Luxembourg, 03/04/2003 (Agence Europe) - The EU's Court of First Instance (CFI) has issued two rulings that confirm the European Commission's decisions with regards competition. On one hand, it confirms the Commission's decision to authorise a merger between the French household appliance manufacturers SEB and Moulinex and, on the other hand, another decision whereby the Commission approved the merger between TotalFina and Elf, subject to the transfer of 70 service stations over the whole French motorway network.
SEB/Moulinex: On 9 January 2002, the Commission cleared the merger between SEB and its direct rival, Moulinex, in judicial settlement, on condition that SEB grant an exclusive license on the Moulinex brand to third parties during a five year period in nine countries. Furthermore, the Commission referred the examination of the dossier concerning the impact that the operation would have on French national territory back to the French authorities. These conditions had been proposed after expiry of the time limit given to the companies for submitting their commitments (three weeks), but the Commission had agreed to these late commitments and had cleared the merger. Further to this decision, the French company, Babyliss, a candidate for taking over Moulinex, and the Dutch company Philips, a direct SEB rival, decided to take the matter before the CFI. They called for the decision to be annulled, considering on one hand that the Commission should not have agreed to the commitments made after the deadline had expired and, on the other hand, challenging referral of part of the dossier to the French authorities. The CFI looked at the arguments put forward by the complainants and decided to reject them as a whole and to confirm the Commission's decision. With regards the first argument, the Court of First Instance stresses that the deadline set is only imposed upon the notifying parties, in order to prevent them from systematically submitting their commitment "at the very last minute", but not upon the Commission which is entitled to accept late commitments if it considers that it has enough time to do so. The CFI also rejected Philips' argument whereby license holders are said to have suffered from parallel imports of Moulinex products, given the almost total lack of such imports and the existence of separate national markets "given the national distribution, supply and logistics structure". Finally, the argument whereby the duration of licenses foreseen by the commitments was insufficient was also dismissed by the CFI given the "market characteristics" (mainly the fact that the life cycle of the products in question does not exceed three years in general). Complainants had in fact urged for these licenses to be extended, as, they said, they were necessary to allow SEB competitors to take position. As far as the decision of referral to French authorities was concerned, the Court of First Instance considers that the conditions foreseen by the regulation on mergers for referral of a merger to a Member State had been met, although it notes that "systematic" referral to Member States when the product in question comes under separate national markets "is likely to injure the principle of 'one shop stop'". It underlines, moreover, that it is not its role to take the place of the Community legislator with a view to palliating possible gaps in the referral mechanism.
TotalFina/Elf: The merger between the French oil groups, TotalFina and Elf Aquitaine, had been authorised by the Commission on 9 February 2000 on condition that the parties sell to other companies a network of 70 motorway service stations as the new enlarged group would otherwise have been in a dominant position on the French motorway network. A first group of bidders had been rejected by the Commission in September 2000, as the Commission considered the list was "was not acceptable as it was". In other words, they would not have had the necessary incentive to put sufficient competitive pressure on TotalFinaElf. A second list was accepted two months later. The companies, Pétrolessence and "Société de gestion de restauration routière" (SG2R), which jointly operated under the trade name of "Mirabellier", were among the candidates rejected. They therefore decided on 9 October 2001 to initiate action at the Court of First Instance. Both companies challenged the Commission's refusal to include them on the list of buyers, considering that they had the necessary financial capacity to take over the six service stations for which they had made a bid. The CFI rejected their arguments, stressing that the Commission is entitled to reject candidates if it considers they do not have the necessary wherewithal to be viable and effective rivals. It thus considers in its ruling that the parties seeking to acquire had not shown the Commission was wrong in its assessment when it considered that the bidders, on their own or even with other concessionaires, could not have maintained or developed effective competition on the market, according to requirements.
Commission welcomes rulings given in both affairs
Speaking through the voice of his spokesperson, Amelia Torres, Competition Commissioner Mario Monti said he was pleased with the CFI's rulings. "I welcome these decisions that confirm the
the Commission practice in examining a merger in a Member State, as well as agreeing to late commitments. The decisions concerning SEB/Moulinex has also been subject to the theory that a merger should not harm consumers by brand combinations", declared the Commissioner. With regard to the SEB/Moulinex affair, the Commission stresses that for the first time the CFI had spoken about the theory of "brand range effects", that it had used on many occasions. It believes that the CFI is in favour of this theory that allows for the competitive position of the company due to the portfolio of brands it possesses. The Commission welcomes the fact that its procedural approach was judged compatible with Community law. In the "Mirabellier" affair, the Commission appreciated the fact that the CFI had, for the first time, clarified the margin of appreciation, which it has when ruling on candidate-acquirers of shares to disinvest, as a condition for a merger. The Commission considers that the Court had "very clearly" confirmed that it had to reject such candidacies when it appeared that the acquirers, even if the companies were profitable, were unable to fulfil the rectifying objectives, which is needed for maintaining effective competition on the market in question.