share competitively sensitive in-
formation with the seller.
(^30) Article 7(1) of Regulation 139/2004 (EC Merger Regulation).
(^31) Case 42/84 Remia v Commission [1985] ECR 2545 paragraph 19.