Part B Commentary, 1 General Provisions, III Related Subjects Outside the Subject Matter of the Market Abuse Regulation
Marco Ventoruzzo, Sebastian Mock
Edited By: Marco Ventoruzzo, Sebastian Mock
B.1.09 Market abuse is particularly relevant in takeover situations. The Market Abuse Regulation also addresses takeover law and refers to the Takeover Directive (2004/25/EC). Pursuant to recital (27), the Market Abuse Regulation should be interpreted in a manner consistent with the laws, regulations, and administrative provisions adopted in relation to takeover bids, merger transactions, and other transactions affecting ownership or control of companies regulated by the supervisory authorities appointed by Member States pursuant to Article 4 of the Takeover Directive (2004/25/EC). Also, Article 9(4) and recital (30) state that the (p. 120) use of inside information in the context of a public takeover bid for the purpose of gaining control should not be deemed to constitute insider dealing.9 Finally, the disclosure of inside information by a person intending to make a takeover bid for the securities of a company or a merger with a company to parties entitled to the securities can constitute a market sounding and therefore be exempt from the prohibition of insider trading.10
B.1.10 Pursuant to recital (80), the Market Abuse Regulation is without prejudice to the application of Union rules on competition. Therefore, a trade, act, or behaviour constituting a market abuse as set out in the Market Abuse Regulation can also violate the rules on competition in Articles 101 ff of the Treaty on the Functioning of the European Union (TFEU). The relevance of recital (80) remains unclear, however, since the Market Abuse Regulation—as a piece of secondary European legislation—cannot override the application of Articles 101 ff TFEU. However, since there are also other (secondary) sources of European competition law, the significance of recital (80) seems to be not to exclude their application. The relation of market abuse and competition law has become especially relevant in several Member States, where the civil liability for a violation of competition law is expressly stated in (general) civil law but not for committing market abuse.
Law of unfair business practices
B.1.11 Also, the relation of the Market Abuse Regulation to the national law of unfair business practices remains unclear. This is especially the case for the prohibition of market manipulation as set out in Articles 12 and 15, since certain transactions or behaviours regarding financial instruments within the scope of the Market Abuse Regulation11 can also constitute a violation of the national law on unfair business practices. The practical relevance of that problem is the absence of a detailed regulation of civil liability in the context of market abuse, since such a regulation usually exists or is generally recognized in the national law on unfair business practices.
Accounting law and law of financial reporting
B.1.12 The Market Abuse Regulation and especially the disclosure requirements pursuant to Articles 17 ff do not affect the disclosure requirements set out by accounting law and the law of financial reporting. Therefore, both requirements must be fulfilled independently by the persons responsible. Moreover, pursuant to (p. 121) Article 19(11), a person discharging managerial responsibilities within an issuer shall not conduct any transactions relating to financial instruments of the issuer during a closed period of thirty calendar days before the announcement of an interim financial report or a year-end report, which the issuer is obliged to make.12
B.1.13 Another issue of the relation of accounting law and law of financial reporting to the Market Abuse Regulation is whether certain accounting techniques can constitute a market manipulation as defined in Article 12. This is especially the case for so-called window dressing, where transactions are delayed or pushed through so that they can be included in a financial statement for a certain accounting period. Although this behaviour affects the price of the financial statement of the issuer publishing these financial statements only indirectly, it is still far from clear whether such transactions can constitute a market manipulation. In this context, the problem of aiding and abetting a market manipulation can also become relevant, since usually these transactions involve a third party.13
Specific (other) regulations on market abuse
B.1.14 Market abuse is also addressed by other European regulations. Pursuant to Article 5 of the Wholesale Energy Market Integrity and Transparency Regulation (1227/2011/EU), any engagement in, or attempt to engage in, market manipulation on wholesale energy markets is prohibited. Also, Article 3 of the Wholesale Energy Market Integrity and Transparency Regulation (1227/2011/EU) prohibits insider trading and its Article 4 states an obligation to publish inside information. Although provided as a separate set of rules on market abuse without referring to the Market Abuse Regulation, the interpretation of Articles 3 to 5 of the Wholesale Energy Market Integrity and Transparency Regulation (1227/2011/EU) is influenced by the Market Abuse Regulation. This is especially the case since the Wholesale Energy Market Integrity and Transparency Regulation (1227/2011/EU) was adopted before the Market Abuse Regulation and is therefore mainly based on the (former) Market Abuse Directive (2003/6/EC). Moreover, the Market Abuse Regulation applies to financial instruments only related to wholesale energy products and therefore being outside the scope of Articles 3 to 5 of the Wholesale Energy Market Integrity and Transparency Regulation (1227/2011/EU).14
9 See art 9 n 61 ff.
10 See art 11 n 6 ff.
11 See art 2 n 3 ff.
12 See art 19 n 42 ff for further details.
13 See Mark C Hilgard and Sebastian Mock, ‘Stoneridge and Its Impact on European Capital Markets Law’ (2008) European Company and Financial Law Review 453 ff for the situation under the (former) Market Abuse Directive (2003/6/EC). See also art 15 n 5 for further details.