Short Reads

The need for speed in mergers is no reason to ignore rights of defence

The need for speed in mergers is no reason to ignore rights of defence

The need for speed in mergers is no reason to ignore rights of defence

07.02.2019 NL law

On 16 January 2019, the European Court of Justice clarified the procedural guarantees the European Commission needs to provide to merging parties during merger reviews. According to the Court of Justice, the General Court (GC) had rightly annulled the Commission's decision to prohibit the merger of UPS and TNT. UPS's right of defence had been infringed because the Commission had failed to share the final version of the econometric model with UPS before adopting its prohibition decision.

Even though there is a need for speed in merger control proceedings, companies should still be given sufficient opportunity to provide their views on the accuracy and relevance of all the factors on which the Commission intends to base its decision.

In 2013, the Commission concluded that the merger would have led to a significant impediment to effective competition in 15 Member States on the market for the international express delivery of small parcels. UPS subsequently withdrew its cash offer for TNT and, in 2016, TNT was acquired by FedEx, a competitor of UPS.

In 2017, the GC set aside the Commission's prohibition decision on the ground that the rights of defence of UPS had been infringed [see our April 2017 Newsletter]. Specifically, the econometric model relied on by the Commission differed materially from the one disclosed to the parties in the statement of objections. The GC held that this error was sufficient to annul the prohibition decision because, absent the error, there was at least a slight chance that the parties would have been better able to defend themselves. Notably, the GC did not find it necessary to consider whether the outcome of the Commission's review would have been different but for the procedural error.

The Court of Justice upheld the GC's judgment and confirmed that the rights of the defence require parties to be put in a position in which they can effectively make known their views on the accuracy and relevance of all the factors on which the Commission intends to base its decision. The Court of Justice emphasized that while econometric models are quantitative tools appropriate for the purpose of carrying out prospective merger control analysis, the methodological basis underpinning those models must be as objective as possible.

The judgment, which is consistent with EU courts' greater appetite to set aside Commission decisions on procedural (as opposed to substantive) grounds, is likely to only have a modest effect on the Commission's conduct in merger reviews. This is because in trying to strike a balance between administrative expediency and the rights of defence, the judgment only requires that "material" changes be notified to the merging parties. According to AG Kokott's opinion, undertakings concerned should not expect, in terms of content, more than a brief and to-the-point description of the econometric model used by the Commission.

Finally, it remains to be seen how the judgment will affect the ongoing damages claims brought against the Commission by UPS and Irish aviation company ASL, which had agreed to buy TNT Airways subject to the UPS/TNT transaction. Both parties are seeking compensation for losses incurred in connection with the prohibition decision.

 

This article was published in the Competition Law Newsletter of February 2019. Other articles in this newsletter:

Team

Related news

09.04.2020 LU law
Luxembourg introduces new State aid scheme for businesses affected by Covid-19

Short Reads - Following the Luxembourg government’s declaration of a state emergency on 28 March 2020 and as part of the new measures implemented in response to the unprecedented and unforeseeable consequences of the Covid-19 pandemic, the country has adopted a new law in an effort to support businesses suffering financial consequences.

Read more

02.04.2020 NL law
Claims assigned to a litigation vehicle: who needs to prove what?

Short Reads - Two recent decisions from the Amsterdam Court of Appeal have confirmed that litigation vehicles cannot come empty-handed to the court, and should provide documentation regarding the assignments of claims they submit. The Dutch legal system allows companies and individuals to assign their claims to a “litigation vehicle” or “claims vehicle” that bundles those claims into a single action. In its decisions of 10 March 2020, the Court of Appeal ruled that it is up to litigation vehicles to prove that the assignments can be invoked against the debtor. 

Read more

02.04.2020 NL law
EU competition policy agenda: full to the brim

Short Reads - The European Commission’s competition policy agenda stretches to 2024 and contains plans for many new or revised rules and guidelines. Recent publications, such as the New Industrial Strategy for Europe, shed more light on the Commission’s initiatives and their possible impact on parties from both inside and outside the European Union (EU). These new initiatives include temporary state aid rules to address the effects of the Corona crisis, consultations on the Block Exemption Regulations, and new measures in respect of (primarily) third-country companies.

Read more

02.04.2020 NL law
ACM played high stakes and lost: no more fixed network access regulation

Short Reads - The ACM’s failure to meet the requisite standard of proof has led to the fixed networks of Dutch telecom providers KPN and VodafoneZiggo being free from access regulation. The Dutch Trade and Industry Appeals Tribunal ruled that the ACM had failed to demonstrate the existence of collective dominance, and that KPN and VodafoneZiggo would tacitly coordinate their behaviour absent regulation.

Read more

26.03.2020 BE law
​I am suffering significant financial losses as a result of the spread of the corona virus. Is there a possibility of State aid?

Short Reads - COVID-19 brings certain questions to centre stage regarding State aid. In this short read, Peter Wytinck, Sophie Van Besien and Michèle de Clerck discuss the possibility of State aid in case of significant financial losses as a result of the spread of the corona virus.

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring