KOKOTT
delivered on 25 July 2018 ( 1 )
Case C‑265/17 P
European Commission
v
United Parcel Service, Inc.
(Appeal — Competition — Merger control — Rights of defence — Right to be heard — Opportunity to submit observations — Econometric analysis — Price concentration model — Material changes to the price concentration model during the ongoing administrative procedure — Market for international express small package delivery services in the EEA — Article 18 of Regulation (EC) No 139/2004 — Articles 13 and 17 of Regulation (EC) No 802/2004)
I. Introduction
1. |
It is not uncommon for merger control proceedings conducted by the European Commission in its capacity as a competition authority to be characterised by the high degree of complexity of the economic relationships that are to be considered. To assess whether a proposed merger would significantly impede effective competition, difficult predictions sometimes have to be made regarding the market development that may be expected. In suitable cases, the Commission uses econometric models for this purpose. It relied on just such a model also in the present case, in prohibiting the acquisition of the package delivery service TNT Express N.V. (TNT) by United Parcel Service Inc. (UPS). |
2. |
The Commission and UPS are now in dispute regarding the question of which procedural guarantees the competition authority has to observe when having recourse to such econometric analyses. Specifically, the question is whether the Commission was permitted to make material changes to the economic model on which it relied — known as a price concentration model — during the ongoing administrative procedure without informing UPS about it and giving the undertaking an opportunity to submit observations. |
3. |
UPS was successful at first instance. The Commission’s Decision of 30 January 2013 prohibiting the proposed merger ( 2 ) (also referred to below as ‘the decision at issue’) was set aside by the General Court by way of a judgment of 7 March 2017 ( 3 ) (also referred to below as ‘the judgment under appeal’) on the ground that UPS’s rights of defence had been infringed. The Commission has brought the present appeal against that judgment. |
4. |
What is now decisive for the outcome of the appeal is the question of what scope has to be accorded to the rights of defence of undertakings in merger control proceedings. Do the rights of defence require these undertakings to be informed about material changes to econometric models during the ongoing administrative procedure and to be heard in relation to such changes before a prohibition on a merger is issued? |
5. |
The present case once again demonstrates the challenges facing competition authorities when they have to conduct an economic analysis in accordance with the legal requirements. However the Court of Justice decides in this case, its judgment will show, beyond the confines of this particular case, the way for the Commission’s future administrative practice in complex merger control proceedings, but also for that of national competition authorities and courts, which not infrequently adhere closely to the standards applicable at Union level in relation to merger control. |
II. Legal context
6. |
The legal context of this case is determined, in terms of primary legislation, by Article 41 of the Charter of Fundamental Rights of the European Union and, in terms of secondary legislation, by Article 18 of the EC Merger Regulation. ( 4 ) In addition, it is necessary to refer to the Implementing Regulation ( 5 ) for the Merger Regulation (Merger Implementing Regulation), and in particular Articles 13 and 17 thereof. |
A. The Merger Regulation
7. |
Article 18 of the Merger Regulation is devoted to ‘Hearing of the parties and of third persons’, and in extract it reads as follows: ‘1. Before taking any decision provided for in Article 6(3), Article 7(3), Article 8(2) to (6), and Articles 14 and 15, the Commission shall give the persons, undertakings and associations of undertakings concerned the opportunity, at every stage of the procedure up to the consultation of the Advisory Committee, of making known their views on the objections against them. 2. … 3. The Commission shall base its decision only on objections on which the parties have been able to submit their observations. The rights of the defence shall be fully respected in the proceedings. Access to the file shall be open at least to the parties directly involved, subject to the legitimate interest of undertakings in the protection of their business secrets. 4. …’ |
B. The Merger Implementing Regulation
8. |
Chapter IV of the Merger Implementing Regulation, which bears the heading ‘Exercise of the right to be heard; Hearings’, contains the following Article 13(2): ‘The Commission shall address its objections in writing to the notifying parties. The Commission shall, when giving notice of objections, set a time limit within which the notifying parties may inform the Commission of their comments in writing. …’ |
9. |
Finally, Chapter V of the Merger Implementing Regulation, which relates to ‘Access to the file and treatment of confidential information’, contains an Article 17, which is worded as follows: ‘1. If so requested, the Commission shall grant access to the file to the parties to whom it has addressed a statement of objections, for the purpose of enabling them to exercise their rights of defence. Access shall be granted after the notification of the statement of objections. 2. … 3. The right of access to the file shall not extend to confidential information, or to internal documents of the Commission or of the competent authorities of the Member States. … 4. …’ |
III. Background to the dispute
10. |
UPS and TNT operate on a global level in the specialist transport and logistics services sector. In the European Economic Area, they are active in the field of international express small package delivery. |
A. Administrative procedure
11. |
On 15 June 2012, UPS notified the Commission of the proposed acquisition of TNT under the Merger Regulation and the Merger Implementing Regulation. |
12. |
By way of the decision at issue, the Commission declared on 30 January 2013 that this acquisition was incompatible with the internal market and with the Agreement on the European Economic Area (EEA Agreement) because it would lead to a significant impediment to effective competition on the market for international intra-EEA express deliveries of small packages in 15 Member States. |
13. |
The Commission’s prediction in relation to the expected negative development of competition on the relevant markets, on which the decision at issue was based, essentially relied on an econometric analysis by means of a price concentration model. However, the General Court found that the last price concentration model used by the Commission exhibited significant differences, as far as the variables adopted (so-called ‘discrete variables’ or ‘continuous variables’) were concerned, from the one which had been the subject of discussions with UPS during the administrative procedure. ( 6 ) The General Court further found that the Commission did not give UPS any opportunity to submit observations in relation to the material changes made to the price concentration model during the administrative procedure. ( 7 ) |
B. First-instance proceedings
14. |
On 5 April 2013, UPS brought an action against the decision at issue before the General Court. On 21 October 2013, the President of the Fourth Chamber of the Court granted FedEx Corp. (FedEx) leave to intervene in the proceedings at first instance in support of the form of order sought by the Commission. |
15. |
By the judgment now under appeal, on 7 March 2017 the General Court annulled the Commission’s decision at issue and ordered the Commission to bear its own costs as well as those of UPS; FedEx was ordered to bear its own costs. |
16. |
The annulment of the decision at issue was based exclusively on the fact that the Commission had not communicated to UPS the final version of the price concentration model that it had used, ( 8 ) even though it had already decided upon this final version on 21 November 2012, that is to say more than two months before the adoption of the decision at issue, ( 9 ) and this final version differed from the original version in a manner that was not negligible. ( 10 ) The General Court considered that this constituted an infringement of UPS’s rights of defence. ( 11 ) |
IV. Proceedings before the Court of Justice
17. |
By a written submission of 16 May 2017, the Commission lodged the present appeal against the judgment of the General Court of 7 March 2017. It requests
|
18. |
For its part, UPS requests
|
19. |
The Commission’s appeal was considered before the Court of Justice on the basis of written submissions. FedEx did not participate in the appeal proceedings. |
V. Assessment
20. |
First of all, it should be made clear that neither the appropriateness of having recourse to an econometric analysis nor the substantive correctness of the price concentration model used by the Commission for this analysis is the subject of the present appeal proceedings. Consequently, when the parties in certain passages in their written submissions slip into a discussion of whether the Commission acted lege artis as regards the econometrics, this does not add any appreciable value for the purposes of resolving the present dispute. |
21. |
Accordingly, I will not discuss this aspect any further below and, instead, will concentrate exclusively on the procedural guarantees in respect of the use of econometric analyses in merger control; the present case represents a textbook example of the issues arising. |
A. Preliminary procedural questions
22. |
In its response to the appeal, UPS raises three preliminary procedural questions which, in its view, justify the Commission’s appeal being declared in part inadmissible and in part ineffective (in French: ‘inopérant’) and, in any event, justify the issuance of a final decision on the dispute without the matter being referred back to the General Court. |
23. |
UPS first contends that the Commission wishes the Court of Justice to undertake a reassessment of the facts, which, according to settled case-law, is not permissible at the appeal stage unless there is a distortion of facts or evidence. ( 12 ) |
24. |
This argument by UPS is not persuasive. The Commission is in no way limiting itself here to merely questioning the General Court’s assessment of the facts and evidence. Rather, the Commission raises a genuine question of law, namely as to the scope of the rights of defence of undertakings in EU merger control proceedings. In this context, the Commission not least questions the legal characterisation of the facts by the General Court. The key question is whether the General Court was correct in inferring from the fact that UPS was not heard in relation to the final price concentration model that its rights of defence were infringed. The Court of Justice, in its appellate jurisdiction, can and must deal with this question. ( 13 ) |
25. |
UPS argues secondly that the Commission is merely repeating its arguments from the proceedings at first instance, and that this is likewise inadmissible at the appeal stage. |
26. |
However, this argument by UPS is not persuasive either. This is because, as the Court of Justice has repeatedly held, an appeal would be deprived of part of its purpose if a party were not able to pursue further at second instance its arguments already pleaded at first instance. ( 14 ) It is true that in this context the appellant is required to deal specifically with the first-instance judgment. ( 15 ) The Commission does precisely that in its appeal, albeit not in a particularly structured manner. The Commission essentially accuses the General Court of not having given sufficient consideration to its submissions at first instance and also of having misconceived the legal position as far as rights of defence are concerned. Such criticisms are completely admissible at the appeal stage. |
27. |
Thirdly, UPS considers that the Commission’s appeal is ineffective because the annulment of the decision at issue was also necessary for reasons other than the infringement of rights of defence that was identified by the General Court. In particular, UPS refers to a series of deficiencies in terms of the statement of reasons which, in its view, affect the decision at issue. |
28. |
In this regard, however, two points need to be made. Firstly, the question of whether an appeal is wholly or partially ineffective concerns its ability to found that appeal. ( 16 ) It therefore cannot be considered separately from the merits of the complaints raised individually in the appeal. Secondly, the deficiencies in the statement of reasons which are criticised by UPS and are alleged to vitiate the decision at issue were not examined by the General Court in the judgment under appeal. In an appeal the Court’s jurisdiction is confined to the solution which the General Court gave to the dispute at first instance. ( 17 ) |
29. |
Overall, the appeal is thus admissible and could indeed also, insofar as it proves to be well founded, result in the setting aside of the judgment under appeal and in the case being referred back to the General Court. |
B. The merits of the appeal
30. |
In substantive terms, the dispute between the Commission and UPS essentially revolves around the question of whether it was legally necessary, during the administrative procedure, to inform UPS about the change to the Commission’s price concentration model and to offer it the opportunity to submit observations in this regard, as the General Court concluded in its judgment. |
31. |
The Commission says that this was not necessary and, in this context, submits various points of criticism aimed at the judgment under appeal, which are contained within four separate grounds of appeal. However, it seems to me that these four grounds of appeal are not particularly clearly sorted and, moreover, overlap each other in many respects. I therefore propose that the Court of Justice assign the Commission’s submissions to three major subject areas:
whereby the major part of the discussions will be on the question of the rights of defence. |
1. The rights of defence
32. |
The Commission’s main criticism, which is submitted primarily in the second and third parts of its first ground of appeal, is directed against the General Court’s finding that UPS’s rights of defence had been infringed in the administrative proceedings. ( 18 ) The Commission considers that the General Court was wrong to conclude that there was such an infringement of the rights of defence. |
33. |
According to settled case-law, observance of the rights of defence is, in all proceedings initiated against a person which are liable to culminate in a measure adversely affecting that person, a general, even fundamental principle of European Union law. ( 19 ) This principle is an emanation of the right to good administration, which is codified in Article 41 of the Charter of Fundamental Rights. ( 20 ) |
34. |
For merger control proceedings conducted by the Commission, the rights of defence of the undertakings concerned are, insofar as is relevant here, specified in Article 18 of the Merger Regulation and in Article 13 of the Merger Implementing Regulation. Under Article 18(1) of the Merger Regulation, the Commission must give the undertakings concerned the opportunity of making known their views on the objections against them. Article 13(2) of the Merger Implementing Regulation adds that the undertakings concerned are to be informed of these objections in writing. Moreover, the first sentence of Article 18(3) of the Merger Regulation makes it clear that the Commission is to base merger-control decisions that have adverse effects only on objections on which the parties have been able to submit their observations. |
35. |
In what follows, proceeding on the basis of the Commission’s criticisms, I will firstly examine whether the rights of defence apply to econometric analyses at all (see section (a) immediately below in that regard) and secondly, if this is the case, which requirements arise from the rights of defence for the purposes of the carrying out of such analyses (see section (b) below in that regard). |
(a) Application of the rights of defence to econometric analyses
36. |
First of all, the parties expend a considerable amount of effort arguing whether the rights of defence are at all applicable to an econometric model such as the price concentration model used here. While the Commission contends that such a model is simply a tool which was used by the competition authority to carry out the assessment under competition law of a proposed merger and in relation to which the undertakings concerned did not specifically need to be heard, UPS argues that econometric models should be considered to form part of the facts and evidence, in relation to which the undertakings should of course be permitted to submit observations. |
37. |
It seems to me that the dispute about whether econometric models are assigned to one or other of these categories constitutes a secondary theatre of war which is irrelevant to the resolution of the current dispute. |
38. |
This is because, according to settled case-law, observance of the rights of defence requires that addressees of decisions which significantly affect their interests be placed in a position in which they can effectively make known their views as regards all elements on which the authorities intend to base their decision. ( 21 ) |
39. |
An econometric model such as the price concentration model in question here undoubtedly constitutes an element on which the Commission essentially relied in its competition-law analysis for the purposes of the adoption of the decision at issue. Or, to express this in terms of Article 18(1) and (3) of the Merger Directive, that model was one of the key foundations for the objections which the Commission raised against the proposed merger. Under these circumstances, it appears to me to be self-evident that the Commission, in order for UPS’s rights of defence to be observed, had to place UPS in a position to make known its views on this price concentration model in an effective manner. This is all the more the case when one considers that such an econometric model — as the present case strikingly demonstrates — can lead to quite different results depending on how this model is configured and applied in concrete terms. |
40. |
It is also otiose to muse on whether the econometric model used constituted an inculpatory element or an exculpatory element. ( 22 ) For the rights of defence to be observed, it is essential that the undertakings concerned be placed in a position in which they can effectively make known their views as regards all elements on which the Commission intends to rely in a merger control decision. It is not the Commission but rather the undertaking concerned itself which examines whether specific elements from the case file may be helpful for the purposes of its defence. ( 23 ) In order that the undertaking can make this decision, it has to be made aware, without distinction, of all of the elements on which the Commission intends to rely. What is more, all of the elements identified by the Commission in the merger control proceedings must be made available, that is to say ultimately also elements on which the Commission for its part may not wish to rely. |
41. |
Finally, the Commission’s attempt to classify its econometric analyses, by analogy with the first sentence of Article 17(3) of the Merger Implementing Directive, as purely internal documents which it did not have to bring to the attention of the undertaking concerned — especially not before the adoption of its merger control decision — is particularly unpersuasive. |
42. |
In a field such as merger control, in which the Commission has a wide discretion in substantive terms, observance of the procedural guarantees is of particular importance. ( 24 ) The rights of defence would be devoid of meaning if the Commission left the undertakings concerned in the dark about the key analytical steps and the calculations on which it based its prediction of a significant impediment to effective competition resulting from the proposed merger. The undertakings would not then be able to make their views known in an effective manner. ( 25 ) |
43. |
Moreover, the right to good administration, which is codified in Article 41 of the Charter of Fundamental Rights, requires the Commission to conduct a fair procedure. It would in no way be reconcilable with this fundamental requirement of fairness if the undertakings concerned ultimately had to guess what they were defending themselves against. |
44. |
The Commission further argues in response that it was open to the undertakings concerned to involve the Hearing Officer if they so wished, and to request from him the right to inspect specific documents from the files which had been withheld from them. This argument must also be rejected, however. This is because pursuant to Article 18(1) of the Merger Regulation the competition authority has a statutory obligation, of its own motion, to give the undertakings concerned the opportunity to submit observations on the objections raised by it and to explain to them the key analytical steps and calculations — including the variables used — on which they are based. Under no circumstances do the undertakings have to take the initiative in this regard, let alone act as supplicants. |
45. |
All in all, therefore, a price concentration model such as the one in question here unambiguously falls within the scope of application of the rights of defence. The General Court did not err in law in this regard. |
(b) The requirements arising from the rights of defence
46. |
Secondly, the parties vigorously dispute precisely which requirements arise from the rights of defence when the Commission wishes to rely on an econometric analysis in a merger control decision such as the decision at issue here. The question in dispute is essentially whether it is really necessary in each case to make the undertakings concerned aware of the final version of an econometric model and to offer them the opportunity to submit observations in relation to it before the Commission makes its final decision. |
– The Commission’s argument that a merger control decision is permitted to deviate from the preceding statement of objections
47. |
The Commission firstly recalls the settled case-law ( 26 ) according to which in competition cases the final decision does not, from a factual or legal point of view, have to correspond to the preceding statement of objections in every aspect, and any deviations from that statement do not have to be justified in more detail either. Relying on that case-law, it seeks to argue that in merger control proceedings the competition authority is not required to bring the final version of the econometric model that it has used to the attention of the undertakings concerned in advance and to hear their submissions in relation to this model. |
48. |
I am not persuaded by this argument. It is true that the statement of objections in competition proceedings is purely provisional in nature and the final decision can deviate from it without any further reasons being provided. ( 27 ) It is, however, self-evident that such deviations are permitted only within the limits of the rights of defence. |
49. |
If the Commission deviates from the statement of objections in favour of the undertakings concerned by dropping individual objections, then of course it does not need to hear the undertakings again. The same is true if the Commission refines or develops its objections in light of the counter-arguments put forward by the undertakings. However, if the Commission deviates from the statement of objections to the detriment of the undertakings concerned by introducing completely new elements, theories or calculation models in relation to which it has not heard the undertakings, then it is required to give the undertakings an opportunity to submit observations in this regard. This is because the Commission is only permitted to base its final decision on objections on which the parties have had the opportunity to submit observations (first sentence of Article 18(3) of the Merger Regulation). ( 28 ) |
50. |
As the General Court found, ( 29 ) the econometric model on which the Commission based the decision at issue differed in a manner that was not negligible — namely with regard to the variables used for the econometric calculations — from the model which it had previously discussed with UPS. The Commission, which has not raised any objection relating to a distortion of facts or evidence in this regard, must accept this finding. |
51. |
It is therefore established that in the decision at issue the Commission relied on objections other than those on which UPS submitted observations, even though it ultimately maintained its prediction of a significant impediment to effective competition with price increases in a series of Member States and thus its negative overall judgment in relation to the proposed merger. |
52. |
In this respect, therefore, the General Court did not err in law. |
– The specific features of merger control and their effects on the rights of defence
53. |
The Commission then emphasises the particular features of merger control at the EU level. It stresses that merger control proceedings are characterised by a requirement for speed, which is manifested not least in strict procedural time limits. ( 30 ) It infers from this that endless debates between the Commission and the undertakings concerned about the econometric models to be applied must not be able to arise during merger control proceedings. |
54. |
It is true that the constraints to which the European competition authority is subject in relation to merger control (not least considerable time pressure, but also limited resources) must have consequences with regard to the manner in which the undertakings concerned make use of their rights of defence. |
55. |
For that reason, the undertakings concerned should not expect, in terms of content, more than a brief and to-the-point description of the econometric model used by the Commission. This description must be of such a nature that it can be understood without difficulty by a person who is proficient in econometrics. |
56. |
In terms of timing, this must not turn into a kind of game of ping-pong in which the undertakings repeatedly raise new misgivings regarding the econometric model favoured by the Commission and the Commission then has to give them opportunities to make submissions in response to constantly new versions of this model. |
57. |
However, I would immediately add that, despite the unquestionable constraints of merger control proceedings, the undertakings concerned must always be allowed sufficient room for the purposes of their defence and the substance of their rights of defence must not be affected. ( 31 ) The desire to incorporate more economic expertise into the assessment of competition cases must not be realised at the expense of fundamental procedural guarantees. |
58. |
Thus, if the Commission decides to conduct complex economic analyses in competition proceedings as part of a ‘more economic approach’, then it is above all its own responsibility firstly to conduct these analyses carefully and impartially ( 32 ) and secondly to conduct them with such promptness that they fit without difficulties into the procedural timetable envisaged by the European Union legislator. |
59. |
As a matter of principle, the econometric model used by the Commission has to be disclosed to the undertakings concerned, and its essential features explained, in the statement of objections pursuant to Article 18(1) and (3) of the Merger Regulation and Article 13(2) of the Merger Implementing Regulation. The requisite fine tuning of this model in light of the investigations undertaken by the Commission and any discussions that they may have had with the undertakings concerned must have been completed by the time of the statement of objections. The undertakings concerned then have the opportunity to submit observations in relation to the Commission’s econometric model in their response to the statement of objections. |
60. |
If, by way of exception, the Commission does not decide on the final version of the econometric model until a later date, then this delay cannot result in the rights of defence of the undertakings concerned being prejudiced. Rather, in such a situation the Commission must hear the undertakings concerned once again separately on this point unless the final version is not materially different from the versions previously discussed with the undertakings or merely constitutes a further development of these versions in light of the undertakings’ arguments. ( 33 ) |
61. |
In the present case, the final version of the price concentration model in question, which differed from earlier versions in a manner that was not negligible in relation to the variables used, ( 34 ) existed from 21 November 2012 onwards, according to the findings made by the General Court. ( 35 ) The Commission has not provided any indications as to which specific constraints of merger control proceedings meant that at that time, which was still over two months before the merger was prohibited by the decision at issue, it was practically impossible for it to hear UPS regarding the said model and to set a short deadline for any response. |
62. |
Against this background, it cannot be complained that the General Court attributed too little weight to the particular features of merger control and, in particular, to the requirement for speed that applies in this area. |
– The changes to the price concentration model used by the Commission which supposedly follow intuitively
63. |
Finally, the Commission argues that it was possible to dispense with hearing UPS in relation to the final version of the price concentration model used by the Commission because the manner in which that model functioned followed intuitively for UPS. |
64. |
It is true that the Commission is not required to hear the undertakings concerned on a mere further development or refinement of the elements, theories or calculation models used by the Commission and on which these undertakings have already been able to submit observations. ( 36 ) In the present case, however, the General Court found that the final version of the price concentration model used by the Commission differed in a manner that was not negligible, as regards the variables used, from the one which had previously been the subject of discussions with UPS. ( 37 ) The Commission, which has not raised any objection relating to a distortion of facts or evidence in this regard, must accept this finding. |
65. |
Under these circumstances, even on a sympathetic interpretation, it cannot be argued that the manner of functioning of the final version of the price concentration model used by the Commission followed intuitively for UPS. The General Court therefore did not err in law in this respect either. |
2. The effects of the infringement of the rights of defence that has been established on the validity of the decision at issue
66. |
In a separate line of attack, in the second and fourth grounds of appeal the Commission makes the criticism that, even in the event that an infringement of UPS’s rights of defence were established, the General Court should not have annulled the decision at issue. The Commission argues that its prediction of a significant impediment to effective competition was valid for two Member States — Denmark and the Netherlands — in any event, even if the results of the price concentration model were disregarded. |
67. |
It is consistent with settled case-law that a procedural error justifies the annulment of a Commission decision only where the outcome of the administrative procedure might have been different without that procedural error. ( 38 ) In other words, it cannot be ruled out that the procedural error affected the content of the Commission decision so that the decision might have been substantively different. ( 39 ) |
68. |
It may be the case that in antitrust proceedings a procedural error in relation to a specific piece of evidence is immaterial if other sufficiently persuasive evidence, in relation to which no procedural error has been committed, is available to the Commission for the purposes of proving a contravention of Article 101 or 102 TFEU. ( 40 ) |
69. |
However, merger control is characterised by the particular feature that, in its decisions on the authorisation or prohibition of proposed mergers, the Commission has to take prediction-based decisions which are always based on the overall assessment of a number of quantitative and qualitative factors. |
70. |
In the present case, the course of the events shows in a striking manner that the number of Member States in which the Commission will predict a significant impediment to effective competition may depend critically on the specific configuration of a price concentration model. Specifically, while in its statement of objections the Commission still proceeded on the basis that the proposed merger would have such a negative effect on competition for 29 national markets, the decision at issue which prohibits this transaction now assumes — not least on account of the changes made to the price concentration model used —a significant impediment to effective competition in only 15 Member States. |
71. |
Furthermore, UPS very pertinently points out that, in a case such as this one, the prediction of a significant impediment to effective competition in certain Member States can turn out to be stronger or weaker depending on whether the Commission is also able to rely on a price concentration analysis in addition to other information. The qualitative factors particularly emphasised by the Commission before the Court of Justice from which negative effects for competition can be derived may, on an overall consideration, carry less weight if quantitative econometric calculations, by means of which those qualitative factors had originally been strengthened, suddenly become less reliable. |
72. |
I would add that an undertaking concerned can normally defend itself more easily against the objection of a significant impediment to effective competition in only two Member States (here: Denmark and the Netherlands, where the Commission predicted significant competition problems on the basis of qualitative considerations independently of its econometric analysis) than against the objection of a significant impediment to effective competition in 15 Member States (as the Commission assumed here in the decision at issue), let alone in 29 States (which was what the Commission had assumed in its statement of objections). |
73. |
The prospects of dispelling the Commission’s objections by way of appropriate commitments, and in this way of preparing the ground for the proposed merger to be authorised subject to conditions and obligations, are also normally improved if the undertaking concerned has to present specific commitments for only two national markets and not for 15 such markets or even for the whole of the territory of the European Union or the whole of the EEA. |
74. |
Thus, the General Court was completely correct to find that UPS might have been better able to defend itself if the undertaking had had at its disposal, before the adoption of the decision at issue, the final version of the econometric model chosen by the Commission. ( 41 ) It was therefore only logical that under these circumstances the General Court annulled the decision at issue. |
3. The requirements to state reasons applicable to the judgment at first instance
75. |
Last of all, the Commission alleges in various parts of its four grounds of appeal that the General Court did not address certain aspects of its submissions at first instance. The points in question are essentially as follows:
|
76. |
In the context of an appeal, the purpose of review by the Court of Justice is, primarily, to examine whether the General Court responded to a sufficient legal standard to all the arguments raised by the parties. ( 42 ) If the General Court does not respond to a central part of a party’s line of argument in the proceedings at first instance, then it contravenes the obligation to state reasons which is incumbent upon it ( 43 ) (Article 36 in conjunction with the first paragraph of Article 53 of the Statute of the Court of Justice). |
77. |
According to settled case-law, however, the General Court it is not obliged to respond exhaustively and one by one to every single argument advanced by the parties, particularly if the arguments were not sufficiently clear and precise; ( 44 ) rather, its statement of reasons for the judgment can also be implicit in relation to individual points. ( 45 ) What is decisive is whether the General Court has sufficiently addressed the submissions of the parties. ( 46 ) |
78. |
In my view, it is sufficiently clear from the judgment under appeal that the General Court considered that the Commission was required to bring the final version of its econometric model to UPS’s attention and to hear the undertaking in relation to it, specifically because the Commission had made changes to this model that were not negligible and could not be traced back to previous discussions with UPS. ( 47 ) Contrary to what has been asserted by the Commission in the proceedings before the Court of Justice, its submissions at first instance on this subject were only very brief and were not clearly broken down into a primary submission and other submissions. ( 48 ) Under these circumstances, the General Court cannot be criticised on the basis that it should have addressed the Commission’s line of argument more intensively. |
79. |
It is likewise sufficiently clear from the judgment under appeal that the changes made by the Commission to its price concentration model did not intuitively follow for UPS and, in particular, were not able to be traced back to the exchanges with that undertaking’s advisers which had previously taken place. ( 49 ) |
80. |
Finally, the General Court’s observations on the quantitative and qualitative elements on which the conclusions of the decision at issue were based are at least an implicit response to the Commission’s submissions in relation to Denmark and the Netherlands. ( 50 ) |
81. |
The General Court has thus completely satisfied its obligation to state reasons pursuant to Article 36 in conjunction with the first paragraph of Article 53 of the Statute of the Court of Justice. Unlike the Commission, I do not see any inconsistencies at all in the statement of reasons of the judgment under appeal. |
82. |
In truth, it seems to me that, by virtue of the deficiencies that it criticises, the Commission is seeking to address not so much the formal requirements to state reasons as, in substantive terms, the merits of the reasons on which the General Court based the judgment under appeal. However, the mere fact that the General Court, on the merits, arrived at a different conclusion from what may be agreeable to the appellant does not constitute a suitable basis for a claim that there has been a failure to state reasons. ( 51 ) |
83. |
All in all, therefore, the objection that the General Court did not adequately respond to the Commission’s arguments in the judgment under appeal must be rejected. |
C. Summary
84. |
Since none of the pleas raised by the Commission against the judgment under appeal have been successful, the appeal must be dismissed in its entirety. |
VI. Costs
85. |
Under Article 184(2) of its Rules of Procedure, the Court of Justice is to make a decision as to costs where it dismisses an appeal. |
86. |
It follows from Article 138(1) and (2) in conjunction with Article 184(1) of the Rules of Procedure that the unsuccessful party is to be ordered to pay costs if they have been applied for. Since UPS has made such applications and the Commission has been unsuccessful, the Commission must be ordered to pay the costs of these appeal proceedings. |
87. |
FedEx, the intervener at first instance in support of the Commission, has not participated in the appeal proceedings and consequently cannot be ordered to pay costs arising from the appeal proceedings pursuant to Article 184(4) of the Rules of Procedure. |
VII. Conclusion
88. |
On the basis of the above considerations, I propose that the Court should:
|
( 1 ) Original language: German.
( 2 ) Decision of 30 January 2013 declaring a concentration incompatible with the internal market and the functioning of the EEA Agreement (Case COMP/M.6570 — UPS v TNT Express), notified under the reference C(2013) 431 final and summarised in OJ 2014 C 137, p. 8.
( 3 ) Judgment of 7 March 2017, United Parcel Service v Commission (T‑194/13, EU:T:2017:144).
( 4 ) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1).
( 5 ) Commission Regulation (EC) No 802/2004 of 21 April 2004 implementing Regulation No 139/2004 (OJ 2004 L 133, p. 1).
( 6 ) Paragraphs 205 to 208 of the judgment under appeal.
( 7 ) Paragraphs 203 and 208 of the judgment under appeal.
( 8 ) Paragraphs 203 and 208 of the judgment under appeal.
( 9 ) Paragraphs 202 and 220 of the judgment under appeal.
( 10 ) Paragraphs 205 to 208 of the judgment under appeal.
( 11 ) Paragraphs 210 and 221 of the judgment under appeal.
( 12 ) Judgments of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala (C‑413/06 P, EU:C:2008:392, paragraph 29); of 16 July 2009, Commission v Schneider Electric (C‑440/07 P, EU:C:2009:459, paragraphs 103 and 104); and of 26 June 2012, Poland v Commission (C‑335/09 P, EU:C:2012:385, paragraphs 83 and 84).
( 13 ) To that effect, judgments of 15 May 1997, Siemens v Commission (C‑278/95 P, EU:C:1997:240, paragraphs 44 and 45); of 11 September 2014, MasterCard and Others v Commission (C‑382/12 P, EU:C:2014:2201, paragraph 60); and of 4 April 2017, Ombudsman v Staelen (C‑337/15 P, EU:C:2017:256, paragraphs 53 and 54).
( 14 ) Judgments of 12 September 2006, Reynolds Tobacco and Others v Commission (C‑131/03 P, EU:C:2006:541, paragraph 51); of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council (C‑583/11 P, EU:C:2013:625, paragraph 47); and of 19 January 2017, Commission v Total and Elf Aquitaine (C‑351/15 P, EU:C:2017:27, paragraph 31).
( 15 ) Judgments of 13 July 2000, Salzgitter v Commission (C‑210/98 P, EU:C:2000:397, paragraph 43); of 7 June 2007, Wunenburger v Commission (C‑362/05 P, EU:C:2007:322, paragraph 92); and of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council (C‑583/11 P, EU:C:2013:625, paragraph 47).
( 16 ) Judgments of 30 September 2003, Eurocoton and Others v Council (C‑76/01 P, EU:C:2003:511, paragraph 52), and of 29 September 2011, Arkema v Commission (C‑520/09 P, EU:C:2011:619, paragraph 31); to the same effect, judgment of 14 October 2014, Buono and Others v Commission (C‑12/13 P and C‑13/13 P, EU:C:2014:2284, paragraph 64).
( 17 ) Judgments of 1 June 1994, Commission v Brazzelli Lualdi and Others (C‑136/92 P, EU:C:1994:211, paragraph 59); of 11 December 2008, Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707, paragraph 95); and of 12 September 2017, Anagnostakis v Commission (C‑589/15 P, EU:C:2017:663, paragraph 55).
( 18 ) Paragraphs 210 and 221 of the judgment under appeal.
( 19 ) Judgments of 24 October 1996, Commission v Lisrestal and Others (C‑32/95 P, EU:C:1996:402, paragraph 21); of 22 October 2013, Sabou (C‑276/12, EU:C:2013:678, paragraph 38); and of 14 June 2016, Marchiani v Parliament (C‑566/14 P, EU:C:2016:437, paragraph 51): see also judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686, paragraph 52).
( 20 ) See in that regard my earlier Opinion in Solvay v Commission (C‑109/10 P, EU:C:2011:256, point 152).
( 21 ) Judgments of 24 October 1996, Commission v Lisrestal and Others (C‑32/95 P, EU:C:1996:402, paragraph 21); of 22 October 2013, Sabou (C‑276/12, EU:C:2013:678, paragraph 38); and of 14 June 2016, Marchiani v Parliament (C‑566/14 P, EU:C:2016:437, paragraph 51).
( 22 ) As the exchanges between the Commission and UPS before the Court of Justice show, in the present case the price concentration model was in part inculpatory and in part exculpatory for UPS. On the one hand, in the decision at issue the Commission essentially relied on this model in order to prohibit the proposed merger. On the other hand, however, the final version of this model also showed that the proposed merger would lead to a significant impediment to effective competition on fewer markets than was originally supposed.
( 23 ) Judgment of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686, paragraph 54).
( 24 ) Judgments of 21 November 1991, Technische Universität München (C‑269/90, EU:C:1991:438, paragraph 14); of 19 July 2012, Council v Zhejiang Xinan Chemical Industrial Group (C‑337/09 P, EU:C:2012:471, paragraph 107); and of 4 April 2017, Fahimian (C‑544/15, EU:C:2017:255, paragraph 46).
( 25 ) See in that regard again judgments of 24 October 1996, Commission v Lisrestal and Others (C‑32/95 P, EU:C:1996:402, paragraph 21); of 22 October 2013, Sabou (C‑276/12, EU:C:2013:678, paragraph 38); and of 14 June 2016, Marchiani v Parliament (C‑566/14 P, EU:C:2016:437, paragraph 51).
( 26 ) The Commission refers to the judgments of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala (C‑413/06 P, EU:C:2008:392, in particular paragraphs 61, 63 and 64), and of 9 March 2015, Deutsche Börse v Commission (T‑175/12, EU:T:2015:148, in particular paragraphs 246, 253 to 258, 314 and 344).
( 27 ) Judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala (C‑413/06 P, EU:C:2008:392, paragraphs 63 to 65).
( 28 ) To that effect, also judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala (C‑413/06 P, EU:C:2008:392, paragraph 63, at the end), according to which the statement of objections does not prevent the Commission from changing its assessment in favour of the undertakings concerned.
( 29 ) Paragraphs 205 to 208 of the judgment under appeal.
( 30 ) Judgments of 18 December 2007, Cementbouw Handel & Industrie v Commission (C‑202/06 P, EU:C:2007:814, paragraph 39), and of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala (C‑413/06 P, EU:C:2008:392, paragraphs 49 and 90).
( 31 ) To that effect, judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala (C‑413/06 P, EU:C:2008:392, paragraph 66), according to which the arguments of the parties to a proposed concentration must be taken into account in proceedings for the control of concentrations in the same way as the arguments of the parties affected by proceedings of the Commission initiated under Articles 101 or 102 TFEU.
( 32 ) See in that regard once again the case-law cited in footnote 24.
( 33 ) See in this regard point 49 of this Opinion.
( 34 ) Paragraphs 205 to 208 of the judgment under appeal.
( 35 ) Paragraphs 202 and 220 of the judgment under appeal.
( 36 ) See again, in that regard, point 49 of this Opinion.
( 37 ) Paragraphs 205 to 208 of the judgment under appeal.
( 38 ) Judgments of 10 July 1980, Distillers Company v Commission (Case 30/78, EU:C:1980:186, paragraph 26), and of 14 February 1990, France v Commission (Case C‑301/87, EU:C:1990:67, paragraph 31); to the same effect judgments of 7 January 2004, Aalborg Portland and Others v Commission (C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraph 73), and of 29 June 2006, SGL Carbon v Commission (C‑308/04 P, EU:C:2006:433, paragraphs 97 and 98).
( 39 ) Judgments of 29 October 1980, van Landewyck and Others v Commission (209/78 to 215/78 and 218/78, EU:C:1980:248, paragraph 47), and of 23 April 1986, Bernardi v Parliament (150/84, EU:C:1986:167, paragraph 28); to the same effect judgments of 25 October 2011, Solvay v Commission (C‑109/10 P, EU:C:2011:686, paragraphs 57 and 62), and of 6 September 2017, Intel v Commission (C‑413/14 P, EU:C:2017:632, paragraphs 96 to 98).
( 40 ) To that effect in particular the judgment of 7 January 2004, Aalborg Portland and Others v Commission (C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraphs 72 and 73), to which the Commission refers.
( 41 ) Paragraph 215 of the judgment under appeal.
( 42 ) Judgments of 28 June 2005, Dansk Rørindustri and Others v Commission (C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P, EU:C:2005:408, paragraph 244), and of 2 April 2009, France Télécom v Commission (C‑202/07 P, EU:C:2009:214, paragraph 41).
( 43 ) To that effect judgments of 1 October 1991, Vidrányi v Commission (C‑283/90 P, EU:C:1991:361, paragraph 29); of 17 December 1992, Moritz v Commission (C‑68/91 P, EU:C:1992:531, paragraphs 37 to 39); and of 20 May 2010, Gogos v Commission (C‑583/08 P, EU:C:2010:287, paragraph 29).
( 44 ) Judgments of 6 March 2001, Connolly v Commission (C‑274/99 P, EU:C:2001:127, paragraph 121); of 9 September 2008, FIAMM and Others v Council and Commission (C‑120/06 P and C‑121/06 P, EU:C:2008:476, paragraph 91); and of 19 March 2015, Dole Food and Dole Fresh Fruit Europe v Commission (C‑286/13 P, EU:C:2015:184, paragraph 83).
( 45 ) Judgments of 7 January 2004, Aalborg Portland and Others v Commission (C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraph 372); of 26 November 2013, Gascogne Sack Deutschland v Commission (C‑40/12 P, EU:C:2013:768, paragraph 35); and of 7 June 2018, Ori Martin v Court of Justice of the European Union (C‑463/17 P, EU:C:2018:411, paragraph 26).
( 46 ) Judgment of 11 April 2013, Mindo v Commission (C‑652/11 P, EU:C:2013:229, paragraph 41); to the same effect judgment of 25 October 2007, Komninou and Others v Commission (C‑167/06 P, EU:C:2007:633, paragraph 22).
( 47 ) Paragraph 209 in conjunction with paragraphs 205 to 208 of the judgment under appeal.
( 48 ) In truth, these submissions only amount to just over one page (paragraphs 27 to 29) of the Commission’s defence before the General Court. These arguments begin with a reference to the exchange of views which took place in the administrative procedure between the Commission and UPS regarding the price concentration model and to the alleged belatedness of the observations made by UPS on that model. Only then does the Commission turn to the case-law on the relationship between the statement of objections and the decision which brings the procedure to an end.
( 49 ) Paragraph 208 of the judgment under appeal.
( 50 ) Paragraphs 216 to 218 of the judgment under appeal.
( 51 ) Judgments of 7 June 2007, Wunenburger v Commission (C-362/05 P, EU:C:2007:322, paragraph 80), and of 20 May 2010, Gogos v Commission (C-583/08 P, EU:C:2010:287, paragraph 35).