Case T‑834/17

United Parcel Service, Inc.

v

European Commission

Judgment of the General Court (Seventh Chamber, Extended Composition), 23 February 2022

(Non-contractual liability – Competition – Markets for international express small package delivery services in the EEA – Concentration – Decision declaring the concentration incompatible with the internal market – Annulment of the decision by a judgment of the Court – Rights of the defence – Sufficiently serious breach of a rule of law intended to confer rights on individuals – Causal link)

1. Judicial proceedings – Application initiating proceedings – Formal requirements – Summary of the pleas in law on which the application is based – Action seeking compensation for loss caused by an EU institution – Minimum requirements – Lack of rigour in the organisation of certain legal and factual arguments – Admissibility

   (Charter of Fundamental Rights of the European Union, Art. 47; Statute of the Court of Justice, Art. 21; Rules of Procedure of the General Court, Art. 76(d))

   (see paragraphs 26-28)

2. Judicial proceedings – Application initiating proceedings – Formal requirements – Summary of the pleas in law on which the application is based – Pleas in law not set out in the application – General reference to documents annexed to the application – Inadmissibility

   (Statute of the Court of Justice, Arts 21 and 53, first para.; Rules of Procedure of the General Court, Art. 76(d))

   (see paragraphs 31-34)

3. Judicial proceedings – Application initiating proceedings – Formal requirements – Summary of the pleas in law on which the application is based – Pleas in law not set out in the application – General reference to other documents – Inadmissibility – Admissibility of a reference to documents submitted to the same court in another case – Assessment on a case-by-case basis – Essential condition – Parties, in particular the applicants, must be the same in both cases

   (Statute of the Court of Justice, Art. 21; Rules of Procedure of the General Court, Art. 76(d))

   (see paragraph 51)

4. Judicial proceedings – Production of evidence – Time limit – Late submission of evidence and offers of evidence – Conditions

   (Rules of Procedure of the General Court, Arts 76(f), 81(1) and 85(1), (2) and (4))

   (see paragraphs 64-66, 69, 79)

5. Non-contractual liability – Conditions – Illegality – Sufficiently serious breach of EU competition law – Discretion of the institution when adopting the measure – Account taken thereof by the EU judicature when assessing the illegality

   (Art. 340, second para., TFEU)

   (see paragraphs 82-88)

6. Non-contractual liability – Conditions – Illegality – Sufficiently serious breach of a rule of law intended to confer rights on individuals – Rule of law intended to confer rights on individuals – Concept – Rights of the defence – Included

   (Art. 340, second para., TFEU)

   (see paragraph 95)

7. Non-contractual liability – Conditions – Illegality – Sufficiently serious breach of a rule of law intended to confer rights on individuals – Infringement by the Commission of its obligation to communicate to the party which has notified a concentration the final version of the econometric model used to assess the effects of that concentration on prices – Sufficiently serious breach of the rights of defence of the party concerned

   (Art. 340, second para., TFEU; Council Regulation No 139/2004, Art. 18(3))

   (see paragraphs 97-111, 117, 118, 122, 123)

8. Non-contractual liability – Conditions – Illegality – Inadequacy in the statement of reasons for an EU measure – Not included

   (Art. 340, second para., TFEU)

   (see paragraph 189)

9. Non-contractual liability – Conditions – Illegality – Sufficiently serious breach of EU competition law – Discretion of the institution when adopting the measure – Commission’s choice of the econometric model in a procedure for the control of a concentration departing significantly from the Commission’s standard practice – No sufficiently serious breach

   (Art. 340, second para., TFEU)

   (see paragraphs 201-203, 209, 210, 215-228)

10. Non-contractual liability – Conditions – Causal link – Concept – Burden of proof

    (Art. 340, second para., TFEU)

    (see paragraph 341)

11. Non-contractual liability – Conditions – Causal link – Damage in the form of the costs associated with participation in a procedure for the control of a concentration between two competing undertakings – Costs arising from the free choice of the applicant – No causal link between the damage and the conduct of the institution

    (Art. 340, second para., TFEU)

    (see paragraph 343)

12. Non-contractual liability – Conditions – Causal link – Damage in the form of the payment of a contractual termination fee following a decision declaring a notified concentration incompatible with the internal market – Costs arising from a contractual commitment which is the result of the parties’ willingness – No causal link between the damage and the conduct of the institution

    (Art. 340, second para., TFEU)

    (see paragraphs 344-350)

13. Non-contractual liability – Conditions – Causal link – Loss of profit as a result of a decision declaring a notified concentration incompatible with the internal market – Undertaking which announced that it would not go ahead with that concentration following that decision – Infringement of the rights of the defence which does not have a decisive impact on the outcome of the procedure for the control of the proposed concentration – Abandonment of the concentration – No causal link between the damage and the conduct of the institution

    (Art. 340, second para., TFEU)

    (see paragraphs 353-371)

Résumé

The General Court dismisses two actions for damages brought by UPS and ASL Aviation Holdings; the two companies sought compensation for the economic damage allegedly suffered as a result of the unlawfulness of the Commission decision declaring a notified concentration incompatible with the internal market

By decision of 30 January 2013 (‘the decision at issue’), ( 1 ) the European Commission declared incompatible with the internal market a notified concentration between United Parcel Service, Inc. (‘UPS’) and TNT Express NV (‘TNT’), two undertakings present on the markets for international express small package delivery services.

While publicly announcing that it would not go ahead with that concentration, UPS brought an action before the General Court for annulment of the decision at issue. By judgment of 7 March 2017, ( 2 ) the General Court upheld that action and, by judgment of 16 January 2019, ( 3 ) the Court of Justice dismissed the appeal brought by the Commission against that judgment of the General Court.

In the meantime, the Commission had declared compatible with the internal market a notified concentration between TNT and FedEx Corp. (‘FedEx’), a competitor of UPS. ( 4 )

At the end of 2017, UPS brought an action for damages against the Commission, seeking compensation for the economic damage allegedly suffered as a result of the unlawfulness of the decision at issue. ( 5 ) In 2018, an action for damages was also brought by ASL Aviation Holdings DAC and ASL Airlines (Ireland) Ltd (together, ‘the ASL companies’), which, before the adoption of the decision at issue, had concluded commercial agreements with TNT that were to be implemented following clearance of the concentration between UPS and TNT. ( 6 )

Those two actions for damages are dismissed by the Seventh Chamber (Extended Composition) of the General Court.

Findings of the Court

Dismissal of the action for damages brought by UPS (Case T‑834/17)

By its action for damages, UPS claimed that, by adopting the decision at issue, the Commission had committed sufficiently serious breaches of EU law capable of giving rise to non-contractual liability on the part of the European Union. According to UPS, the Commission had, first, infringed its procedural rights during the administrative procedure, second, failed to fulfil the obligation to state reasons and, third, erred in its substantive assessment of the notified concentration.

As a preliminary point, the Court recalls that in order for the European Union to incur non-contractual liability, three cumulative conditions must be satisfied: there must be a sufficiently serious breach of a rule of law conferring rights on individuals; actual damage must be shown to have occurred; and there must be a direct causal link between the breach and the damage sustained.

As regards, in the first place, the alleged infringement of UPS’ procedural rights during the administrative procedure, UPS claimed, first, that the Commission failed to communicate the final version of the econometric model used to analyse the effects of the notified concentration on prices and the criteria for assessing the efficiencies deriving from that concentration. Second, UPS claimed that the Commission had infringed its right of access to information provided by FedEx during the administrative procedure.

With regard to the failure to communicate the final version of the econometric model used by the Commission, the Court observes that, under the applicable legislation, the Commission was under an obligation to bring that final version to UPS’ attention. Since the Commission had considerably reduced, or even no, discretion in that regard, it committed a sufficiently serious breach of UPS’ rights of defence by failing to communicate that model to UPS. In the light of the case-law on observance of the rights of the defence and the judgment of the Court of Justice of 16 January 2019, that infringement of UPS’ rights was not, moreover, excusable on account of an alleged lack of clarity of EU law, as contended by the Commission.

The General Court also rejects the Commission’s argument in its defence based on the fact that the finalisation of the econometric model had been preceded by numerous exchanges with UPS. By failing to communicate the final version of the econometric model, the Commission not only avoided a procedural constraint intended to safeguard the legitimacy and fairness of the European Union’s procedure for the control of concentrations, but also placed UPS in a position where it was unable to understand part of the grounds of the decision at issue.

By contrast, as regards the failure to communicate to UPS the criteria for assessing the efficiencies deriving from the notified concentration, the Court observes that no provision of EU law applicable to the control of concentrations requires the Commission to define in advance, in the abstract, the specific criteria on the basis of which it intends to accept that an efficiency may be regarded as verifiable. In those circumstances, UPS’ line of argument seeking to show that the Commission was required to communicate to it the specific criteria and standards of proof which it intended to apply in order to determine whether each of the efficiencies relied on was verifiable is unfounded in law.

The Court also rejects the argument that the Commission had infringed UPS’ right of access to certain documents provided to the Commission by FedEx during the administrative procedure. Since UPS had not exercised its rights of access in due time and in the manner prescribed by the applicable legislation (failure to refer the matter to the hearing officer), it did not meet the conditions for obtaining compensation for alleged damage resulting from the infringement of those rights.

Regarding, in the second place, the alleged failure by the Commission to fulfil the obligation to state reasons, the Court recalls that an inadequacy in the statement of reasons for an EU measure is not, in principle, in itself such as to give rise to liability on the part of the European Union.

As regards, in the third place, UPS’ argument alleging errors in the substantive assessment of the notified concentration, the Court, while confirming that the Commission made certain errors, observes that those errors do not constitute sufficiently serious breaches of EU law to be capable of giving rise to non-contractual liability on the part of the European Union. In that regard, the Court states that, even though the Commission used, in disregard of its own rules (Best practices for the submission of economic evidence), an econometric model that departs significantly from standard economic practice, it enjoyed considerable discretion in defining that model. Moreover, in order to carry out its analysis of the effects of the notified concentration, the Commission did not rely exclusively on that econometric model, but also carried out a general analysis of the characteristics of the market in question, highlighting the nature and characteristics of that market and the consequences flowing from the proposed transaction.

In the last place, the Court concludes that UPS has failed to demonstrate the existence of manifest and serious errors in the assessment of the verifiability of the efficiencies and of FedEx’s competitive situation in the proposed concentration, and to provide any indication of unequal treatment between the decision relating to the transaction between FedEx and TNT and the decision at issue.

After thus establishing that the sufficiently serious breach of UPS’ procedural rights during the administrative procedure was limited to the failure to communicate the final version of the econometric model used by the Commission to analyse the effects of the notified concentration on prices, the Court examines, next, whether there is a direct causal link between that illegality and the types of damage relied on by UPS, namely, first, the costs associated with its participation in the procedure for the control of the notified concentration between FedEx and TNT, second, the payment to TNT of a contractual termination fee following the termination of the merger protocol concluded with TNT and, third, the loss of profit on account of the fact that it was impossible to implement that merger protocol.

As regards, first of all, the costs associated with UPS’ participation in the procedure for the control of the notified concentration between FedEx and TNT, the Court holds that that participation was clearly the result of UPS’ free choice. Thus, the infringement of UPS’ procedural rights during the procedure for the control of the concentration between itself and TNT cannot be regarded as the determining cause of the costs associated with its participation in the procedure for the control of the concentration between FedEx and TNT. Likewise, given that the payment of a termination fee to TNT stemmed from a contractual obligation arising from the terms of the merger protocol between UPS and TNT, the illegalities vitiating the decision at issue could not constitute the determining cause of the payment of that fee to TNT.

Regarding, lastly, the alleged loss of profit sustained by UPS, the Court observes that it cannot be presumed that, had UPS’ procedural rights not been infringed in the procedure for the control of the concentration between itself and TNT, that concentration would have been declared compatible with the internal market. Furthermore, UPS has neither proved nor provided the Court with evidence which would enable it to conclude that, without that infringement, the Commission would have declared that transaction compatible with the internal market. Moreover, the fact that UPS decided not to go ahead with the proposed concentration as soon as the decision at issue was announced had the effect of breaking any direct causal link between the illegality identified and the damage alleged.

In the light of the foregoing, the Court concludes that UPS failed to establish that the infringement of its procedural rights in the procedure for the control of the concentration between itself and TNT constituted the determining cause of the types of damage alleged. Thus, it dismisses the action for damages in its entirety.

Dismissal of the action for damages brought by the ASL companies (Case T‑540/18)

The action for damages brought by the ASL companies sought compensation for the alleged loss of profit resulting from the fact that it was impossible to implement the commercial agreements concluded with TNT on account of the decision at issue. In support of that application, the ASL companies relied on a breach of their fundamental rights and those of UPS by the Commission, as well as the existence of serious and manifest errors in the Commission’s assessment of the notified concentration between UPS and TNT.

In the first place, the Court holds that the ASL companies cannot rely, as the basis for their own claim for compensation, on a breach of UPS’ rights of defence in the procedure for the control of the concentration between UPS and TNT. In accordance with the settled case-law of the Court, it is necessary that the protection afforded by the rule of law relied on in support of an action for damages is effective as regards the person who relies on it and, therefore, that that person is among those on whom the rule in question confers rights.

In the second place, the Court rejects as unfounded the line of argument put forward by the ASL companies based on the fact that the Commission infringed, in the procedure for the control of the concentration between UPS and TNT, their fundamental rights and in particular their right to sound administration enshrined in Article 41 of the Charter of Fundamental Rights of the European Union. In that regard, the Court states that, in so far as the ASL companies had freely chosen not to participate in that procedure, they could not rely on an alleged infringement by the Commission of their fundamental rights in the context of that procedure.

In the third place, the Court rejects as inadmissible the plea alleging the existence of serious and manifest errors committed by the Commission in the assessment of the concentration between UPS and TNT, given that the ASL companies confined themselves to referring in that regard to the application lodged by UPS in Case T‑834/17.

In the light of those considerations, the Court, finding that the ASL companies have not established the existence of sufficiently serious breaches of EU law vitiating the decision at issue, dismisses their action as unfounded.

( 1 ) Decision C(2013) 431 declaring a concentration incompatible with the internal market and the functioning of the EEA Agreement (Case COMP/M.6570 – UPS/TNT Express).

( 2 ) Judgment of 7 March 2017, United Parcel Service v Commission (T‑194/13, EU:T:2017:144).

( 3 ) Judgment of 16 January 2019, Commission v United Parcel Service (C‑265/17 P, EU:C:2019:23).

( 4 ) Decision of 8 January 2016 declaring a concentration compatible with the internal market and the functioning of the EEA Agreement (Case M.7630 – FedEx/TNT Express), a summary of which was published in the Official Journal of the European Union (OJ 2016 C 450, p. 12).

( 5 ) Case T‑834/17, United Parcel Service v Commission.

( 6 ) Case T‑540/18, ASL Aviation Holdings and ASL Airlines (Ireland) v Commission.