Gun jumping

This article has been written by Punit Gaur pursuing Diploma in International Data Protection and Privacy Laws and edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.


In the world of mergers and acquisitions (M&A), there are various legal aspects that companies must adhere to in order to ensure fair competition and protect the interests of shareholders and consumers at large and one such aspect is ‘gun jumping’.

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The term itself actually originates from 1900s track and field races where the athlete starts racing before the signal gun is fired. Gun jumping in the field of merger control regimes represents a situation that happens either when merging entities complete a deal without obtaining necessary regulatory approvals or where merging entities fail to comply with the waiting period/statutory notice period from the date of taking a binding decision to merge under the merger control rules and regulations. This is considered a violation of merger control regulations and this act can lead to significant fines and legal consequences.

The focus of regulatory authorities all around the world has increased on such violations by merging entities, as such infringements are increasing with time. Therefore, it becomes relevant to understand the term and the issues that it creates. So, this article will provide a comprehensive analysis of gun jumping, its significance in merger control, and its implications for antitrust laws.

What is gun jumping

Gun jumping refers to the premature implementation of a merger or acquisition before obtaining the necessary regulatory approvals. In the context of antitrust and merger control laws, when companies engage in the process of merging or acquiring another business, they are required to seek approval from relevant regulatory authorities to ensure that the transaction complies with competition laws.

The term “gun jumping” is used because the involved parties metaphorically “jump the gun” by proceeding with integration or operational changes before receiving official approval from regulatory bodies. This premature action can take various forms, including the sharing of commercially sensitive information, combining resources, or implementing operational changes.

The primary rationale behind regulatory approval is to assess whether the proposed merger or acquisition could result in anti-competitive practices, such as creating a dominant market player that might harm fair competition. Regulatory authorities, such as the Federal Trade Commission (FTC) in the United States or the European Commission in the European Union, review these transactions to ensure they comply with antitrust laws.

Engaging in gun jumping is considered a violation of merger control regulations, and it can lead to legal consequences for the parties involved. Such consequences may include fines, the unwinding of the transaction (reverting to the pre-merger status), and reputational damage.

To avoid gun jumping, companies typically work closely with legal counsel, follow best practices in merger planning, and maintain transparent communication with regulatory authorities throughout the process. Understanding and adhering to the specific requirements of antitrust laws in different jurisdictions is crucial to navigating mergers and acquisitions successfully without running afoul of regulatory authorities.

Understanding merger control

Merger control is a regulatory process with the purpose of preventing anti-competitive practises and ensuring healthy competition in the market, benefiting the end consumer. It involves a detailed assessment of the potential impact of a merger and acquisition on market competition, consumer welfare, and other relevant factors under the antitrust or competition law of the country.

A term often heard in competition law cases is ‘mandatory and suspensory regime’ which basically is a merger control regime where filing of a transaction is compulsory and that the parties to a transaction are indefinitely prevented from closing the deal until they have received a merger clearance. Mechanisms may vary across jurisdictions, but their primary objective is to strike a balance between promoting economic efficiency and safeguarding fair competition. 

The primary objective of merger control is to prevent anti-competitive practices and ensure that mergers do not harm fair competition in the marketplace. Here’s a comprehensive understanding of the key aspects of the merger control regime:

Regulatory authorities: Regulatory authorities responsible for merger control vary by jurisdiction. In the United States, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) handle antitrust enforcement. In the European Union, the European Commission oversees merger control. Other countries have their own regulatory bodies.

Antitrust and competition laws: The basis of the merger control regime lies in antitrust and competition laws. These laws are designed to promote fair competition, prevent monopolistic behaviour, and protect consumers. Mergers that could substantially lessen competition or create a dominant market player may be subject to scrutiny.

Thresholds and notification requirements: Not all mergers trigger the need for regulatory review. Many jurisdictions have specific thresholds based on the size of the transaction, the market share of the merging parties, or other relevant factors. Transactions that exceed these thresholds typically require notification to the regulatory authorities.

Pre-merger notification and review: Parties involved in a merger that meet the specified criteria are usually required to submit a pre-merger notification to the relevant regulatory authority. The regulatory body then reviews the transaction to assess its potential impact on competition.

Substantive assessment: During the review process, regulatory authorities conduct a substantive assessment to determine whether the merger would result in a substantial lessening of competition. This involves analysing factors such as market concentration, entry barriers, and the potential for anti-competitive behaviour.

Remedies and conditions: If the regulatory authority identifies concerns regarding competition, it may impose remedies or conditions on the merger. This could include divestitures of certain business units or the implementation of specific measures to address anti-competitive effects.

Significance of gun jumping in merger control

There are a number of reasons why merger control authorities have strict rules against gun jumping, some of which can be:

  • First, by implementing the merger before it has been approved, the merging parties can lock in customers, suppliers, and other strategic assets. This can make it more difficult for authorities to assess the impact of mergers and for other companies to compete, and can ultimately lead to higher prices and less choice for consumers.
  • Second, give the merging entities an unfair advantage over their competitors by gaining access to confidential information about their competitors or locking in customers of merging entities.
  • Finally, gun jumping can undermine public confidence in the merger control process. When companies are seen to be flouting the rules, it can erode public trust in the system and make it more difficult for competition authorities to do their job. 

Rules and regulations surrounding gun jumping

The rules and regulations governing gun jumping vary from country to country. However, there are some common elements that can be found in most merger control regimes. This may include:

  1. Sharing competitively sensitive information, such as customer lists, pricing data, or marketing plans.
  2. Integrating operations, such as merging sales forces or combining IT systems.
  3. Changing prices or terms of sale.
  4. Appointing directors or officers to the merged entity.
  5. The merging parties take steps that are preparatory to implementing the merger, even if they do not have a direct impact on the market.

Let’s look at various laws applicable in countries to control M&A


The principal legislation governing mergers in India is the Competition Act of 2002 (the Act) and Section 5 of the Act describes the types of transactions that constitute a combination and Section 6 of the Act requires the filing of a pre-merger notice with CCI in respect of a proposed combination.

The Competition Commission of India (CCI) has the authority to restrict enterprises from entering combinations or arrangements that will have an appreciable adverse effect on competition (AAEC) or abuse their dominant position in the relevant market.

The expression “gun-jumping” has not been defined anywhere in the Act or Regulations framed thereunder. Though it includes instances relating to: (i) failure to notify and (ii) violation of the standstill obligation. Till date, the Commission has found multiple violations from combinations of entities and imposed penalties under Section 43A of the Act.

Recently, the Competition Act of 2002 was amended and the CCI scope was widened. The highlights of the amendment are:  

  • CCI can regulate M&A based on the value of transactions exceeding INR 2000 crores.
  • Smooth framework for settlement and commitment for faster resolution of investigations of anti-competitive agreements and abuse of dominant position.
  • Entities engaged in non-similar businesses are also covered and earlier only entities engaged in similar businesses could be held to be part of anti-competitive agreements. 

European Union

The legal basis for EU merger control is Council Regulation (EC) No. 139/2004, the EU Merger Regulation and the authority to deal with it is the European Commission. The regulation prohibits M&A, which would significantly reduce competition in the single market, for example, if they created dominant companies that are likely to raise prices for consumers.

The Commission in principle only examines larger mergers with an EU dimension, meaning that the merging firms reach certain turnover thresholds. There are two alternative ways to reach turnover thresholds for the EU dimension.

The first alternative requires:

  • a combined worldwide turnover of all the merging firms over €5000 million, and
  • an EU-wide turnover for each of at least two of the firms over €250 million. 

The second alternative requires:

  • a worldwide turnover of all the merging firms over €2500 million, and
  • a combined turnover of all the merging firms over €100 million in each of at least three Member States, 
  • a turnover of over €25 million for each of at least two of the firms in each of the three Member States included under ii, and 
  • EU-wide turnover of each of at least two firms of more than €100 million.

In both alternatives, an EU dimension is not met if each of the firms archives more than two thirds of its EU-wide turnover within one and the same Member State.

United States of America

In the USA, the premier merger control legislation is the United States Code, Title 15 – Commerce and Trade, Chapter 1- Monopolies and Combinations in Restraint of Trade, also called the “Clayton Act,” and Section 7a prohibits gun jumping and requires companies to maintain separate operations until the expiration of a waiting period following merger notification. Further, the statutory waiting period specified in Section 18a of the Clayton Act is to allow time to review proposed mergers before the assets become too difficult to unscramble. 

Other legislation that bars gun jumping is the Sherman Act, 15 U.S.C. 1, and Section 1 prohibits agreements between competitors that harm competition. Thus, during the pre-consummation period, competing firms may also be liable for agreements that violate Section 1.

Also, Section 5 of the Federal Trade Commission Act declared unlawful “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce”.

The premier merger control authorities are the US Federal Trade Commission (USFTC) and the Antitrust Division of the Department of Justice (DOJ), which can enforce Section 7a of the Clayton Act. Further, the DOJ has provided guidelines for antitrust enforcement agencies for international operations, covering all applicable laws, issues that may arise regarding jurisdiction and procedural rules applicable in the situation.


The law applicable in Israel that controls M&A is Economic Competition Law 5748-1988 (the Law) and any merger that crosses the required threshold shall proceed after ex ante approval from the Director General of the Israel Antitrust Authority (IAA).

In Israel, IAA follows the “Bright Green” route for merger examinations to expedite the approval process for M&As that do not raise competitive concerns. Under this process, mergers that clearly raise no serious concerns about harm to competition or the public as per Section 21 of the law can be clearly approved. The decision is taken based on prima facie information provided by merging parties within 30 days.

Section 19 of the law covers the term ‘gun jumping’ to describe cases in which the parties to a merger that are subjected to the reporting obligation begin to carry out the merger before receiving the Director General’s approval but act contrary to the provision.

Identifying actions that may constitute gun jumping

The specific actions that may constitute gun jumping will vary depending on the specific merger control regime. The main purpose of the regime is to ensure that entities remain independent until they obtain regulatory approvals. There are some common types of activities that are often prohibited, which include:

  • Premature implementation of a merger: This is one of the most common forms of gun jumping and can occur when the merging parties take steps to integrate their operations or to change prices or terms of sale before the merger has been approved.
  • Sharing competitively sensitive information: This can include information about customers, suppliers, pricing, or marketing plans.
  • Coordinated actions before clearance: This occurs when the merging parties coordinate their competitive behaviour before the merger has been approved and includes agreeing on prices, dividing markets, or allocating customers.
  • Negotiating contracts on behalf of another party: An executive of either of merging entities cannot negotiate contracts or accept settlements on behalf of the other merging entity

Though major activities are prohibited before approvals are obtained, before that, the concerned entities can perform transition planning so that the purpose of M&A is not adversely affected due to conduct outside the course of business. Therefore, some permitted actions may include:

  • Information publicly available can be shared among the merging entities.
  • Sharing of information that is pro-competitive in nature or is required for due diligence.
  • Exercise of veto rights over decisions outside the ordinary course of business that do not result in decisive influence of the acquirer entity over the entity being acquired

Examining the potential ramifications for companies involved

The penalties for gun jumping can be severe. In some countries, companies that engage in gun jumping may be fined up to 10% of their global turnover. In addition, the merger may be voided, and the merging entities may be liable for damages to competitors or consumers while damaging their reputations all together.

Fines and penalties: The amount of the fine will vary depending on the specific merger control regime, but it can be significant. In some cases, fines have been imposed that are equal to 10% of the global turnover of the merging parties.

Reputational damage: When a company is found to have engaged in gun jumping, it can be seen as being untrustworthy and unethical. This can make it more difficult for the company to attract customers and investors in the future.

Voidability of the transaction: In some cases, a merger that has been implemented in violation of merger control laws may be voided.

Potential lawsuits: Companies that engage in gun jumping may also face potential lawsuits from competitors or enforcement actions by competition authorities.

Analysing real-life examples of gun jumping cases and their outcomes

All over the world, there have been many high-profile ‘gun jumping’ cases in recent years. Let’s take a look at important cases from various jurisdictions where the courts have found companies guilty of gun jumping.


A large number of gun-jumping cases before CCI were Suo-Motu inquiries, primarily based on information gathered through media and market intelligence. Several procedural gun-jumpings were unearthed on the basis of voluntary belated filings by the parties or information provided in combination notices regarding other transactions pursued by the parties. Some of the important cases are mentioned below:

Amazon-Future Group Deal case: In 2021, CCI, while exercising its extraordinary jurisdiction, suspended the 2019 approval order granted in favour of Amazon NV Investment Holdings LLC (Amazon) for the acquisition of Future Coupons Private Limited (FCPL) and fined Rs. 202 crores on Amazon on the ground that Amazon was found jumping the gun by giving false information to CCI about the reason for the combination, which in reality was to by-pass FDI restrictions, which violates Section 6(2) read with Section 43A of the Competition Act of 2002 (the Act) and Regulation 9(4) of the Combination Regulation. Further, the order was upheld by NCLAT.

Chhatwal Group Trust/Shrem Roadways Private Limited: In 2018, CCI imposed a penalty of Rs.10 lakh on Chhatwal Group Trust for violation of Section 6 read with Section 43A of the Act, on the ground that pre-payment of consideration by the acquirers in the form of ‘token money’ in advance of signing definitive transaction documents amounts to consummating a part of the combination before filing notice of the combination with the Commission and resulted in gun-jumping.

European Union (EU)

In the EU, the legal implications of ‘Gun Jumping’ are severe, with heavy sanctions imposed for procedural merger control infringements. In 2022, a total of €113.8 million in fines were imposed in 70 decisions across various jurisdictions, marking a 7% increase from 2021.

Canon Inc. vs. European Commission (2022): In 2022, the EU General Court upheld the European Commission’s order against Canon, which imposed a fine of €28 million for gun jumping on the ground that, in this case, the interim transaction and the ultimate transaction are to be considered as a single transaction because the interim transaction was a necessary step in the implementation of the overall transaction and a direct functional link with the change of control over the acquired entity before the acquisition was approved by the regulatory authority.

Altice Europe vs. Commission (2021): In 2021, the EU General Court upheld the European Commission’s 2018 order against Altice Europe, imposing a penalty of €124.5 million on grounds of gun jumping, violation of the obligation to notify and failure to comply with the standstill obligation before approval was obtained for the acquisition.

United States of America

United States vs. Gemstar-TV Guide International, Inc. & TV Guide, Inc. case (2003): An executive from TV Guide led negotiations to settle a patent dispute between Gemstar and another market player only because the discussed terms were against TV Guide interests. The Court found entities were in violation of Section 1 of the Sherman Act and Section 7a of the Clayton Act and imposed a penalty of $5.676 million on the ground that the negotiations reflected that the entities had aligned economic interests before the expiration of the waiting period or regulatory approval.

In the Re Insilco Corp. case: The court found Insilco in violation of Section 1 of the Sherman Act and Section 7a of the Clayton Act on the ground that during the pre-consumption period of the acquisition of a competitor by Insilco, there was an illegal information exchange of customer specific data.


Michlol-Berman Merger Case: In this case, the IAA found that the merging entities were in violation of the law due to gun jumping on the ground that they had carried out certain actions like the exchange of ‘token money’, revenue sharing, etc. in the period between signing the merger agreements and receiving the Director General’s approval.

Imagine Media-Kardan Israel Merger case: In parallel to signing an SPA, the merging entities also signed a loan transfer agreement, which the IAA found to be in violation of the law on the ground that the purchase of debt and the SPA should be viewed as consideration transfers for the merger before regulatory approval.


Gun jumping is a serious violation of merger control laws that can have significant consequences for the companies involved. By understanding the rules and regulations governing gun jumping and taking steps to avoid it, companies can help protect themselves from the potential penalties and other negative consequences of gun jumping. The rules and regulations governing gun jumping can change from time to time, so it is important to stay up-to-date on the latest developments.

Further, merging companies can follow safeguards to avoid gun jumping. These include:

  1. After the acquisition process begins, adopt the ‘antitrust protocol’ to address the risk of gun-jumping by drafting a clause in the M&A agreement clearly providing parties conduct and obligations during the stand-still period.
  2. Conducting thorough due diligence. Conduct thorough due diligence on the target company before entering into a merger agreement. This will help to assess target value and identify any potential antitrust issues that could lead to gun jumping.
  3. Safeguard exchange of commercially sensitive information by maintaining data rooms, having clean teams of persons not involved in day-to-day business operations, redacting documents and having all persons involved sign non-disclosure agreements
  4. The entity being acquired should perform all acts in the ordinary course of business to preserve the asset value of the target, which can be ensured by including covenants in the merger agreements.
  5. Maintaining open communication with competition authorities during the process. Companies should keep competition authorities informed about their merger plans and should cooperate fully with any investigations.
  6. Implementing effective internal controls and compliance programs. Companies should implement effective internal controls and compliance programs to ensure that they are in compliance with merger control laws.

Additionally, competition authorities should continue to enforce the rules against gun jumping and raise awareness about its implications to foster fair competition and protect the interests of shareholders and consumers.


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