Schneider hopes to net €1.6bn compensation

EU antitrust regulators are anxiously awaiting a court ruling next week (11 July) on a claim for damages brought by the French group Schneider Electric against the European Commission.

The electrical goods manufacturer is seeking €1.6 billion in compensation because the Commission blocked its merger with rival Legrand in 2001.

Schneider was forced to sell Legrand to private equity groups in the wake of the 2001 ruling, which was overturned a year later by the European Court of First Instance (CFI). The same court is to decide next week whether the Commission should be made to pay compensation.

A ruling in Schneider’s favour would be unprecedented. Damages have never before been awarded for overturned Commission antitrust rulings. Although the court has already come down in Schneider’s favour by overturning the initial antitrust decision, legal experts think it unlikely that the Commission’s reading of competition law was sufficiently misguided to warrant compensation.

"Schneider is pushing for something that hasn’t been done before. The court already sharply criticised the Commission when it overruled the original prohibition decision, but you can’t automatically jump from there to approval of a compensation claim," said Alec Burnside, head of competition law at the Brussels office of Linklaters.

"Even the striking level of failure" demonstrated by the Commission in the 2001 ruling, he said, "may not be sufficient to lead to damages...That’s the question which is before the Court. I doubt Schneider will succeed."

The case will be closely watched by other companies that have been successful in overturning Commission merger decisions. UK tour operator MyTravel has also filed a damages claim for the Commission’s 2001 prohibition of its bid for rival First Choice, which was scrapped by the court in 2002.

Another Brussels-based lawyer said a decision supporting Schneider’s claim would be "a rude wake-up call for the Commission". The court, he said, would have to be very careful in its ruling because of the potential effect it could have on the Commission’s handling of complex cases.

But previous court reversals of antitrust rulings on grounds of insufficient or faulty analysis - including the Schneider and MyTravel cases - have already had a significant effect on the way antitrust regulators look at mergers. Last week’s (27 June) veto of Irish airline Ryanair’s bid for Aer Lingus, for example, was the Commission’s first merger prohibition since 2004. "The Commission has already undergone a chilling effect," said Burnside. "It is now a more cautious and sober and less buccaneering authority than it was before."

A Commission official said: "Any court ruling is extremely valuable in terms of telling us how to interpret rules and how we can do things better." According to the official, should the CFI support Schneider in its request for €1.6bn in damages, the money would have to be taken from the EU budget. This outcome could further complicate existing EU wrangling over funding for costly and contested EU projects Galileo and the European Institute of Technology.

EU antitrust regulators are anxiously awaiting a court ruling next week (11 July) on a claim for damages brought by the French group Schneider Electric against the European Commission.