Luxembourg, 15/02/2005 (Agence Europe) - The European Court of Justice has rejected the European Commission's appeal calling for the annulment of the EU Court of First Instance's ruling in the Tetra Laval/Sidel affair. The European Court of First Instance had annulled the Commission veto on a merger between Tetra Laval, world leader in the carton drinks packaging sector, and Sidel, the leading French company in the production of equipment for polyethylene terephthalate (PET) drinks packaging.
In its ruling, the Court of Justice holds that the Court of First Instance observed the criteria to be applied in the exercise of the power of judicial review conferred on the Community Courts. It thus “properly explained why the evidence submitted in support of the Commission's arguments was insufficient, incomplete, insignificant, inconsistent and therefore inaccurate”. Despite the fact that the Commission enjoys discretion in economic matters, the Court recalls that the Court of First Instance must review the Commission's interpretation of information of an economic nature, especially in the context of a prospective analysis.
Rejecting the Commission's conclusions as to the adoption by the merged entity Tetra Laval/Sidel of potentially unlawful conduct which might lead to leveraging, the Court of Justice recognises that the Court of First Instance has erred in law. Nonetheless, it continues, that error cannot invalidate the Court of First Instance's judgement as, it says, the annulment of the Commission's decision was based on its refusal to take account of the commitments entered into by Tetra Laval with respect to its future conduct.
Finally, the Court of Justice rejected the Commission's other grounds of appeal concerning definition of the markets, distortion of the facts and arguments relating to the strengthening of the dominant position on the carton market and the creation of a dominant position on the market of SBM machines (Stretch Blow Moulding machines used in bottle production). All these arguments for appeal were rejected as unfounded or because they concerned the Court of First Instance's assessment of the evidence. The Court recalls that such an assessment is not subject to review by the Court in appeal proceedings, which are limited to questions of law.
The EU Court of Justice has thus confirmed annulment of the two Commission decisions. In October 2001, the Commission had banned the Tetra Laval merger and, in January 2002, it had ordered separation of the two companies.
The European Commission justified its decisions saying that the merger encouraged Tetra Laval to use its dominant position on the carton packaging market to persuade its customers on that market switching to PET for certain sensitive products (milk, fruit juices, still drinks, tea and coffee drinks) to choose Sidel's SBM machines, thus transforming Sidel's leading position into a dominant position. The Commission also felt that the merger would have strengthened Tetra Laval's already dominant position on the carton packaging market.
Ruling on actions brought by Tetra Laval, the Court of First Instance of the European Communities annulled the two Commission decisions on the grounds that there had been manifest errors of assessment and that the anti-competitive consequences of the merger had been over-estimated (see EUROPE of 26 November 2002).