Short Reads

General Court annuls European Commission's merger blocking decision in UPS/TNT for procedural errors

General Court annuls European Commission's merger blocking decision in UPS/TNT for procedural errors

General Court annuls European Commission's merger blocking decision in UPS/TNT for procedural errors

04.04.2017 NL law

On 7 March 2017, the General Court ("GC") annulled the decision of the European Commission to block the proposed acquisition of TNT Express ("TNT") by United Parcel Service ("UPS"). The GC found that the Commission had infringed the right of defence of UPS by failing to communicate the final version of the econometric model used in the assessment.

UPS notified the Commission of its proposed acquisition of TNT in 2012. On 30 January 2013, the Commission decided the proposed acquisition was incompatible with the internal market and with the EEA agreement. The Commission decided not to grant approval for the proposed acquisition as it would lead to competitive concerns on the market for express small package delivery services in 15 Member States.

The Commission first estimated the degree of concentration on the market by using an econometric model based on variables recommended by UPS. However, in the later "prediction stage", the Commission used different variables.

UPS appealed the decision at the GC arguing that the Commission had infringed its right of defence. UPS argued that it could not effectively challenge the reliability of the econometric model used by the Commission in its decision, properly analyse the differences between the Commission’s results and its own results, or replicate the Commission's results.

The GC sided with UPS and emphasized that observing the right of the defence is a general principle of EU law which much be guaranteed in all proceedings. The GC noted that the right to a fair hearing "requires that the undertaking concerned must have been afforded the opportunity, during the administrative procedure, to make known its views on the truth and relevance of […] the documents used by the Commission to support its claim."

The GC ruled that the changes made to the final model could not be regarded as negligible. By failing to communicate the final model the Commission had infringed the right of defence of UPS. The GC concluded that UPS might have been better able to defend itself had the final version of the econometric model been at its disposal. Consequently, the GC annulled the decision.

The judgment confirms that parties should be given sufficient opportunity to comment and respond to analyses used by the Commission in merger cases. The parties are unable to refile the concentration as TNT has meanwhile been acquired by FedEx. However, the GC's ruling might form a basis for UPS to claim damages.

This article was published in the Competition Law Newsletter of April 2017. Other articles in this newsletter:

  1. Court of Justice confirms the fine imposed on Samsung in the cathode ray tubes cartel
  2. Court of Justice rules on the Hearing Officer's competence to resolve confidentiality requests
  3. European Commission proposes a new Directive to empower national competition authorities to be more effective enforcers of EU competition law rules
  4. European Commission launches anonymous whistleblower tool
  5. District Court of Gelderland denies passing-on defense in antitrust litigation related to the GIS-cartel

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