Brussels, 09/09/2008 (Agence Europe) - The Commission cannot be held responsible for damages incurred by UK travel company MyTravel following a merger ban which was subsequently overturned. In a judgment delivered on 9 September, the Court of First Instance ruled that, even though the Commission was incorrect in blocking the merger, the errors of assessment were not sufficiently serious to make it financially liable (case T-212/03).
In September 1999, the European Commission turned down the proposed acquisition of First Choice by MyTravel, which at that time was named Airtours, on the grounds that the merger would have led to a collective dominant position on the UK short-haul foreign package holiday market. The Court of First Instance annulled the decision in June 2002, deeming that the Commission had not sufficiently demonstrated the negative impact of the merger on the competition.
Following that judgment, MyTravel brought an action against the Commission before the Court of First Instance for €645 million in damages for losses resulting from the Commission decision. This sum was, MyTravel claimed, the total profits made in the meantime by First Choice, expenses incurred in preparing the merger and savings that would have resulted from the merger.
In Tuesday's judgment, the Court ruled that the errors made by the Commission in refusing to allow the merger were not sufficient to amount to “a manifest and grave” disregard for the limits of its discretion. It is, the Court acknowledged, in principle possible that, in assessing a proposed merger, the Commission may be sufficiently seriously negligent that it may be liable for damages. In this case, however, the assessment errors of the initial decision were not sufficiently great. The ruling said that the complexity of the situations to be regulated in the control of mergers and time constraints on the Commission had to be taken into account. The decision not to approve the merger was thus sufficiently flawed that it could be annulled, but not sufficiently for the Commission to be held financially liable. The Court also rejected MyTravel's argument that the Commission had not examined rigorously enough its proposals for resolving the competition issues raised by the merger.
A Brussels lawyer specialising in competition law said she was not surprised by this outcome. “It's difficult to get damages from the Commission, because you need a combination of several conditions. It's very rare,” she told EUROPE. However, it is good that companies keep on trying, she said, “because you never know … and it puts pressure on the Commission to evaluate carefully - it let's them know, 'We're watching what you're doing'”.
Hitherto, the Commission has only been required once to pay damages to the “victims” of its decisions on mergers. Last year, the Court of First Instance, found for French electrical household goods manufacturer Schneider, which had not been allowed to acquire the Legrand company, on grounds of the dynamic that would have been created through linking with a partner (see EUROPE 9466). The Court annulled this refusal, arguing that the parties could not have foreseen that this point of competition law would be invoked for the first time. It awarded Scheider compensation of two thirds of the losses incurred, the total amount of which still has to be assessed. The Commission has appealed against this judgment, and the case is still pending (see EUROPE 9485). (C.D./transl.rt)