Recent Judgments Illustrate How the European Commission Can Correct Its Errors Post-Annulment

By on February 22, 2016

As a general proposition, when the validity of a European Commission antitrust decision is challenged before the General Court of the European Union (GCEU), the procedure is one of judicial review, not a retrial on the merits (although the GCEU does have special jurisdiction to increase or reduce the amount of any fine). Thus there are only three possible outcomes: annulment of the Commission’s decision; variation in the amount of any fine, upwards or downwards; or rejection of the challenge altogether.

In the case of annulment, Article 266 of the Treaty on the Functioning of the European Union requires that the Commission “take the necessary measures to comply with the judgment” of the GCEU. Provided that the limitation period has not expired, the Commission may take a new decision on the case, taking care to avoid the illegalities identified by the GCEU in respect of the first decision. The new decision can be different from the first decision, as illustrated by the recent judgments in Mitsubishi Electric and Toshiba, but it can also be substantially the same, as illustrated by the recent judgment in Éditions Odile Jacob.

The Mitsubishi Electric and Toshiba cases arose out of the gas insulated switchgear cartel. Mitsubishi Electric and Toshiba were fined for their participation in the cartel. The companies challenged the Commission’s decision imposing the fines, and the GCEU annulled the fines imposed individually on Mitsubishi Electric and Toshiba on the ground that the Commission had infringed the principle of equal treatment by choosing, when calculating the fine, a reference year for Mitsubishi Electric and Toshiba which was different from that chosen for the European participants in the infringement.

Following the annulment, the Commission addressed a letter of facts to Mitsubishi Electric and Toshiba informing them of its intention to adopt a new decision remedying the unequal treatment criticised by the GCEU. Mitsubishi Electric and Toshiba submitted comments on the Commission’s letter of facts and had meetings with the Commission team responsible for the case. Subsequently the Commission adopted a new decision imposing lower individual fines on Mitsubishi Electric and Toshiba than in the first decision.

The two companies challenged this second decision before the GCEU on several grounds, but their challenges were rejected. The GCEU held that the Commission had respected the rights of the defence of the two companies and had stated adequate reasons for its second decision, when read in the light of the first decision. The challenges to the Commission’s new calculation of the lower fines were also rejected.

The case of Éditions Odile Jacob arose out of the Commission’s 2014 authorisation of the acquisition by Lagardère of Vivendi Universal Publishing (VUP). The Commission’s merger authorisation was conditional on Lagardère’s commitment to divest itself of certain assets of VUP to a purchaser approved by the Commission. The purchaser had to satisfy certain criteria laid down in the Commission’s merger authorisation. Lagardère received offers from five candidates, one of which was Éditions Odile Jacob, but it decided to negotiate exclusively with Wendel. A consultant appointed with the agreement of the Commission drew up a report finding that Wendel satisfied the relevant criteria. Based on this report, the Commission approved Wendel as the purchaser of the assets that had to be divested by Lagardère (the divestment assets).

Éditions Odile Jacob challenged the Commission’s merger authorisation before the GCEU and filed a separate challenge against the approval of Wendel as the purchaser of the divestment assets. The first challenge was rejected by the GCEU and, on appeal, also by the Court of Justice of the European Union (CJEU). The second challenge, on the other hand, was upheld by the GCEU on the grounds that the consultant did not satisfy the conditions of independence required by the Commission’s merger authorisation.

Lagardère therefore submitted a new request to the Commission that Wendel be approved as purchaser, and suggested to the Commission a new consultant to prepare the necessary report. The Commissionapproved the new consultant after having given Éditions Odile Jacob the opportunity to submit its comments. In its report, the new consultant concluded that Wendel was a suitable acquirer of the divestment assets, and so the Commission adopted a second decision, in 2011, approving Wendel as the purchaser.

Éditions Odile Jacob challenged the Commission’s second approval of Wendel before the GCEU but without success. Its appeal to the CJEU was rejected on 28 January 2016. In particular, the CJEU rejected Éditions Odile Jacob’s argument that the annulment of the Commission’s first approval of Wendel invalidated the Commission’s merger authorisation as a legal basis for the Commission’s second approval of Wendel.

In conclusion, the Éditions Odile Jacob case illustrates how a successful court challenge of a Commission antitrust or merger decision can be short-lived if the challenge succeeds on the basis of a defect that the Commission can correct legally a second time around. On the other hand, the Mitsubishi Electric and Toshiba cases show that, where the Commission makes a substantive error, it is obliged to correct that error in any subsequent decision taken to replace the annulled decision.





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