Short Reads

European Commission must reassess Lufthansa's request to waive merger commitments

European Commission must reassess Lufthansa's request to waive merger

European Commission must reassess Lufthansa's request to waive merger commitments

01.06.2018 NL law

On 16 May 2018, the General Court partially annulled the European Commission's rejection of Lufthansa's request to waive pricing commitments it had given when it acquired Swiss International Air Lines (Swiss) in 2005. The Court held that the Commission had failed to fulfil its obligation to carefully examine all the relevant facts.

In 2005, the Commission approved the acquisition of Swiss by Lufthansa, subject to conditions. The conditions included pricing commitments in relation to the Zurich-Stockholm and Zurich-Warsaw routes operated by Swiss. On these routes, Lufthansa committed to apply an equivalent fare reduction each time it reduced a published fare on a comparable route. The commitments also contained a review clause providing that under specific circumstances Lufthansa could request a waiver, modification or substitution of the commitments.

In 2013, the parties requested a waiver of the pricing commitments on three grounds: (i) the termination of a joint venture agreement entered into between Lufthansa and Scandinavian Airlines System in 1995, (ii) the Commission's policy change in the treatment of alliance partners in the context of the Commission's merger review and (iii) increased competition in the market. The Commission rejected the requested waiver in 2016 and Lufthansa appealed this decision before the General Court.

The Court reiterated that the Commission has a certain discretion in its merger review, especially with respect to economic assessments. According to the Court, this discretion also applies in the assessment of a waiver request that entails complex economic assessments.

At the same time, the Commission is obliged to carry out a careful examination of that request, to conduct investigation if necessary, to make appropriate enquiries and to base its conclusions on all the relevant information. The Court also ruled that if the parties have adduced sufficient evidence to support the request, it is then for the Commission to show how the evidence is insufficient or unreliable and, if necessary, carry out an investigation to verify, supplement or refute that evidence.

As regards the Zurich-Stockholm route, the Court ruled that the matters relied on in the decision could not justify the rejection of the requested waiver. The Court found, for example, that the Commission had failed to examine the impact of the termination of the joint venture on competition and had not adequately answered Lufthansa's argument that the Commission had changed its policy by no longer taking alliance partners into account in determining affected markets. The Commission had also failed to undertake a concrete analysis of contractual changes and relied on purely speculative matters in that regard.

In the absence of contractual changes relating to the Zurich-Warsaw route, the Court saw no reason to annul the Commission's decision in so far as it concerned that route.
 
The case clarifies the standard of review and the burden of proof in proceedings concerning assessments of a request for a waiver of commitments. It is also the third ruling in a short period in which the Court has annulled a merger decision due to faulty analyses or procedures. 

This article was published in the Competition Law Newsletter of June 2018. Other articles in this newsletter:

European Court of Justice rules EY did not violate stand-still obligation in Danish merger
Dutch Appeal Court drastically reduces cartel fine Dutch construction company
District Court of Amsterdam declines jurisdiction in competition law damages case
Belgian Supreme Court confirms illegality of dawn raids due to the lack of a warrant

Team

Related news

04.04.2022 EU law
ACM jumps on gun-jumping bandwagon

Short Reads - Companies involved in multi-step acquisitions should beware of potential gun-jumping risks. The Dutch Authority for Consumers and Markets (ACM) has fined a trade association for failing to notify the acquisition of four pharmacies involving a consecutive partial resale. Unlike the European Commission’s gun-jumping fine for partial implementation of a concentration through a ‘warehousing’ two-step acquisition (see our July 2019 newsletter; appeal pending), the ACM’s fine relates to faulty turnover calculations due to an unmaterialized two-step transaction.

Read more

05.04.2022 NL law
Game on for gatekeepers: Digital Markets Act finalised

Short Reads - Now that political agreement has been reached on the final text, the Digital Markets Act (DMA) will enter into force soon. The DMA’s ex ante rules and obligations will apply next to the ad hoc EU and national competition rules. Time for big digital companies to take stock of the potential implications of these additional rules on their day-to-day business operations. See our infographic for a concise overview of the DMA.

Read more

04.04.2022 EU law
The ECN+ Directive implemented in Belgium and introduction of merger filing fees

Short Reads - On 7 March 2022, the Act implementing the ECN+ Directive into Belgian law was published in the Belgian Official Gazette. The Act entered into force on 17 March 2022. Some of the key amendments include (i) the introduction of filing fees for the notification of a concentration, (ii) new fines and penalty payments (including clarifications on the leniency programme), (iii) new dawn raid powers and (iv) the introduction of a regulatory framework for mutual assistance and cooperation within the European Competition Network.

Read more

10.03.2022 EU law
De Dataverordening (“Data Act”)

Short Reads - De Europese Commissie heeft op 23 februari 2022 de Europese dataverordening (“Data Act”) voorgesteld, die het delen van data beoogt te bevorderen. Steeds meer gegevens worden door mensen en machines gegenereerd, bewaard en hergebruikt. Data en data-analyse kan een bijdrage leveren aan de efficiëntie van maatschappelijke processen, onderzoek en innovatie stimuleren en het concurrentievermogen van industrieën versterken. Veel data is echter niet vrij toegankelijk.  

Read more