| Author (Person) | Bower, Helen | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Publisher | ProQuest Information and Learning | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Series Details | 27.10.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Publication Date | 27/10/2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Content Type | News, Overview, Topic Guide | In Focus | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The European Commission is set to present its proposals for a reform of the EU's merger policy in December 2002 after the European Court of First Instance ruled against the European Commission twice in a week at the end of October 2002. The rulings concerned the European Commission's ban of a merger between Swiss based Tetra Lavel and French firm Sidel, and between two French electricity firms - Schneider and Legrand. The ruling follows fast on the Court's decision to overturn the European Commission's ban on a merger between UK travel groups Airtours and First Choice in June 2002. It means that Mario Monti has presided over all three defeats of the European Commission on merger cases since the body acquired its powers in 1990. Background On 6 June 2002, the European Court of First Instance (CFI) took an unprecedented step when it decided to overrule a European Commission merger veto in the case of two UK tour operators, Airtours and First Choice. The case had been brought by Airtours, now My Travel, who decided to challenge the European Commission's decision to ban the merger on the basis that the proposed merger would lead to an 'oligopoly' , which meant that the market structure would become concentrated in such a way that the major players could collectively have a dominant position, with consequent adverse effects on prices and/or other key competition matters. In its ruling the Court of First Instance supported Airtours challenge and annulled the European Commission's decision. The CFI did not question that the EC Merger Regulation can be applied to operations leading to collective dominance but it stated that the European Commission had not proved that if the transaction proceeded, the three leading tour operators would have an incentive to cease competing with each other. Nor did the European Commission prove that the concentration would have resulted in the three conditions that must be met if there is to be a finding of collective dominance. It ruled that:
The decision came at a time when the European Commission's Directorate General for Competition was already conducting a review of the EU's merger policy but it increased the pressure on the European Commission to accelerate reforms. Just two days before the CFI decision members on the panel at a conference on reform of the European merger control hosted by the British Chamber of Commerce in Brussels criticised the DG Competition for being the 'policeman,judge and jury' when ruling on merger decisions. More information on the reform of the EU's merger policy can be found in a previous European Sources Online: In Focus entitled ' Moreover, the ruling suggested that several other merger cases, including the Schenider/ Legrand and the Tetra/Laval case, which were still pending decisions in the Court of First Instance might also go against the European Commission. Two court rulings within a week against European Commission Of those cases, the European Court of First Instance ruled first on the European Commission's decision to ban a merger between the two French electrical groups - Schneider and Legrand. In its ruling on 22 October 2002, the Court overturned the European Commission's ban on the merger between the companies criticising the Commission for its economic analysis which was 'vitiated by errors and omissions'. It said that the European Commission had been wrong to conclude that the merger would have harmed competition in several European countries and found that the Commission had committed a 'serious infringement of the rights of the defence' by failing to spell out to the companies what its concerns were. In contrast to the Meanwhile the European Commission has up to 60 days to study the ruling and decide whether it wishes to appeal against it before the European Court of Justice. With pressure mounting on the European Competition Commissioner, Mario Monti, to radically reform the way the EU scrutinises mergers the European Court of First instance ruled against the European Commission for a third time on 25 October 2002 in the case of its decision on a proposed merger between the two packaging companies, Tetra Laval and Sidel. The European Commission had prohibited the acquisition of French company Sidel SA by Swiss-based Tetra Laval on 30 October 2001. In its decision, it argued that the €1.7 billion take-over would combine Tetra's dominant position in carton packaging with Sidel's leading position in PET plastic packaging equipment, which would therefore create a dominant position in the market for PET packaging equipment. The Court of First Instance annulled the prohibition of the merger on the basis that the 'economic analysis of the immediate anti-competitive effects, of conglomerate effects and of the foreseeable conduct of the companies in question is based on insufficient evidence and some errors of assessment'. However, it did not support Tetra Laval's argument concerning infringement of the right of access to the file. Reform of merger regulation to be presented in December 2002 Following the Court of First Instance's third rebuff of the European Commission in four months, Mario Monti announced that proposed reforms of the EC merger regulation would be presented by the end of December 2002. Clearly keen to stem a tide of criticism, the Competition Commissioner also gave an outline of the nature of reforms at a press conference following the Court's ruling in the Tetra Laval/Sidel case. According to the BBC, the measures would include:
The proposed reform package is expected to consist of a draft proposal for a new Council Regulation; a draft Commission Notice containing comprehensive guidelines on the assessment of dominance in horizontal mergers, with a view to publishing it for consultation of both Member States and interested third parties; and a draft set of best practice guidelines covering the day-to-day handling of merger cases by DG Competition. However, if this is to be the extent of the reforms then they are unlikely to quieten critics who are calling for a separation in the responsibilities of investigating and settling merger cases, the introduction of effective external scrutiny and disciplines and even the requirement for the European Commission to obtain prior court approval for merger vetoes, as US antitrust authorities are obliged to do. Although such reforms have won the backing of the European Parliament, Mario Monti is known to be adamantly against moving to the US system. However, he is coming under increasing pressure to introduce radical reforms and with nine other merger veto cases awaiting a decision by the Court (among them MCI Worldcom/Sprint, GE/Honeywell) the future of the European Commission's powers in the merger field remain in doubt. Further information within European Sources Online:
Further information can be seen in these external links: EU Institutions
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Helen Bower The European Commission is set to present its proposals for a reform of the EU's merger policy in December 2002 after the European Court of First Instance ruled against the European Commission twice in a week at the end of October 2002. The rulings concerned the European Commission's ban of a merger between Swiss based Tetra Lavel and French firm Sidel, and between two French electricity firms - Schneider and Legrand. |
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