Monti court defeat over merger veto gives boost to reform calls

Date: 24/10/02

By Peter Chapman

THE latest stinging court defeat for Mario Monti, the competition commissioner, will add fuel to demands for a radical shake-up of the way the EU vets mergers, it is claimed.

The Luxembourg-based Court of First Instance (CFI) overturned the European Commission's decision to block the merger of French electrical firm Schneider with rival Legrand - citing 'several obvious errors, emissions and contradictions' in its analysis and pointing to use of procedures that 'infringed Schneider's defence rights'.

The Schneider case was the first of two rulings at the CFI this week using a new fast-track procedure that slashes the time it takes the court to rule on selected cases from up to three years to less than 12 months. The CFI rules tomorrow (25 October) on another controversial decision, the veto of packaging giant Tetra Laval's take-over of French bottling firm Sidel.

Monti has already announced he plans to change the way his team vets mergers, partly in response to court criticism that began with the CFI's veto of his decision to block the marriage of UK tour operators Airtours and First Choice.

But Danish MEP Karin Riis-Jorgensen, competition spokesman for the assembly's Liberal group, told European Voice that Monti's defeat strengthens her calls for even more radical reforms that were backed by Parliament earlier this month.

'I don't want to undermine the Commission because it needs to be very strong - so I want to give Monti a tool to help him become stronger and not be accused of failing to give companies justice,' she said.

She wants the EU to set up a separate competition 'judicial panel' linked to the European Court of Justice and its lower chamber, the CFI.

This panel, which would hear company appeals against merger decisions, would be manned by competition law experts.

It would be able to deliver fast verdicts as a matter of course. That contrasts with the current system where only selected merger appeals - such as Schneider and Tetra Laval's - are allowed to jump the queue at the CFI. This would give companies a far better chance to resurrect blocked deals if they win an appeal.

Riis-Jorgensen said the Nice Treaty already provides the legal basis for setting up such a body.

Funding it would be likely to cause more problems - but she said appealing companies could pay some of the costs.

Meanwhile, the MEP said the Commission's plans for a 'devil's advocate committee' of fellow officials, to vet the quality of draft merger decisions of their peers, do not go far enough.

MEPs have no formal powers in the competition field.

But Riis-Jorgensen, who wrote to Monti with her proposals last week, reckons the competition chief cannot ignore their views.

Leading competition lawyers in Brussels, such as Alec Burnside of Linklaters and Alliance, said they backed MEPs' demands for a special court body and independent review of draft decisions.

Burnside favours a review panel that would examine the Commission's case against a merger and the companies' replies. Members of the panel could include academics and business executives as well as officials.

The new system could slow the initial time frame for getting a decision from Brussels. But Burnside said that would be 'a worthwhile compromise,'adding that member states should pay for it.

The latest court defeat for Mario Monti, the competition commissioner, will add fuel to demands for a radical shake-up of the way the EU vets mergers, it is claimed.