Tuesday, August 26, 2008
The Commission's Non Contractual Liability in the Field of Merger Control - Don't Use a Hammer When You Need a Screwdriver
Posted by D. Daniel Sokol
Nicolas Petit, University of Liege Faculty of Law and Miguel Rato, Howrey write on The Commission's Non Contractual Liability in the Field of Merger Control - Don't Use a Hammer When You Need a Screwdriver.
ABSTRACT: It has become conventional wisdom to view the rulings handed down by
the CFI in Airtours, Schneider, Tetra Laval and Impala as unprecedented
setbacks for the European Commission ("the Commission") that would
usher in a new era of administrative accountability in the field of
merger control. However, several commentators still consider that the
Commission regretfully enjoys a de facto power of "life or death" over
notified mergers, and that judgments striking down its decisions are
unlikely to change much in practice. Parties to a blocked merger
generally abandon their projects following the Commission's decision,
irrespective of the outcome of the actions they may subsequently bring
before the EC Courts (e.g. the Airtours/First Choice or
Schneider/Legrand mergers). Third parties - competitors or consumers -
to an illegally approved merger have little prospect of inducing the
Commission to unscramble a consummated transaction (e.g. the Sony/BMG
This unsatisfactory state of affairs has led practitioners to explore other legal avenues to hold the Commission accountable for its mistakes. One such possible means of redress is to resort to Article 288 EC which provides that the EC shall "make good any damage caused by its institutions". Where an EC institution such as the Commission is found liable for such damage, Article 235 EC grants the Community Courts jurisdiction to award compensation In light of the virulence of some of criticism directed at the Commission by the CFI in the Airtours and Schneider/Legrand judgments, the parties to those mergers initiated proceedings against the Commission, seeking compensation for the unlawful prohibition of their proposed mergers.
These actions drew enthusiastic reactions from certain EC competition law experts which, upon close examination, appear unjustified. The legal avenue provided for by Article 288 EC is most likely a procedural dead-end. First, from the applicants' perspective, the conditions under which the Commission's liability can give rise to a right to compensation in the field of merger control are set so high by existing case-law that most Article 288 EC claims are likely to be dismissed as unfounded. Second, from a public policy standpoint, Article 288 EC does not constitute an adequate instrument to improve the Commission's accountability for its unlawful decisions.