3rd January, 2014 by Rupert Millar
French wine group Castel Frères has been fined €4 million by France’s competition authorities for failing to notify the government about its acquisition of companies from Patriarche in 2011.
According to Agence France Presse, L’Autorité de la concurrence said that, “Castel Frères had deliberately ignored its obligations in order to quickly complete the transaction.”
When the largely Bordeaux-based Castel acquired six companies from the Burgundy oriented Patriarche in April 2011 (KBB, Sorevi, SNC Beaune Visites en Cave, Sodigap, Patriarche Père et Fils and SCI du Phare), the news was brought to the government’s attention via a third party and was not apparently reported by Castel before the deal was finalised on 6 May.
However, after an investigation the authority approved the acquisition in July 2012 despite noting that the deal left Castel with a significant “concentration” of assets.
It has now reversed its decision in order to impose a financial penalty having finally decided that Castel “knowingly exempted itself” from normal procedures therefore committing a “serious violation” of the rules.
Calling on articles L. 430-5 to L. 430-7, the authority is allowed to level a fine on a company to the tune of 5% of its turnover after tax, particularly if “the figures after tax made in France by up to two businesses or groups…is greater than €50m.”
Castel and Patriarche’s combined figures for 2010 exceeded €150m.
It is only the third time in the authority’s history that it has fined a company for failing to notify it of an acquisition. The previous two fines were five times less than the one recently handed to Castel, the next largest being just €400,000.
The authority explained that even though Castel did eventually recognise its infraction, it was not enough to outweigh the group’s prior failure to notify the governing body of the deal and its lack of cooperation.
It said that the sanction was of a “dissuasive character”.
Castel is allowed to challenge the ruling and take its case to the Council of State. It has so far made no comment.