**Case C-413/06 P**

**Bertelsmann AG and Sony Corporation of America**

**v**

**Independent Music Publishers and Labels Association (Impala)**

(Appeals – Competition – Control of concentrations between undertakings – Sony BMG joint venture – Appeal against the annulment of a Commission decision declaring a concentration compatible with the common market – Judicial review – Scope – Standard of proof – Role of the statement of objections – Strengthening or creation of a collective dominant position – Statement of reasons for a decision approving a concentration – Use of confidential information)

Summary of the Judgment

1.        *Competition – Concentrations – Assessment of compatibility with the common market – Standard of proof – Identical in cases
where a concentration is approved and where it is prohibited*

*(Council Regulation No 4064/89, Arts 2(2) and (3), 6(1), 8(1) and 10(6))*

2.        *Competition – Concentrations – Administrative procedure – Statement of objections – Provisional nature*

*(Arts 81 EC and 82 EC; Council Regulation No 4064/89, Art. 18(3); Commission Regulation No 447/98, Art. 13(2))*

3.        *Competition – Concentrations – Examination by the Commission – Adoption of a decision holding a concentration to be compatible
with the common market – Judicial review*

*(Council Regulation No 4064/89, Art. 18(3))*

4.        *Competition – Concentrations – Administrative procedure – Observance of the rights of the defence – Submission of arguments
in reply to the statement of objections – Right of the notifying parties*

*(Council Regulation No 4064/89, Arts 11, 14, 15, 18(3) and 19; Commission Regulation No 447/98, Arts 3(1) and 13(2))*

5.        *Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a collective
dominant position significantly impeding effective competition in the common market – Criteria*

*(Art. 81 EC; Council Regulation No 4064/89, Art. 2(3))*

6.        *Competition – Concentrations – Examination by the Commission – Economic assessments – Judicial review – Limits*

*(Council Regulation No 4064/89, Art. 2)*

7.        *Acts of the institutions – Statement of reasons – Obligation – Scope – Decision applying the rules relating to concentrations
between undertakings*

*(Art. 253 EC; Council Regulation No 4064/89, Art. 8(2))*

8.        *Actions for annulment – Grounds – Infringement of essential procedural requirements – Infringement of the duty to state reasons
in relation to a decision authorising a concentration – To be considered of the Court’s own motion*

*(Arts 230 EC and 253 EC; Council Regulation No 4064/89, Arts 2, 6(1), 8(1) and 10(6))*

1.        There is nothing in Article 2(2) or (3) of Regulation No 4064/89 on the control of concentrations between undertakings which
states that it imposes different standards of proof in relation to decisions approving a concentration, on the one hand, and
decisions prohibiting a concentration, on the other. The prospective analysis called for in relation to the control of concentrations,
which consists of an examination of how a concentration might alter the factors determining the state of competition on a
given market in order to establish whether it would give rise to a significant impediment to effective competition, makes
it necessary to envisage various chains of cause and effect with a view to ascertaining which of them is the most likely.
It cannot therefore be inferred from the regulation that there is a general presumption that a notified concentration is compatible
with, or incompatible with, the common market.

That interpretation of Regulation No 4064/89 is not invalidated by Article 10(6), which provides that a notified concentration
is to be deemed compatible with the common market where the Commission has not taken a decision on the compatibility of that
concentration within the prescribed period. That provision is a specific expression of the need for speed, which characterises
the general scheme of the regulation and which requires the Commission to comply with strict time-limits for the adoption
of the final decision. It is, however, an exception to the general scheme of the regulation, which is laid down in particular
in Articles 6(1) and 8(1), according to which the Commission is to rule expressly on the concentrations which are notified
to it.

Furthermore, it is true that the decisions of the Commission as to the compatibility of concentrations with the common market
must be supported by a sufficiently cogent and consistent body of evidence and that in the context of the analysis of a ‘conglomerate-type’
concentration the quality of the evidence produced by the Commission in order to establish that it is necessary to adopt a
decision declaring the concentration incompatible with the common market is particularly important. However, it cannot be
deduced from that that the Commission must, particularly where it pursues a theory of collective dominance, comply with a
higher standard of proof in relation to decisions prohibiting concentrations than in relation to decisions approving them.
The essential function of evidence is to establish convincingly the merits of an argument or, as in the case of the control
of concentrations, to support the conclusions underpinning the Commission’s decisions. Furthermore, the fact that an issue
of collective dominance does, or does not, arise, cannot of itself have an impact on the standard of proof which applies.
The inherent complexity of a theory of competitive harm put forward in relation to a notified concentration is a factor which
must be taken into account when assessing the plausibility of the various consequences such a concentration may have, in order
to identify those which are most likely to arise, but such complexity does not, of itself, have an impact on the standard
of proof which is required.

It follows that, where it has been notified of a proposed concentration pursuant to Regulation No 4064/89, the Commission
is, in principle, required to adopt a position, either in the sense of approving or of prohibiting the concentration, in accordance
with its assessment of the economic outcome attributable to the concentration which is most likely to ensue.

(see paras 46-52)

2.        In proceedings for the control of concentrations, the statement of objections is a procedural and preparatory document which,
in order to ensure that the rights of the defence may be exercised effectively, delimits the scope of the administrative procedure
initiated by the Commission, thereby preventing the latter from relying on other objections in its decision terminating the
procedure in question. It is therefore inherent in the nature of the statement of objections that it is provisional and subject
to amendments to be made by the Commission in its further assessment on the basis of the observations submitted to it by the
parties and subsequent findings of fact. The Commission must take into account the factors emerging from the whole of the
administrative procedure, in order either to abandon such objections as have been shown to be unfounded or to amend and supplement
its arguments, both in fact and in law, in support of the objections which it maintains. Thus, the statement of objections
does not prevent the Commission from altering its standpoint in favour of the undertakings concerned

It follows that the Commission is not obliged to maintain the factual or legal assessments set forth in the statement of objections.
On the contrary, it must give as reasons for its ultimate decision its final assessments based on the situation existing at
the time the formal proceedings are closed. Furthermore, the Commission is not obliged to explain any differences with respect
to its provisional assessments set out in the statement of objections.

The fact that the Commission is, by contrast to the position under Articles 81 EC and 82 EC, subject to strict time-limits
in the control of concentrations, has no effect on the provisional nature of the statement of objections. The effective exercise
of the rights of the defence requires that the arguments of the parties to a proposed concentration be taken into account
in proceedings for the control of concentrations in the same way as the arguments of the parties affected by proceedings initiated
under Articles 81 EC or 82 EC.

(see paras 63-66)

3.        The Court of First Instance is not necessarily precluded from using the statement of objections in order to interpret a decision
of the Commission relating to the control of concentrations, particularly as regards the examination of its factual basis.
That is the case notwithstanding the preparatory and provisional nature of the document and despite the fact that the Commission
is not obliged to explain any differences in the final decision by comparison with the statement of objections.

However, the Court of First Instance commits an error of law where, in its examination of the line of argument alleging the
existence of manifest errors of assessment, it does not merely use the statement of objections as a basis for verifying the
correctness, completeness and reliability of the factual material which underpinned the contested decision, but treats a particular
category of conclusions set out in that statement as established, without demonstrating the reasons for which, notwithstanding
the final position adopted by the Commission in the contested decision, those elements should be considered as being established
beyond dispute. Apart, possibly, from non-controversial elements which, for example, by reason of their empirical and verifiable
nature are obvious to such a degree that they cannot be contested, it should not be assumed that assessments made in a statement
of objections cannot be modified in the light of the replies to such a statement. It can happen that, in their reply to the
statement of objections, the notifying parties will supplement or clarify their ‘case’ regarding the functioning of the market
or markets in question in the light of that statement, so that new elements may be added or facts previously examined by the
Commission may be put in an entirely different light.

(see paras 69, 73, 75-76)

4.        It flows from the rights of defence of the undertakings notifying a concentration that those undertakings have the right to
submit in their written and oral hearing following receipt of the statement of objections all material which they consider
capable of refuting the Commission’s objections and of leading it to approve their proposed concentration. Accordingly, those
parties cannot, as a rule, be criticised for putting forward certain – potentially decisive – arguments, facts or evidence
only in their arguments in reply to the statement of objections. It is only with that statement that the parties to the concentration
can obtain detailed indications as to the reservations of the Commission in relation to their proposed concentration and as
to the arguments and evidence on which it relies in that regard. A line of argument put forward in reply to the statement
of objections forms part of the investigation to be undertaken in the formal proceedings and is not submitted out of time,
but at the time laid down for that purpose in the procedure for the control of concentrations. Having regard to the requirements
of the rights of the defence, such a line of argument cannot be subject to more demanding standards as to their probative
value and their cogency than those imposed in relation to the arguments of competitors, customers and other third parties
questioned by the Commission in the course of the administrative procedure or in the light of information provided by the
notifying undertakings at a previous stage of the Commission’s investigation.

Furthermore, when the Commission examines in its decision the arguments submitted by the notifying undertakings in reply to
the statement of objections and takes the opportunity to reconsider its provisional findings in that statement, with a view
to possibly departing from them, without making a request for information or undertaking any new market investigations, it
does not ‘delegate’ the investigation to the notifying undertakings.

It is true that the Commission is required to examine carefully the arguments of the parties to the concentration as regards
their exactitude, completeness and cogency and to disregard them where justified doubts arise. It is also true that, under
Article 3(1) of Regulation No 447/98, the notification of the proposed concentration must contain information that is correct
and complete and that, in accordance with Article 11 of Regulation No 4064/89, the notifying parties are bound to provide
a response to any requests for information by the Commission which is complete, correct and submitted within the periods laid
down, failing which, where the information in question was requested by decision, the Commission may, by virtue of Articles
14 and 15 of Regulation No 4064/89, impose fines and periodic penalty payments. None the less, it remains the case that the
Commission must, at the stage of the reply to the statement of objections, if it is not to undermine the rights of defence
of the notifying parties, apply the same criteria as those applied for the purposes of the examination of the arguments of
third parties or those adopted at an earlier stage of its investigation, while being entitled to draw the appropriate consequences
in the event that it should transpire at a very advanced stage of the procedure that the notification concerned does not comply
with the requirements of Article 3(1) of Regulation No 447/98.

In those circumstances, having regard in particular to the time constraints which arise by virtue of the procedural time-limits
laid down by Regulation No 4064/89, the Commission cannot, in principle, be required, in every individual case, to send, following
communication of the objections and after hearing the undertakings concerned, requests for extensive information to numerous
economic operators shortly before transmitting its draft decision to the Advisory Committee on concentrations, pursuant to
Article 19 of Regulation No 4064/89.

(see paras 89, 91-95)

5.        In assessing the compatibility of a concentration with the common market, where the creation or strengthening of a collective
dominant position is alleged, the Commission is obliged to assess, using a prospective analysis of the reference market, whether
the concentration which has been referred to it will lead to a situation in which effective competition in the relevant market
is significantly impeded by the undertakings which are parties to the concentration and one or more other undertakings which
together, in particular because of correlative factors which exist between them, are able to adopt a common policy on the
market in order to profit from a situation of collective economic strength, without actual or potential competitors, let alone
customers or consumers, being able to react effectively. Such correlative factors include, in particular, the relationship
of interdependence existing between the parties to a tight oligopoly within which, on a market with the appropriate characteristics,
in particular in terms of market concentration, transparency and product homogeneity, those parties are in a position to anticipate
one another’s behaviour and are therefore strongly encouraged to align their conduct on the market in such a way as to maximise
their joint profits by increasing prices, reducing output, the choice or quality of goods and services, diminishing innovation
or otherwise influencing parameters of competition. In such a context, each operator is aware that highly competitive action
on its part would provoke a reaction on the part of the others, so that it would derive no benefit from its initiative.

A collective dominant position significantly impeding effective competition in the common market or a substantial part of
it may thus arise as the result of a concentration where, in view of the actual characteristics of the relevant market and
of the alteration to those characteristics that the concentration would entail, the latter would make each member of the oligopoly
in question, as it becomes aware of common interests, consider it possible, economically rational, and hence preferable, to
adopt on a lasting basis a common policy on the market with the aim of selling at above competitive prices, without having
to enter into an agreement or resort to a concerted practice within the meaning of Article 81 EC and without any actual or
potential competitors, let alone customers or consumers, being able to react effectively. Such tacit coordination is more
likely to emerge if competitors can easily arrive at a common perception as to how the coordination should work, and, in particular,
of the parameters that lend themselves to being a focal point of the proposed coordination. Unless they can form a shared
tacit understanding of the terms of the coordination, competitors might resort to practices that are prohibited by Article 81
EC in order to be able to adopt a common policy on the market. Moreover, having regard to the temptation which may exist for
each participant in a tacit coordination to depart from it in order to increase its short-term profit, it is necessary to
determine whether such coordination is sustainable. In that regard, the coordinating undertakings must be able to monitor
to a sufficient degree whether the terms of the coordination are being adhered to. There must therefore be sufficient market
transparency for each undertaking concerned to be aware, sufficiently precisely and quickly, of the way in which the market
conduct of each of the other participants in the coordination is evolving. Furthermore, discipline requires that there be
some form of credible deterrent mechanism that can come into play if deviation is detected. In addition, the reactions of
outsiders, such as current or future competitors, and also the reactions of customers, should not be such as to jeopardise
the results expected from the coordination.

In applying those criteria, it is necessary to avoid a mechanical approach involving the separate verification of each of
those criteria taken in isolation, while taking no account of the overall economic mechanism of a hypothetical tacit coordination.
In that regard, the assessment of, for example, the transparency of a particular market should not be undertaken in an isolated
and abstract manner, but should be carried out using the mechanism of a hypothetical tacit coordination as a basis. It is
only if such a hypothesis is taken into account that it is possible to ascertain whether any elements of transparency that
may exist on a market are, in fact, capable of facilitating the reaching of a common understanding on the terms of coordination
and/or of allowing the competitors concerned to monitor sufficiently whether the terms of such a common policy are being adhered
to. In that respect, it is necessary, in order to analyse the sustainability of a purported tacit coordination, to take into
account the monitoring mechanisms that may be available to the participants in the alleged tacit coordination in order to
ascertain whether, as a result of those mechanisms, they are in a position to be aware, sufficiently precisely and quickly,
of the way in which the market conduct of each of the other participants in that coordination is evolving.

Lastly, the investigation of a pre-existing collective dominant position based on a series of elements normally considered
to be indicative of the presence or the likelihood of tacit coordination between competitors cannot be considered to be objectionable
of itself. However, it is essential that such an investigation be carried out with care and, above all, that it should adopt
an approach based on the analysis of such plausible coordination strategies as may exist in the circumstances.

(see paras 120-123, 125-126, 129)

6.        The Commission has a margin of assessment with regard to economic matters for the purposes of the application of the substantive
rules of Regulation No 4064/89 on the control of concentrations between undertakings, in particular Article 2. It follows
that the review by the Community judicature of a Commission decision relating to concentrations is confined to ascertaining
that the facts have been accurately stated and that there has been no manifest error of assessment. That being so, while the
Community judicature must not substitute its own economic assessment for that of the Commission for the purposes of applying
the substantive rules of the regulation, that does not mean that it must refrain from reviewing the Commission’s interpretation
of information of an economic nature. Not only must the Community judicature establish, among other things, whether the evidence
relied on is factually accurate, reliable and consistent but also whether that evidence contains all the information which
must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions
drawn from it.

(see paras 144-145)

7.        The Commission does not infringe its duty to state reasons if, when exercising its power to examine concentrations, it does
not include precise reasoning in its decision as to the appraisal of a number of aspects of the concentration which appear
to it to be manifestly irrelevant or insignificant or plainly of secondary importance to the appraisal of the concentration.
Such a requirement would be difficult to reconcile with the need for speed and the short timescales which the Commission is
bound to observe when exercising its power to examine concentrations and which form part of the particular circumstances of
proceedings for control of those concentrations. It follows that where the Commission declares a concentration to be compatible
with the common market on the basis of Article 8(2) of Regulation No 4064/89 the requirement to state reasons is satisfied
when that decision clearly sets out the reasons for which the Commission considers that the concentration in question, where
appropriate following modification by the undertakings concerned, does not create or strengthen a dominant position as a result
of which effective competition would be significantly impeded in the common market or in a substantial part of it. In that
regard, while it is true that the Commission is not obliged, in the statement of reasons for decisions adopted under the regulation,
to take a position on all the information and arguments relied on before it, including those which are plainly of secondary
importance to the appraisal it is required to undertake, it none the less remains the case that it is required to set out
the facts and the legal considerations having decisive importance in the context of the decision. The reasoning must in addition
be logical and must not disclose any internal contradictions.

(see paras 167-169)

8.        Article 10(6) of Regulation No 4064/89 on the control of concentrations between undertakings, the purpose of which is to ensure
legal certainty where, exceptionally, the Commission has not adopted a decision within the prescribed period, with the result
that the undertakings concerned are free to implement their concentration as soon as approval is deemed to have been given,
cannot serve as a basis for an exception to the rule that a decision approving such a concentration may be challenged on the
ground of infringement of the duty to state reasons any more than it can form the basis of a general presumption that concentrations
are compatible with the common market. That provision, which constitutes an exception to the general scheme of the regulation,
which is laid down in particular in Articles 6(1) and 8(1) thereof, according to which the Commission is to rule expressly
on the concentrations which are notified to it, whether its decision be a negative or a positive one, must be interpreted
and applied in the light of Articles 230 EC and 253 EC. An inadequate statement of reasons in breach of Article 253 EC constitutes
an infringement of essential procedural requirements for the purposes of Article 230 EC and is, moreover, a plea which may,
and even must, be raised by the Community judicature of its own motion.

(see paras 172, 174-175)

JUDGMENT OF THE COURT (Grand Chamber)

10 July 2008 (*)

Table of contents

Legal context

Facts

The proceedings before the Court of First Instance and the judgment under appeal

Forms of order sought and positions of the parties

The appeal

Admissibility

The general plea of inadmissibility

The plea of inadmissibility based on the appellants having omitted to challenge a critical passage of the judgment under appeal

Substance

The second part of the third ground of appeal, alleging an error of law in that the Court of First Instance applied an excessive
burden and standard of proof as regards decisions approving a concentration

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The first ground of appeal, alleging an error of law in that the Court of First Instance relied on the statement of objections
as a benchmark for its review of the substance of the contested decision

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The second ground of appeal, together with the first part of the third ground, alleging errors of law in that the Court of
First Instance required the Commission to undertake new market investigations following the response to the statement of objections
and applied an unduly high standard of proof to the evidence submitted in response to the statement of objections

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The seventh ground of appeal, alleging an error of law in that the Court of First Instance relied on evidence that was not
disclosed to the parties to the concentration

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The fifth ground of appeal, alleging an error of law in that the Court of First Instance misconstrued the relevant legal criteria
applying to the creation or strengthening of a collective dominant position

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The fourth ground of appeal, alleging an error of law in that the Court of First Instance exceeded the scope of its role in
carrying out judicial review

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The sixth ground of appeal, alleging an error of law in that the Court of First Instance applied an incorrect standard of
reasoning as regards decisions approving a concentration

– The judgment under appeal

– Arguments of the parties

– Findings of the Court

The alleged cross-appeal

Referral of the case back to the Court of First Instance

(Appeals – Competition – Control of concentrations between undertakings – Sony BMG joint venture – Appeal against the annulment of a Commission decision declaring a concentration compatible with the common market – Judicial review – Scope – Standard of proof – Role of the statement of objections – Strengthening or creation of a collective dominant position – Statement of reasons for a decision approving a concentration – Use of confidential information)

In Case C‐413/06 P,

APPEAL under Article 56 of the Statute of the Court of Justice, brought on 3 October 2006,

**Bertelsmann AG,** established in Gütersloh (Germany), represented by P. Chappatte and J. Boyce, Solicitors,

**Sony Corporation of America,** established in New York (United States of America), represented by N. Levy, Barrister, R. Snelders, avocat, and T. Graf,
Rechtsanwalt,

appellants,

the other parties to the proceedings being:

**Independent Music Publishers and Labels Association (Impala),** established in Brussels (Belgium), represented by S. Crosby and J. Golding, Solicitors, and by I. Wekstein, advocate,

applicant at first instance,

**Commission of the European Communities,** represented by A. Whelan and K. Mojzesowicz, acting as Agents, with an address for service in Luxembourg,

defendant at first instance,

**Sony BMG Music Entertainment BV,** established in Vianen (Netherlands), represented by N. Levy, Barrister, R. Snelders, avocat, and T. Graf, Rechtsanwalt,

intervener at first instance,

THE COURT (Grand Chamber),

composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas, K. Lenaerts, G. Arestis and U. Lõhmus, Presidents
of Chambers, E. Juhász, A. Borg Barthet, M. Ilešič, J. Klučka, E. Levits and A. Ó Caoimh (Rapporteur), Judges,

Advocate General: J. Kokott,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 6 November 2007,

after hearing the Opinion of the Advocate General at the sitting on 13 December 2007,

gives the following

**Judgment**

1        By their appeal, Bertelsmann AG (‘Bertelsmann’) and Sony Corporation of America (‘Sony’) request the Court to set aside the
judgment of the Court of First Instance of the European Communities in Case T-464/04 *Impala* v *Commission*[2006] ECR II-2289 (‘the judgment under appeal’), in which the Court of First Instance annulled Commission Decision 2005/188/EC
of 19 July 2004 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement
(Case COMP/M.3333 – Sony/BMG) (OJ 2005 L 62, p. 30) (‘the contested decision’).

**Legal context**

2        Article 2(2) and (3) of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings
(OJ 1989 L 395, p. 1, and Corrigendum (OJ 1990 L 257, p. 13)), as amended by Council Regulation (EC) No 1310/97 of 30 June
1997 (OJ 1997 L 180, p. 1, and Corrigendum (OJ 1998 L 40, p. 17)) (‘the Regulation’) states:

‘2.      A concentration which does not create or strengthen a dominant position as a result of which effective competition would be
significantly impeded in the common market or in a substantial part of it shall be declared compatible with the common market.

3.      A concentration which creates or strengthens a dominant position as a result of which effective competition would be significantly
impeded in the common market or in a substantial part of it shall be declared incompatible with the common market.’

3        Article 6(1) of the Regulation provides as follows:

‘The Commission shall examine the notification as soon as it is received.

...

(c)      ... where the Commission finds that the concentration notified falls within the scope of this Regulation and raises serious
doubts as to its compatibility with the common market, it shall decide to initiate proceedings.’

4        Article 8 of the Regulation empowers the Commission, in the formal proceedings for assessing the compatibility of the concentration
with the common market initiated under Article 6(1)(c) of the Regulation (‘the formal proceedings’), to adopt a decision pursuant
to Article 8(2) declaring the concentration compatible, where appropriate following modification by the undertakings concerned
to the proposed concentration as notified, or a decision pursuant to Article 8(3) declaring the concentration incompatible.
Under Article 8(5)(a) of the Regulation, the Commission may revoke the decision it has taken pursuant to Article 8(2) where
the declaration of compatibility is based on incorrect information for which one of the undertakings concerned is responsible
or where it has been obtained by deceit.

5        Article 10(1) of the Regulation allows the Commission, except in certain circumstances which are not relevant to the present
appeal, a period of one month in which to decide whether to initiate the formal proceedings. Article 10(3) provides that a
decision declaring the notified concentration incompatible with the common market is to be taken within not more than four
months of the date on which the formal proceedings are initiated. Under Article 10(6) of the Regulation, a notified concentration
is to be deemed compatible with the common market where the Commission has not taken a decision either to initiate the formal
proceedings or a decision on the compatibility of the concentration with the common market within the periods laid down in
Article 10(1) and (3), respectively.

6        Article 11 of the Regulation concerns the requests for information which the Commission, in carrying out the duties assigned
to it by the Regulation, may send to, among others, the notifying parties and to other undertakings or associations of undertakings,
where appropriate by way of decision. Articles 14 and 15 of the Regulation provide for the imposition of fines or periodic
penalty payments where incorrect or misleading information is supplied.

7        Article 18(3) of the Regulation provides:

‘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.’

8        Article 19 of the Regulation concerns liaison between the Commission and the competent authorities of the Member States. Under
Article 19(3), an Advisory Committee on concentrations is to be consulted before any decision is taken pursuant to Article
8(2) to (5) of the Regulation. Article 19(6) provides that the Advisory Committee is to deliver an opinion on the Commission’s
draft decision, if necessary by taking a vote.

9        Under Article 3(1) of Commission Regulation (EC) No 447/98 of 1 March 1998 on the notifications, time-limits and hearings
provided for in Regulation No 4064/89 (OJ 1998 L 61, p. 1) (‘the Implementing Regulation’), the notification of the proposed
concentration must contain the information, including documents, requested by form CO annexed to that regulation.

10      Article 13(2) of the Implementing Regulation provides, among other things, that the Commission is to address its objections
in writing to the notifying parties and to set a time-limit within which they may inform the Commission of their views in
writing.

**Facts**

11      The facts of the dispute were set out as follows by the Court of First Instance in paragraphs 1 to 11 of the judgment under
appeal:

‘1      The Independent Music Publishers and Labels Association (Impala) is an international association, incorporated under Belgian
law, whose members are 2 500 independent music production companies.

2      On 9 January 2004 the Commission received notification pursuant to [the Regulation] of a proposed concentration by which the
undertakings Bertelsmann ... and Sony ... proposed to merge their global recorded music businesses.

3      Bertelsmann is an international media company ... active in recorded music through its wholly-owned subsidiary Bertelsmann Music
Group “BMG”. ...

4      ... In the recorded music sector [Sony] acts through Sony Music Entertainment. ....

5      The proposed operation consisted in the integration of the global recorded music businesses of the parties to the concentration
(with the exception of Sony’s activities in Japan) into three or more newly-created companies pursuant to a Business Contribution
Agreement dated 11 December 2003. In the aggregate, these joint venture companies were to be operated under the name Sony
BMG.

6      Under the agreement, Sony BMG would be active in the discovery and development of artists (the so-called A & R (“Artist and
Repertoire”) activity) and the marketing and sale of the resulting discs. Sony BMG would not be involved in related activities
such as music publishing, manufacturing and distribution.

7      On 20 January 2004, the Commission sent out questionnaires to a number of players on the market. [Impala] replied to that
questionnaire and lodged a separate submission on 28 January 200[4] in which it set out the reasons why in its view the Commission
should declare the operation incompatible with the common market. [Impala] set out its concerns about further concentration
in the market and the impact that this would have on market access, including in the retail sector, the media, the internet
and consumer choice.

8      By decision dated 12 February 2004, the Commission found that the notified operation raised serious doubts as to its compatibility
with the common market and the functioning of the Agreement on the European Economic Area (“the EEA Agreement”). It therefore
initiated [the formal proceedings].

9      On 24 May 2004 the Commission sent a statement of objections to the parties to the concentration, in which it provisionally
concluded that the notified operation was incompatible with the common market and the functioning of the EEA Agreement, since
it would strengthen a collective dominant position in the recorded music market and in the wholesale market for licences for
online music and would coordinate the parent companies’ behaviour in a way incompatible with Article 81 EC.

10      The parties to the concentration replied to the statement of objections and a hearing took place before the Hearing Officer
on 14 and 15 June 2004 in the presence of, among others, [Impala].

11      By [the contested decision], the Commission declared the concentration compatible with the common market pursuant to Article
8(2) of [the Regulation] ...’

**The proceedings before the Court of First Instance and the judgment under appeal**

12      By application lodged at the Registry of the Court of First Instance on 3 December 2004, Impala brought an action for the
annulment of the contested decision. In support of that action, Impala put forward five pleas in law, divided into a number
of parts.

13      As regards the first plea, relating to the strengthening of a pre-existing collective dominant position, the Court of First
Instance, after having first set out a number of observations regarding the concept of a ‘collective dominant position’, examined
the argument according to which, in essence, the contested decision did not explain to the requisite legal standard the reasons
for which discounts, in particular campaign discounts, undermine the transparency necessary to allow the development of such
a position.

14      Having reached the conclusion set out in paragraph 325 of the judgment under appeal that, in essence, the contested decision
should be annulled on the ground that it was inadequately reasoned, in paragraphs 327 to 458 of the judgment under appeal
the Court of First Instance none the less examined, in the interest of completeness, Impala’s arguments that the elements
put forward by the Commission in order to demonstrate insufficient transparency in the recorded music markets at issue were
vitiated by manifest errors of assessment.

15      In that regard, the Court of First Instance found in particular, in paragraph 373 of the judgment under appeal, that it followed
both from the contested decision and from the arguments advanced by the Commission before it that the only alleged element
of opacity of the market resulted from the lesser transparency of the campaign discounts. In paragraphs 377 and 378 of the
judgment under appeal, it held, first, that the evidence, as mentioned in the contested decision, did not support the conclusions
drawn from it by the Commission and, secondly, that those conclusions were also markedly different from the findings made
in the statement of objections.

16      In paragraphs 475 and 476 of the judgment under appeal, the Court of First Instance set out its conclusions relating to the
first plea as follows:

‘475      ... the assertion that the markets for recorded music are not sufficiently transparent to permit a collective dominant position
is not supported by a statement of reasons of the requisite legal standard and is vitiated by a manifest error of assessment
in that the elements on which it is based are incomplete and do not include all the relevant data that ought to have been
taken into consideration by the Commission and are not capable of supporting the conclusions which are drawn from them. As
that assertion constitutes ... an essential ground on which the Commission concluded ... that there was no collective dominant
position, the [contested decision] must be annulled on that ground alone.

476      Likewise, as the analysis in respect of retaliation is vitiated by an error of law, or at the very least by a manifest error
of assessment, and as that analysis constitutes the other essential ground on which the Commission concluded in the [contested
decision] that there was no collective dominant position, that defect also provides a ground for annulment of the [contested
decision].’

17      By its second plea raised before the Court of First Instance, Impala claimed that, by not taking the view that the proposed
concentration would create a collective dominant position on the market for recorded music, the Commission had infringed Article
253 EC and made a manifest error of assessment and an error of law.

18      In paragraph 527 of the judgment under appeal, the Court of First Instance set out the terms of the analysis in the contested
decision as regards the risk that a collective dominant position might be created and went on to hold as follows in paragraph
528 of the judgment:

‘... these few observations, which are so superficial, indeed purely formal, cannot satisfy the Commission’s obligation to carry
out a prospective analysis ... particularly where, as in the present case, the concentration raises serious problems. Independently
of the Court’s findings in respect of the first plea in law, it follows both from the fact that the Commission had to engage
in lengthy discussion in the [contested decision] in order to conclude that there was no collective dominant position before
the concentration and from the fact that it had concluded in the statement of objections, after an investigation lasting five
months, that such a position did exist before the concentration, that the question whether the fusion between two of the five
[major record companies (‘the majors’)] might create a collective dominant position raises, for even stronger reasons, serious
problems requiring a thorough examination. As that examination was not carried out, it follows, on that ground alone, that
the second plea in law is well founded.’

19      In the interest of completeness, the Court of First Instance held in paragraph 539 of the judgment under appeal that the Commission
could not, without making an error, rely on the fact that there was no evidence that retaliatory measures had been used in
the past to conclude that the concentration in question was not likely to give rise to a collective dominant position.

20      In those circumstances, the Court of First Instance held that the first and second pleas in law were well founded and annulled
the contested decision without examining the third to fifth pleas raised before it.

**Forms of order sought and positions of the parties**

21      By their appeal, the appellants request that the Court of Justice should:

–        set aside the judgment under appeal;

–        dismiss Impala’s application for annulment of the contested decision or, alternatively, refer the case back to the Court of
First Instance for reconsideration; and

–        order Impala to pay the costs of the present proceedings.

22      By the seven grounds of appeal put forward by the appellants, some of which are divided into a number of parts, the appellants
allege errors of law in that in the judgment under appeal the Court of First Instance:

–        relied on the statement of objections as a benchmark for its review of the substance of the contested decision;

–        required the Commission to undertake new market investigations following the response to the statement of objections;

–        applied an excessive and incorrect standard of proof for decisions approving a concentration;

–        exceeded the scope of its role in carrying out judicial review;

–        misconstrued the relevant legal criteria applying to the creation or strengthening of a collective dominant position;

–        applied an incorrect standard of reasoning as regards decisions approving a concentration; and

–        relied on evidence that was not disclosed to the parties to the concentration.

23      Sony BMG Music Entertainment BV adopts in full both the appeal and the forms of order sought by the appellants.

24      The forms of order sought by the Commission are, in substance, the same as those of the appellants. The Commission supports
the first, second and fourth grounds of appeal, together with the first part of the third ground.

25      Impala requests the Court to dismiss the appeal and to order the appellants to pay the costs. As a preliminary point, it pleads
that the appeal is inadmissible in whole or in part. It also argues that the appeal could not in any event lead to the setting
aside of the judgment under appeal, since the appellants have failed to challenge paragraph 528 of the judgment, which is
itself sufficient justification for the annulment of the contested decision.

26      The appellants and the Commission claim that both the plea of inadmissibility and the line of argument relating to paragraph
528 of the judgment under appeal summarised in the preceding paragraph of this judgment should be rejected.

27      At the end of its response, the Commission made some ‘additional observations on the “essential grounds” of the [contested]
decision’. Those observations are challenged by Impala, relying on Article 117(2) of the Rules of Procedure of the Court of
Justice. The appellants support those observations.

**The appeal**

*Admissibility*

The general plea of inadmissibility

28      As a preliminary point, Impala pleads that the appeal is inadmissible in that it constitutes an attempt to reopen questions
of fact relating to the inadequacy of reasoning in the contested decision and to the manifest error of assessment vitiating
the contested decision, which were settled by the Court of First Instance. The appeal seeks, to a very large extent, to re-examine
questions of fact which are beyond the jurisdiction of the Court of Justice. Impala also submits in this respect that the
question whether a decision is sufficiently reasoned is a question of fact. Lastly, it adds that its individual replies to
the grounds of appeal raised by the appellants should be understood as being in the alternative.

29      In this regard, it is clear from Article 225 EC and the first paragraph of Article 58 of the Statute of the Court of Justice
that an appeal lies on points of law only. The Court of First Instance accordingly has exclusive jurisdiction, first, to find
the facts, except where the substantive inaccuracy of its findings is apparent from the documents submitted to it and, second,
to assess those facts. When the Court of First Instance has found or assessed the facts, the Court of Justice has jurisdiction
under Article 225 EC to review the legal characterisation of those facts by the Court of First Instance and the legal conclusions
it has drawn from them. The Court of Justice thus has no jurisdiction to establish the facts or, in principle, to examine
the evidence which the Court of First Instance accepted in support of those facts. Provided that the evidence has been properly
obtained and the general principles of law and the rules of procedure in relation to the burden of proof and the taking of
evidence have been observed, it is for the Court of First Instance alone to assess the value which should be attached to the
evidence produced to it. Save where the clear sense of the evidence has been distorted, that appraisal does not therefore
constitute a point of law which is subject as such to review by the Court of Justice (see, inter alia, Case C‐185/95 P *Baustahlgewebe* v *Commission* [1998] ECR I‐8417, paragraphs 23 and 24; Case C‐551/03 P *General Motors* v *Commission* [2006] ECR I‐3173, paragraphs 51 and 52; and Case C‐328/05 P *SGL Carbon* v *Commission* [2007] ECR I‐3921, paragraph 41).

30      On the other hand, according to the case-law of the Court, the extent of the obligation to state reasons is a question of
law reviewable by the Court on appeal, since a review of the legality of a decision carried out in that context must necessarily
take into consideration the facts on which the Court of First Instance based itself in reaching its conclusion as to the adequacy
or inadequacy of the statement of reasons (see Case C-188/96 P *Commission*v *V*[1997] ECR I-6561, paragraph 24, and Joined Cases C‐189/02 P, C‐202/02 P, C‐205/02 P to C‐208/02 P and C‐213/02 P *Dansk Rørindustri and Others*v *Commission* [2005] ECR I‐5425, paragraph 453).

31      As regards the present case, as is apparent from, among other things, paragraph 22 of this judgment and contrary to what Impala
contends, the appellants do not, by their appeal, seek generally to call into question the findings of fact made by the Court
of First Instance, as such. By contrast, they raise for the most part questions of law which can form a valid basis for an
appeal. Impala’s general plea of inadmissibility should therefore be rejected. That being said, to the extent that Impala
puts forward more detailed objections of inadmissibility in relation to a number of specific parts of the appeal, those objections
fall to be addressed in the context of the grounds of appeal concerned.

The plea of inadmissibility based on the appellants having omitted to challenge a critical passage of the judgment under appeal

32      Impala submits that, in any event, the Court of First Instance held in paragraph 528 of the judgment under appeal that the
Commission did not carry out a prospective analysis of whether the concentration would create a collective dominant position,
and held that for this reason alone that Impala’s second plea in law at first instance was well founded. That, in itself,
is sufficient to annul the contested decision. Accordingly, even if the appellants succeed on one or more of their grounds
of appeal, the appeal must in any event be dismissed, since the appellants do not contest the finding that no prospective
analysis was carried out.

33      In that regard, it is sufficient to hold that the appeal expressly refers, in a list of the passages in the judgment under
appeal that are specifically subject to criticism, to paragraph 528 of that judgment, as well as to paragraphs 533, 539 and
541, which also address the question of the creation of a collective dominant position.

34      That being the case, it cannot validly be argued that the appeal is limited to the reasoning of the Court of First Instance
regarding the question of the strengthening of a pre-existing collective dominant position with the result that it should
be rejected as inadmissible in its entirety.

*Substance*

35      The seven grounds of appeal relied on by the appellants overlap in a number of respects. Essentially, the first to fourth
grounds, together with the seventh ground, concern the manner in which the Court of First Instance carried out its review,
particularly with respect to questions of proof. The fifth ground concerns the concept of a collective dominant position.
The sixth ground relates to the findings of the Court of First Instance with respect to the failure of the contested decision
to state adequate reasons.

36      It is appropriate to begin the examination of the substance of this appeal by considering the grounds of appeal concerning
the manner in which the Court of First Instance approached issues of evidence and proof, and, in the first place, by considering
the second part of the third ground.

The second part of the third ground of appeal, alleging an error of law in that the Court of First Instance applied an excessive
burden and standard of proof as regards decisions approving a concentration

–       The judgment under appeal

37      It is apparent from, among others, paragraphs 289, 366 and 459 of the judgment under appeal that the Court of First Instance
considered whether the considerations on which the contested decision was based were capable of justifying the Commission’s
finding in that decision that the markets in question were not sufficiently transparent to allow a collective dominant position.

–       Arguments of the parties

38      By their third ground of appeal, the appellants maintain that the Court of First Instance committed an error of law by applying
an incorrect and excessive standard of proof as regards merger clearance decisions. In the second part of that ground, the
appellants submit that the Court of First Instance misconstrued the burden and standard of proof which applies to those decisions.

39      According to the appellants, since it is for the Commission to substantiate a decision prohibiting a concentration, where
it has not been able to collect evidence which meets the high standard set by the Community judicature to justify such a prohibition,
particularly where the Commission is pursuing a theory of collective dominance, it must approve the proposed concentration.
It is clear, in particular, from Article 10(6) of the Regulation that if the Commission is unable to substantiate its theory
of competitive harm on the basis of convincing evidence, the scheme of the Regulation dictates that it must approve the concentration.

40      The appellants also maintain in that regard that the Court of First Instance committed an error of law in failing to recognise
that the Commission is obliged to satisfy a higher standard of proof when a concentration is prohibited than when such a concentration
is approved, since a prohibition represents a serious limitation of the commercial freedom of the notifying parties and since
concentrations should benefit from a presumption that they are compatible with the common market. It is clear from the case-law
that the Commission must prove that a decision prohibiting a concentration is well founded in accordance with a standard which
is stricter than one based on the mere balancing of probabilities and, consequently, that the Commission is not subject to
the same burden and standard of proof in the case of an approval decision as it is in the case of a prohibition decision.
Under a stricter standard than the mere balancing of probabilities, the Commission is, in reality, required only to prove
that a decision prohibiting a concentration is well founded. According to the appellants, the failure to accept such an ‘asymmetric’
standard of proof permeates the assessment by the Court of First Instance of the contested decision and of the evidence on
which the Commission relied.

41      The appellants go on to submit that, as a result, the Court of First Instance committed an error of law in requiring the Commission
to prove the absence of transparency in the recorded music market, when it should have examined whether, at the date of the
contested decision, there was sufficient evidence to prove to the requisite legal standard that that transparency existed.
That error vitiates the whole of the judgment under appeal and, in particular, in various respects described in detail in
the appeal, paragraphs 381 to 387, 389, 420, 428, 429 and 433.

42      According to Impala, to follow the appellants’ line of argument in support of the second part of the third ground of appeal
and to accept that there is a presumption in favour of the approval of concentrations could have grave repercussions for the
merger control regime, such as the risk of abuse of the system. That line of argument ignores the delicate balance created
by the Community legislation on merger control between private and public interests and the symmetrical double obligation
imposed on the Commission to prohibit mergers which are incompatible with the common market and to approve those that are
compatible with it. The standard of proof required in that regard is that of the balance of probabilities and it is for the
Commission to demonstrate where the balance falls. Impala also submits that the Court of First Instance concluded that the
Commission had found a large body of convincing evidence showing that there was transparency on the markets concerned, but
that it had ultimately decided that there was not sufficient transparency on the basis of ‘less transparent’ campaign discounts.
The Court of First Instance also found that the evidence that was supposed to establish that insufficiency of transparency
did not support it.

43      Impala also considers that in putting forward the arguments referred to in paragraph 41 of this judgment the appellants appear
to be inviting the Court to reopen the findings of fact made by the Court of First Instance.

–       Findings of the Court

44      As a preliminary remark, it is clear from the Court’s case-law that an alleged failure to have regard to the rules of evidence
is a question of law, which is admissible in an appeal (see, to that effect, Case C-199/92 P *Hüls* v *Commission* [1999] ECR I‐4287, paragraph 65, and Joined Cases C‐403/04 P and C‐405/04 P *Sumitomo Metal Industries and Nippon Steel* v *Commission* [2007] ECR I‐729, paragraph 40). Thus, in so far as Impala, under its general plea of inadmissibility, specifically argues
that the third ground of appeal is inadmissible in its entirety, that argument cannot be accepted.

45      As regards the substance, as Impala points out, at the heart of the second part of the third ground of appeal is the premiss
that the standard of proof will differ according to whether a decision approving a concentration or a decision prohibiting
a concentration is involved. In this connection, it is common ground between the parties that in the judgment under appeal
the Court of First Instance applied the same standard of proof to the contested decision – an approval decision – as that
which it would have applied to a prohibition decision.

46      In that regard, it should be noted at the outset that there is nothing in Article 2(2) or (3) of the Regulation which states
that it imposes different standards of proof in relation to decisions approving a concentration, on the one hand, and decisions
prohibiting a concentration, on the other.

47      Thus, as the Court has, in substance, already held, the prospective analysis called for in relation to the control of concentrations,
which consists of an examination of how a concentration might alter the factors determining the state of competition on a
given market in order to establish whether it would give rise to a significant impediment to effective competition, makes
it necessary to envisage various chains of cause and effect with a view to ascertaining which of them is the most likely (see,
to that effect, Case C‐12/03 P *Commission* v *Tetra Laval* [2005] ECR I‐987, paragraph 43).

48      Contrary to what the appellants submit, it cannot therefore be inferred from the Regulation that there is a general presumption
that a notified concentration is compatible with, or incompatible with, the common market.

49      That interpretation of the Regulation is not invalidated by Article 10(6), which provides that a notified concentration is
to be deemed compatible with the common market where the Commission has not taken a decision on the compatibility of that
concentration within the prescribed period. That provision is a specific expression of the need for speed, which characterises
the general scheme of the Regulation and which requires the Commission to comply with strict time-limits for the adoption
of the final decision (see, in that regard, Case C‐202/06 P *Cementbouw Handel & Industrie* v *Commission* [2007] ECR I‐0000, paragraph 39). It is, however, an exception to the general scheme of the Regulation, which is laid down
in particular in Articles 6(1) and 8(1), according to which the Commission is to rule expressly on the concentrations which
are notified to it.

50      Furthermore, it is true that, as is apparent from the Court’s case-law, the decisions of the Commission as to the compatibility
of concentrations with the common market must be supported by a sufficiently cogent and consistent body of evidence (see,
to that effect, Joined Cases C‐68/94 and C‐30/95 *France and Others*v *Commission*[1998] ECR I‐1375, ‘*Kali & Salz*’, paragraph 228) and that in the context of the analysis of a ‘conglomerate-type’ concentration the quality of the evidence
produced by the Commission in order to establish that it is necessary to adopt a decision declaring the concentration incompatible
with the common market is particularly important (see *Commission* v *Tetra Laval*, paragraph 44).

51      However, it cannot be deduced from that that the Commission must, particularly where it pursues a theory of collective dominance,
comply with a higher standard of proof in relation to decisions prohibiting concentrations than in relation to decisions approving
them. That case-law merely reflects the essential function of evidence, which is to establish convincingly the merits of an
argument or, as in the case of the control of concentrations, to support the conclusions underpinning the Commission’s decisions
(see, to that effect, *Commission* v *Tetra Laval*, paragraphs 41 and 44). Furthermore, the fact that an issue of collective dominance does, or does not, arise, cannot of itself
have an impact on the standard of proof which applies. In that regard, the inherent complexity of a theory of competitive
harm put forward in relation to a notified concentration is a factor which must be taken into account when assessing the plausibility
of the various consequences such a concentration may have, in order to identify those which are most likely to arise, but
such complexity does not, of itself, have an impact on the standard of proof which is required.

52      It follows that, where it has been notified of a proposed concentration pursuant to the Regulation, the Commission is, in
principle, required to adopt a position, either in the sense of approving or of prohibiting the concentration, in accordance
with its assessment of the economic outcome attributable to the concentration which is most likely to ensue.

53      The appellants are accordingly incorrect in maintaining that, since it was a decision approving a concentration that was at
issue, the Court of First Instance should have considered only whether the Commission could, by applying a particularly high
standard of proof, have prohibited that concentration. Consequently, without it being necessary to adopt a position on the
admissibility of the specific criticisms relating to the paragraphs of the judgment under appeal listed in paragraph 41 of
this judgment, it must be held that since the premiss underlying those criticisms is groundless, they cannot, in any event,
be accepted.

54      In the light of the above, the second part of the third ground of appeal must be rejected.

The first ground of appeal, alleging an error of law in that the Court of First Instance relied on the statement of objections
as a benchmark for its review of the substance of the contested decision

–       The judgment under appeal

55      In a number of passages in the judgment under appeal, among others, in paragraphs 379, 424 and 446, the Court of First Instance
referred to the statement of objections in order to support its reasoning, both as regards the plea alleging inadequate reasoning
in the contested decision and as regards the argument alleging manifest errors of assessment which vitiated that decision.

56      In its examination of the plea alleging insufficient reasoning in the contested decision, the Court of First Instance observed
in particular as follows:

‘282 The Court must examine, first of all, the impact of the circumstance, emphasised by [Impala], that the Commission had concluded
emphatically in the statement of objections that the concentration was incompatible with the common market on the ground,
in particular, that a collective dominant position existed before the proposed concentration and that the market for recorded
music was transparent and particularly conducive to coordination.

283      This fundamental U-turn in the Commission’s position may indeed appear surprising, particularly in view of the late stage
at which it was made. In effect, as may be seen from the case-file and from the oral argument before the Court, throughout
the administrative procedure the Commission considered, on the basis of all the information which it had received, during
an investigation lasting five months, both from the various operators on the market and from the parties to the concentration,
that the market was sufficiently transparent to allow tacit collusion on prices, and that it was only in the wake of the arguments
submitted by the parties to the concentration, assisted by their economic adviser, at the hearing on [14] and [15] June 2004
that, without carrying out any fresh market investigations, it adopted the opposite position and, on 1 July 2004, sent the
draft decision to the Advisory Committee.

284      However, as the Commission correctly submits, it follows from the case-law ([Joined Cases 142/84 and 156/84] [*British American Tobacco*]*and Reynolds*[*Industries*] v *Commission*, [[1987] ECR 4487]) that, when the Commission rejects an application under Article 3 of Council Regulation No 17 of 6 February
1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-62, p. 17), it
is sufficient for it to set out the reasons why it did not consider it possible to show the existence of an infringement of
the competition rules, but it is not obliged to explain any differences by comparison with the statement of objections, since
that is a preparatory document containing assessments which are purely provisional in nature and are intended to define the
scope of the administrative procedure vis-à-vis the undertakings forming the subject of that procedure, or to discuss all
the points of fact and of law dealt with during the administrative procedure. In [Joined Cases 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] *Aalborg Portland and Others*v *Commission*[[2004] ECR I-123], the Court of Justice referred to the provisional nature of a statement of objections and to the Commission’s
obligation to take into account the elements resulting from the administrative procedure, in order, in particular, to drop
any objections which may have proved unfounded.

285      Admittedly, that case-law was developed in respect of proceedings for the application of Articles 81 EC and 82 EC and not
in the specific field of the control of concentrations, where the need to observe the mandatory time-limits governing the
adoption of decisions by the Commission does not allow it to extend its investigation, thus reducing the likelihood that the
Commission will fundamentally alter its position as the administrative procedure advances. In its final observations, moreover,
the Commission emphasised that the measures of investigation carried out after the hearing consisted essentially in consulting
the operators on the market concerning the proposed commitments and did not deal with the objections raised against the notified
concentration. However, the fact remains that the statement of objections is merely a preparatory document and that the final
decision must be based solely on all the circumstances and evidence relevant for the purpose of the assessment of the effects
which the proposed concentration will have on competition in the reference markets. It follows that the mere fact that the
Commission did not explain in the body of the decision the change in its position by comparison with that set out in the statement
of objections cannot as such constitute a lack of, or an insufficient, statement of reasons.’

–       Arguments of the parties

57      The appellants claim that the Court of First Instance committed an error of law in using the statement of objections as a
benchmark for evaluating the substance of the contested decision, in contravention of the rights of the defence.

58      In those circumstances, the appellants take the view that the comparison made by the Court of First Instance between the contested
decision and the provisional findings of the Commission contained in the statement of objections cannot support the conclusions
reached in the judgment under appeal as regards the reasoning of the contested decision and the Commission’s findings in it.
They cite in that regard paragraphs 300, 302 and 308 of the judgment under appeal as regards the conclusions of the Court
of First Instance in relation to the reasoning of the contested decision. In addition, as regards the examination by the Court
of First Instance of the arguments based on manifest errors of assessment, the appellants criticise in their appeal paragraphs
338, 339, 341, 362, 378, 379, 398, 402, 409, 419, 424, 446, 447, 451, 456, 467, 491, 532 and 538 of the judgment.

59      In support of the appellants in relation to this ground of appeal, the Commission argues that in much of the judgment under
appeal the Court of First Instance – contrary to the case-law cited by that court itself in paragraph 284 of the judgment,
to which it paid only lip service – did not examine the contested decision on its own merits as regards the question whether
it was adequately reasoned and, as regards the plea of substantive error, the question whether that decision contains errors
of fact or manifest errors of assessment, but instead focused in its judgment on the question whether the statement of objections
was shown to be unfounded. Thus, according to the Commission, since certain facts were not mentioned in the statement of objections,
the Court of First Instance inferred from that that they could not be important for the assessment of the consequences of
the concentration in general. Moreover, whereas the Commission set out certain findings in the contested decision that were
expressed in a less unqualified manner in the statement of objections, the Court of First Instance took as a basis for its
review the assessment made in the statement of objections.

60      Impala argues that the Court of First Instance merely mentioned extracts from the statement of objections in order to emphasise
inherent inconsistencies in the contested decision itself and the lack of underlying support for the findings set out in it.
The Court of First Instance expressly recognised that the statement of objections is a preparatory document, that its findings
are purely provisional and that the Commission does not have to explain differences between that statement and the contested
decision.

–       Findings of the Court

61      It is apparent from the Court’s case-law that the right to a fair hearing, which is a fundamental principle of Community law
and forms, in particular, part of the rights of the defence, requires that the undertaking concerned must have been afforded
the opportunity, during the administrative procedure, to make known its views on the truth and relevance of the facts and
circumstances alleged and on the documents used by the Commission to support its claim that there has been an infringement
of the EC Treaty (see inter alia, to that effect, Case 17/74 *Transocean Marine Paint Association* v *Commission* [1974] ECR 1063, paragraph 15; Joined Cases 100/80 to 103/80 *Musique diffusion française and Others*v *Commission* [1983] ECR 1825, paragraph 10; *Kali & Salz*, paragraph 174; and *Aalborg Portland and Others*v *Commission*, paragraph 66).

62      For procedures for the control of concentrations governed by the Regulation, that principle is laid down in the second sentence
of Article 18(3) and, in more detail, in Article 13(2) of the Implementing Regulation. The latter in substance requires, among
other things, that written notice be given to the notifying parties of the Commission’s objections, with an indication to
those parties of the period within which they may inform the Commission of their views in writing.

63      It follows, by analogy with the case-law on Articles 81 EC and 82 EC, that the statement of objections is a procedural and
preparatory document which, in order to ensure that the rights of the defence may be exercised effectively, delimits the scope
of the administrative procedure initiated by the Commission, thereby preventing the latter from relying on other objections
in its decision terminating the procedure in question (see, in particular, the order in Joined Cases 142/84 and 156/84 *British American Tobacco and Reynolds Industries*v *Commission* [1986] ECR 1899, paragraphs 13 and 14). It is therefore inherent in the nature of the statement of objections that it is
provisional and subject to amendments to be made by the Commission in its further assessment on the basis of the observations
submitted to it by the parties and subsequent findings of fact (see, to that effect, *SGL Carbon* v *Commission*, paragraph 62). The Commission must take into account the factors emerging from the whole of the administrative procedure,
in order either to abandon such objections as have been shown to be unfounded or to amend and supplement its arguments, both
in fact and in law, in support of the objections which it maintains. Thus, the statement of objections does not prevent the
Commission from altering its standpoint in favour of the undertakings concerned (see the order in *British American Tobacco and Reynolds Industries*v *Commission*, paragraph 13).

64      It follows that the Commission is not obliged to maintain the factual or legal assessments set forth in that document. On
the contrary, it must give as reasons for its ultimate decision its final assessments based on the situation existing at the
time the formal proceedings are closed (see, by way of analogy, the order in *British American Tobacco and Reynolds Industries*v *Commission*, paragraph 15).

65      Furthermore, the Commission is not obliged to explain any differences with respect to its provisional assessments set out
in the statement of objections (see, to that effect, the order in *British American Tobacco and Reynolds Industries*v *Commission*, paragraph 15, and the judgment in *British American Tobacco and Reynolds Industries* v *Commission*, paragraph 70).

66      The fact that the Commission is, by contrast to the position under Articles 81 EC and 82 EC, subject to strict time-limits,
has no effect on the provisional nature of the statement of objections. The effective exercise of the rights of the defence
requires that the arguments of the parties to a proposed concentration be taken into account in proceedings for the control
of concentrations in the same way as the arguments of the parties affected by proceedings initiated under Articles 81 EC or 82
EC.

67      It is true that the Court of First Instance expressly recognised, in particular in paragraphs 284 and 285 of the judgment
under appeal, the preparatory nature of the statement of objections, including where proceedings for the control of concentrations
are involved. It also acknowledged that the Commission is not, in accordance with the case-law relating to Articles 81 EC
and 82 EC, obliged to explain any differences by comparison with the statement of objections.

68      However, having regard to the line of argument of the appellants and of the Commission set out in paragraphs 58 and 59 of
this judgment, it is necessary to examine the criticisms made by them in relation to a series of specific references to the
statement of objections made by the Court of First Instance in its examination of the validity of the contested decision.

69      In that regard, it is clear from the case-law that while, in the context of the control of concentrations, a field in which
the Commission has a margin of assessment with regard to economic matters, review by the Court of First Instance is limited
to establishing whether the evidence relied on is factually accurate and to establishing the absence of a manifest error of
assessment, it none the less remains the case that the correctness, completeness and reliability of the facts on which a decision
is based may be the subject of judicial review (see, to that effect, *Commission*v *Tetra Laval*, paragraph 39, and Case C-525/04 P *Spain*v *Lenzing*[2007] ECR I-0000, paragraphs 56 and 57). Indeed, that is one of the ways in which the Community judicature can verify whether
the factual and legal elements upon which the exercise of the power of assessment depends were present (see, to that effect,
Case C‐269/90 *Technische Universität München* [1991] ECR I‐5469, paragraph 14). It follows that notwithstanding the preparatory and provisional nature of the statement
of objections and despite the fact that the Commission is not obliged to explain any differences by comparison with the statement
of objections, the Court of First Instance is not necessarily precluded from using the statement of objections in order to
interpret a decision of the Commission, particularly as regards the examination of its factual basis.

70      Thus, for example, the references to the statement of objections made by the Court of First Instance in paragraphs 300, 302
and 308 of the judgment under appeal when reaching its findings in relation to the reasoning of the contested decision were,
as the Advocate General pointed out in substance in points 165 and 166 of her Opinion, made for purely illustrative purposes,
or simply for the sake of completeness. The same applies to certain of the paragraphs of the judgment cited by the appellants
which concern the evaluation by the Court of First Instance of the arguments alleging manifest errors of assessment, namely
paragraphs 338, 339, 341, 362, 402, 456, 467, 532 and 538 of the judgment under appeal, which serve merely to illustrate and
to supplement what the Court of First Instance had, in any event, already directly deduced from the contested decision.

71      However, some of the references in the judgment under appeal to the statement of objections show that, notwithstanding the
position it itself adopted as to the provisional nature of that statement, the Court of First Instance treated what, in paragraph
410 of the judgment, it termed ‘findings of fact made previously’ in that statement as being more reliable and more conclusive
than the findings set out in the contested decision itself.

72      The Court of First Instance, in effect, relied in that regard on a distinction between those ‘findings of fact made previously’,
on the one hand, and ‘assessments’, on the other, which could, in its view, more legitimately be modified. In particular,
in paragraph 379 of the judgment under appeal, the Court of First Instance classified the statement in the statement of objections
that ‘there is sufficient evidence that the majors are aware of each other’s commercial terms’ as not being ‘an assessment
by the Commission that might be modified, but rather a finding of fact resulting from its investigation’. That statement by
the Court of First Instance should be understood in the light of other statements made previously in the judgment under appeal.
Thus, in paragraph 335 of the judgment, the Court of First Instance stated, among other things, that ‘the findings set out
in the [contested decision] must be compatible with the findings of fact made in the statement of objections, in so far as
it is not established that the latter findings were incorrect’. In addition, in paragraph 378 of the judgment, the Court of
First Instance stated that ‘the conclusions drawn from [the evidence as mentioned in the contested decision] are also markedly
different from the findings made in the statement of objections’.

73      Thus, the Court of First Instance did not merely use the statement of objections as a basis for verifying the correctness,
completeness and reliability of the factual material which underpinned the contested decision. It treated a particular category
of conclusions set out in that statement as established, whereas those conclusions could, however, only be considered as being
provisional.

74      That conception of the statement of objections can also be seen in other paragraphs of the judgment under appeal. Thus, in
paragraphs 409 and 410 of the judgment, the Court of First Instance criticised the fact that the Commission did not refute
the ‘findings of fact made previously’ in the statement of objections. In addition, in paragraph 424 of the judgment, the
appellants and the Commission were criticised for not having asserted, ‘still less demonstrated’, that a ‘finding’ in the
statement of objections was incorrect. In paragraph 446 of the judgment under appeal, it was similarly indicated that ‘the
observation that there was no evidence that discounts significantly affected prices constitutes a finding of fact rather than
an assessment’. Moreover, in paragraphs 398, 419, 447 and 451 of the judgment, the Commission was, in essence, criticised
for having relied to a considerable extent, for the purposes of the contested decision, on the impact of ‘campaign discounts’,
whereas, as the Court of First Instance indicated in paragraph 447 of the judgment, the Commission ‘did not even consider
it necessary to mention [those] discounts in the statement of objections’.

75      As the Commission points out, it can happen that, in their reply to the statement of objections, the notifying parties will
supplement or clarify their ‘case’ regarding the functioning of the market or markets in question in the light of that statement,
so that new elements may be added or facts previously examined by the Commission may be put in an entirely different light.
In those circumstances, even if the lack of justification for certain of the individual findings of fact provisionally made
by the Commission in the statement of objections is not established, the Commission’s evaluation of those findings in that
new context may be radically different. In the judgment under appeal, it appears that the Court of First Instance, by focusing
on the discrepancies between the contested decision, which was the subject of the action brought before it, and the ‘findings
of fact previously made’ in the statement of objections, excluded that possibility. As the Commission argues, the approach
adopted by the Court of First Instance in some paragraphs of the judgment under appeal appears to assume that the Commission’s
provisional conclusions in the statement of objections are invariably based on unequivocal evidence. Apart, possibly, from
non-controversial elements which, for example, by reason of their empirical and verifiable nature are obvious to such a degree
that they cannot be contested, it should not be assumed that assessments made in a statement of objections cannot be modified
in the light of the replies to such a statement. Furthermore, even if it were accepted that the Court of First Instance was
entitled to make a distinction between the findings of fact and the assessments made in the statement of objections, it must
be held that in paragraphs 379 and 446 of the judgment under appeal, it categorised as findings of fact certain complex assessments
which could not in any event be considered as findings of fact that could not be modified.

76      In those circumstances, it must be held that the Court of First Instance committed an error of law in so far as, in its examination
of the line of argument alleging the existence of manifest errors of assessment, it treated certain elements in the statement
of objections as being established, without demonstrating the reasons for which, notwithstanding the final position adopted
by the Commission in the contested decision, those elements should be considered as being established beyond dispute.

77      None the less, that error is not of itself capable of undermining the finding of the Court of First Instance in paragraph
377 of the judgment under appeal that ‘the evidence, as mentioned in the [contested decision], does not support the conclusions
drawn from it’. Consequently, it is not of itself capable of leading to the setting aside of the judgment under appeal. Further
grounds of appeal thus fall to be examined.

The second ground of appeal, together with the first part of the third ground, alleging errors of law in that the Court of
First Instance required the Commission to undertake new market investigations following the response to the statement of objections
and applied an unduly high standard of proof to the evidence submitted in response to the statement of objections

–       The judgment under appeal

78      In its examination of the plea alleging manifest errors of assessment in relation to the issue of market transparency, the
Court of First Instance stated in paragraph 414 of the judgment under appeal, in particular, that ‘the parties to the concentration
cannot wait until the last minute before submitting evidence to the Commission with a view to refuting objections raised at
the proper time by the Commission, since the Commission would then no longer be in a position to carry out the necessary investigations.
In such a hypothetical situation, that evidence must at the very least be particularly reliable, objective, relevant and cogent
if it is to be capable of validly refuting the objections raised by the Commission’.

79      The Court of First Instance also held, in paragraph 415 of the judgment under appeal, that the Commission cannot ‘go so far
as to delegate, without supervision, responsibility for conducting certain parts of the investigation to the parties to the
concentration, in particular where, as in the present case, those aspects constitute the crucial element on which the [contested
decision] is based and where the data and assessments submitted by the parties to the concentration are diametrically opposite
to the information gathered by the Commission during its investigation and also to the conclusions which it drew from that
information’.

80      In addition, in a number of places in the judgment under appeal, among others in paragraphs 398, 428 and 451, the Court of
First Instance stated that the Commission did not, following the response of the parties to the concentration to the statement
of objections, carry out any new market investigations in order to test the validity of its altered assessment of the proposed
concentration.

–       Arguments of the parties

81      By the second ground of appeal, the appellants claim that the Court of First Instance committed an error of law in holding,
in essence, that the Commission is required to undertake new market investigations following the response to the statement
of objections. Its finding that the Commission committed errors of assessment and of reasoning because it did not undertake
any new investigations is accordingly without foundation.

82      By the first part of the third ground, which should be considered together with the second ground, the appellants maintain
that the Court of First Instance in effect suggested in paragraph 414 of the judgment under appeal that the exculpatory evidence
submitted by the notifying parties in response to the statement of objections is subject to a higher standard of proof than
that applied to the evidence cited by the Commission in the statement of objections.

83      In support of the appellants, the Commission argues, first, that in view of the tight deadlines that it faces under the Regulation
it must be able to rely on the evidence submitted by the appellants in the reply to the statement of objections, since that
reply forms part of the formal proceedings. Like the appellants, it observes that the Regulation provides for the imposition
of fines or periodic penalty payments where incorrect or misleading information is submitted and gives the Commission the
power to revoke a decision based on incorrect information for which one of the undertakings is responsible or which has been
obtained by deceit.

84      Secondly, the Commission considers that paragraph 414 of the judgment under appeal, which sets out the approach followed by
the Court of First Instance in paragraphs 415 to 457 of the judgment to a large body of evidence, reveals a number of related
errors of law concerning, among other things, the probative value of the evidence submitted in response to the statement of
objections.

85      Impala submits that the Court of First Instance took into account the strict timetables laid down by the Regulation. It merely
found as a fact that the Commission had failed to carry out any market investigations whatsoever, without stating whether,
after the hearing, market investigations should have been carried out. According to Impala, the Commission should have investigated
the problem of transparency and discounts before issuing the statement of objections.

86      As regards the first part of the third ground of appeal, Impala submits that it is clear from paragraph 414 of the judgment
under appeal that the Court of First Instance referred to a hypothetical situation in which the parties to a concentration
provide evidence at the very last minute, giving the Commission no opportunity to carry out the necessary investigations.
It is also clear, according to Impala, from that paragraph of the judgment under appeal that it must be inferred that the
Court of First Instance considered, not that the Commission should have investigated those matters after the hearing, but
that it should have done so earlier in the formal proceedings.

–       Findings of the Court

87      It is necessary at the outset to reject Impala’s argument set out in paragraph 86 of this judgment that paragraph 414 of the
judgment under appeal refers to a hypothetical situation. Such an interpretation of that paragraph is refuted by its very
wording, which makes it clear that the observations of the Court of First Instance that are criticised in the first part of
the third ground of appeal referred to the procedure leading to the adoption of the contested decision.

88      Next, as is clear from paragraphs 61 and 62 of this judgment, compliance with the rights of the defence prior to the adoption
of any decision which may impact adversely on the undertakings concerned is imperative in procedures for the control of concentrations.

89      Accordingly, the notifying parties cannot, as a rule, be criticised for putting forward certain – potentially decisive – arguments,
facts or evidence only in their arguments in reply to the statement of objections. It is only with that statement that the
parties to the concentration can obtain detailed indications as to the reservations of the Commission in relation to their
proposed concentration and as to the arguments and evidence on which it relies in that regard. As is apparent from paragraph
62 of this judgment, it flows from the notifying undertakings’ rights of defence laid down in the second sentence of Article
18(3) of the Regulation and in Article 13(2) of the Implementing Regulation that those undertakings have the right to submit
in their written and oral hearing following receipt of the statement of objections all material which they consider capable
of refuting the Commission’s objections and of leading it to approve their proposed concentration. Contrary to what the Court
of First Instance suggests, in particular in paragraph 414 of the judgment under appeal, a line of argument put forward in
reply to the statement of objections forms part of the investigation to be undertaken in the formal proceedings. Such a line
of argument is not submitted out of time, but at the time laid down for that purpose in the procedure for the control of concentrations.

90      Furthermore, as is apparent from paragraph 49 of this judgment, the need for speed which characterises the general scheme
of the Regulation requires the Commission to comply with strict time-limits for the adoption of the final decision.

91      In those circumstances, having regard in particular to the time constraints which arise by virtue of the procedural time-limits
laid down by the Regulation, the Commission cannot, in principle, be required, in every individual case, to send, following
communication of the objections and after hearing the undertakings concerned, requests for extensive information to numerous
economic operators shortly before transmitting its draft decision to the Advisory Committee on concentrations, pursuant to
Article 19 of the Regulation.

92      In addition, as the Commission observes, the reply to the statement of objections may concentrate on the elements which the
notifying parties consider to be crucial to the outcome of the formal proceedings. Such elements may not have been regarded
as crucial in the statement of objections. A failure to take those elements into account may be a component of the parties’
criticisms of the Commission’s preliminary assessment. Having regard to the requirements of the rights of the defence, the
arguments of the notifying parties submitted in reply to the statement of objections cannot be subject to more demanding standards
as to their probative value and their cogency than those imposed in relation to the arguments of competitors, customers and
other third parties questioned by the Commission in the course of the administrative procedure or in the light of information
provided by the notifying undertakings at a previous stage of the Commission’s investigation.

93      Furthermore, when the Commission examines in its decision the arguments in defence submitted by the notifying undertakings
and takes the opportunity to reconsider its provisional findings in the statement of objections, with a view to possibly departing
from them, it does not ‘delegate’ the investigation to those undertakings. It should be pointed out in that regard that Articles
14 and 15 of the Regulation provide for the imposition of fines or periodic penalty payments where incorrect or misleading
information is submitted and that Article 8(5)(a) of the Regulation gives the Commission the power to revoke a decision which
is based on incorrect information for which one of the undertakings concerned is responsible or which has been obtained by
deceit.

94      It is true that the Commission is required to examine carefully the arguments of the parties to the concentration as regards
their exactitude, completeness and cogency and to disregard them where justified doubts arise. It is also true that, under
Article 3(1) of the Implementing Regulation, the notification of the proposed concentration must contain information that
is correct and complete and that, in accordance with Article 11 of the Regulation, the notifying parties are bound to provide
a response to any requests for information by the Commission which is complete, correct and submitted within the periods laid
down, failing which, where the information in question was requested by decision, the Commission may, by virtue of Articles
14 and 15 of the Regulation, impose fines and periodic penalty payments. None the less, it remains the case that the Commission
must, at the stage of the reply to the statement of objections, if it is not to undermine the rights of the defence of the
notifying parties, apply the same criteria as those applied for the purposes of the examination of the arguments of third
parties or those adopted at an earlier stage of its investigation, while being entitled to draw the appropriate consequences
in the event that it should transpire at a very advanced stage of the procedure that the notification concerned does not comply
with the requirements of Article 3(1) of the Implementing Regulation.

95      It follows that the Court of First Instance committed an error of law, first, in requiring, in essence, that the Commission
apply particularly demanding requirements as regards the probative character of the evidence and arguments put forward by
the notifying parties in reply to the statement of objections and, secondly, in finding that the lack of additional market
investigations after communication of the statement of objections and the adoption by the Commission of the appellants’ arguments
in defence amounted to an unlawful delegation of the investigation to the parties to the concentration.

96      Nevertheless, that error of law does not vitiate the whole of the judgment under appeal, in particular that part of it which
relates to the inadequacies of reasoning in the contested decision and the finding of the Court of First Instance in paragraph
377 of the judgment under appeal that ‘the evidence, as mentioned in the [contested decision], does not support the conclusions
drawn from it’. Further grounds of appeal thus fall to be examined.

The seventh ground of appeal, alleging an error of law in that the Court of First Instance relied on evidence that was not
disclosed to the parties to the concentration

–       The judgment under appeal

97      In paragraph 352 of the judgment under appeal, when examining price transparency and, in particular, the possibility that
the retail market was monitored by the majors through weekly reports drawn up by their sales representatives, the Court of
First Instance referred to a finding of the Commission in the contested decision that the appellants had set up a system of
weekly reports which also included information on competitors. In paragraphs 356 to 360 of the judgment under appeal, the
Court of First Instance referred additionally in that regard to a number of documents submitted by Impala, which were classified
as confidential. Accordingly, paragraphs 356 to 360 of the version of the judgment under appeal published in the European
Court Reports are simply marked ‘[*confidential*]’. Reference is also made to the weekly monitoring reports in paragraphs 389 and 451 of the judgment under appeal, with paragraph
389 containing a section marked ‘[*confidential*]’ in the version published in the European Court Reports.

–       Arguments of the parties

98      The appellants maintain that the Court of First Instance committed an error of law in relying, in paragraphs 356 to 360 of
the judgment under appeal, on evidence that was not before the Commission when the contested decision was adopted and which
had never been disclosed to them. According to the appellants, it is hard to imagine why the Court of First Instance would
have discussed those documents over five paragraphs of its judgment and referred to them on two other occasions, in paragraphs
389 and 451 of the judgment under appeal, if it did not consider them relevant to the outcome of its review.

99      Impala submits that the information in question was mentioned during the hearing of 14 and 15 June 2004 in the presence of
the parties and was provided to the Commission on a confidential basis after the hearing. According to Impala, the appellants
were accordingly aware, as a result of the hearing, that that information concerned their own price monitoring practices in
France and they gave ample comments on that aspect of the pricing system during both the administrative procedure and the
proceedings before the Court of First Instance. In any event, according to Impala, even if the appellants’ complaint underlying
this ground of appeal were correct, it cannot be taken into account since that evidence did not influence the outcome of the
judgment under appeal.

–       Findings of the Court

100    It is necessary, first of all, to reject Impala’s argument set out in paragraph 99 of this judgment that the appellants were
adequately informed of the content of the documents forming the subject-matter of paragraphs 356 to 360 of the judgment under
appeal at the hearing before the Commission. Impala’s written response to the appeal states that ‘the information was mentioned
during the ... hearing ... and was then provided to the Commission on a confidential basis post the hearing’. In those circumstances,
it cannot be claimed that the content of those documents was disclosed in good time and in a manner which was sufficiently
precise and clear to allow the appellants, if necessary, to reply effectively to the inferences which Impala drew from those
documents before the Commission.

101    By virtue of Article 18(3) of the Regulation, the Commission may base its decisions taken under the Regulation only on objections
on which the parties have been able to submit their observations. It follows that, since the appellants were unable to acquaint
themselves in sufficient time with the tenor of the confidential documents in question, the Commission could not rely on those
documents for the purposes of the contested decision.

102    The Court of First Instance therefore committed an error of law in relying, as a basis for the annulment of the contested
decision, on documents submitted by Impala on a confidential basis, since the Commission itself could not have used them for
the purposes of adopting that decision by reason of their confidential nature.

103    Without it being necessary to adjudicate on the question whether the taking into account of those documents could have had
an impact on the outcome of the examination by the Court of First Instance of the arguments relating to manifest errors of
assessment on the Commission’s part, it need only be stated that the error of law identified in the seventh ground of appeal
is not, in any event, capable of invalidating the finding of the Court of First Instance in paragraph 325 of the judgment
under appeal that, in substance, the contested decision should be annulled on the ground of its inadequate reasoning. Further
grounds of appeal thus fall to be examined.

The fifth ground of appeal, alleging an error of law in that the Court of First Instance misconstrued the relevant legal criteria
applying to the creation or strengthening of a collective dominant position

–       The judgment under appeal

104    In paragraphs 250 to 254 of the judgment under appeal, the Court of First Instance made the following observations as regards
the concept of a collective dominant position:

‘250 ... The determination of the existence of a collective dominant position must be supported by a series of elements of established
facts, past or present, which show that there is a significant impediment of competition on the market owing to the power
acquired by certain undertakings to adopt together the same course of conduct on that market, to a significant extent, independently
of their competitors, their customers and consumers.

251      It follows that, in the context of the assessment of the existence of a collective dominant position, although the three conditions
defined by the Court of First Instance in [Case T-342/99] *Airtours*v *Commission*[[2002] ECR II-2585], which were inferred from a theoretical analysis of the concept of a collective dominant position, are
indeed also necessary, they may, however, in the appropriate circumstances, be established indirectly on the basis of what
may be a very mixed series of indicia and items of evidence relating to the signs, manifestations and phenomena inherent in
the presence of a collective dominant position.

252      Thus, in particular, close alignment of prices over a long period, especially if they are above a competitive level, together
with other factors typical of a collective dominant position, might, in the absence of an alternative reasonable explanation,
suffice to demonstrate the existence of a collective dominant position, even where there is no firm direct evidence of strong
market transparency, as such transparency may be presumed in such circumstances.

253      It follows that, in the present case, the alignment of prices, both gross and net, over the last six years, even though the
products are not the same (each disc having a different content), and also the fact that they were maintained at such a stable
level, and at a level seen as high in spite of a significant fall in demand, together with other factors (power of the undertakings
in an oligopoly situation, stability of market shares, etc.), as established by the Commission in the [contested decision],
might, in the absence of an alternative explanation, suggest, or constitute an indication, that the alignment of prices is
not the result of the normal play of effective competition and that the market is sufficiently transparent in that it allowed
tacit price coordination.

254      However, as [Impala] has based its line of argument on an incorrect application of the various conditions that must be satisfied
in order for there to be a collective dominant position, as defined in *Airtours*v *Commission* ... and, in particular, the condition relating to market transparency, rather than on the theory that a finding of a common
policy over a long period, together with the presence of a series of other factors characteristic of a collective dominant
position, might, in certain circumstances and in the absence of an alternative explanation, suffice to demonstrate the existence
of a dominant position, as opposed to the creation of such a position, without its being necessary positively to establish
market transparency, the Court will confine itself, in its examination of the pleas in law put forward, to ascertaining that
the [contested decision] properly applied the conditions defined in *Airtours*v *Commission*. Without its even being necessary to consider whether the opposite approach would lead the Court to step outside the framework
of the dispute as defined by the parties, or whether it would merely constitute an application of the law in the context of
a plea raised by [Impala], the Court must follow the approach thus outlined, in view of the *inter partes*principle, since that issue has not been discussed before the Court.’

105    Paragraph 309 of the judgment under appeal reads as follows:

‘Furthermore, it follows from the last sentence of recital 77 to the [contested decision] that discounts are not capable of
really affecting the transparency of the market as regards prices resulting from, in particular, public list prices, since
it is stated that “[i]f a significant deviation from pricing policies was being implemented by the majors through the grant
of discounts, this deviation would have been reflected in their average net prices”.’

106    As regards the question of the impact of variations in discounts on the transparency of the market, the Court of First Instance
stated in particular in paragraph 420 of the judgment under appeal, that ‘as [Impala] observed, the differences in the ranges
of discounts over time could be the result of differences in performance and do not preclude the discounts being based on
a known set of rules’.

107    In paragraph 427 of the judgment under appeal, the Court of First Instance stated that certain evidence on which the Commission
relied ‘do[es] not preclude the possibility that [variations of discount by customer] may, at least for an industry professional,
be explained quite readily on the basis of a number of general or specific rules governing the grant of discounts’.

108    Paragraph 428 of the judgment under appeal reads as follows:

‘Although, as the Commission emphasised, [Impala] admittedly did not explain precisely what those various rules governing
the grant of campaign discounts are, or, according to the Commission, referred to too high a number of such rules, which would
render their application complex and therefore not particularly transparent, the fact remains that, as already stated, the
Commission did not carry out an investigation in the market in that regard or, at least, did not adduce any evidence of the
opacity of campaign discounts, apart from the tables drawn up by the parties to the concentration, which, in addition to their
imperfections, were in any event intended solely to establish the existence of certain variations in campaign discounts but
do not demonstrate that the explanation for those variations might not be more or less readily apparent to an industry professional.
...’

109    In paragraph 429 of the judgment under appeal, the Court of First Instance stated that, ‘although the combination of variables
necessarily has the effect of increasing the hypothetical situations, the Commission has not demonstrated that the exercise
would be rendered excessively difficult for a market professional’.

–       Arguments of the parties

110    The appellants maintain that, in holding that the Commission had committed manifest errors of assessment and had inadequately
reasoned the contested decision as regards market transparency, the Court of First Instance misconstrued the position under
Community law as regards the concept of a collective dominant position. According to the appellants, the test of market transparency
as an indication of a collective dominant position, as laid down by the Court of First Instance in its judgment in *Airtours*v *Commission*, and which the Court of First Instance purported to follow in the judgment under appeal, required the Commission to establish,
first, that the majors had a plausible mechanism for monitoring each other’s net wholesale prices and, secondly, given that
the contested decision was essentially based on the existence of tacit collusion, that the majors had actually applied such
a monitoring mechanism.

111    According to the appellants, the Court of First Instance in practice applied a watered-down test for establishing market transparency,
as is apparent in particular from paragraph 251 of the judgment under appeal, in that it inferred that transparency from a
number of factors which, as a matter of law, are not sufficient to establish the required degree of transparency. In particular,
by ignoring the relevance of discounts in assessing transparency at the level of net wholesale prices, the Court of First
Instance committed an error of law in failing to identify a method by which significant changes to the net wholesale prices
of the other majors could be observed in a sufficiently precise and timely manner to identify deviation from any tacitly agreed
price levels with precision and in good time.

112    According to the appellants, a hypothesis of pre-existing tacit collusion would imply that the appellants and the other majors
had actually monitored their net wholesale prices and had sufficiently precise and timely information regarding the changes
in each other’s net wholesale prices. Neither the Court of First Instance, nor Impala, nor the Commission could identify a
mechanism by which the majors could actually monitor net wholesale prices or prove that such a mechanism had been used.

113    Instead, according to the appellants, the Court of First Instance applied an incorrect test in assessing the degree of transparency
required for a finding of collective dominance on the recorded music market in question. It considered elements that are irrelevant
to the criterion relating to market transparency, while disregarding elements that are clearly pertinent to that issue. In
that last respect, the appellants submit that the Court of First Instance committed errors of law by, in particular:

–        inferring, in paragraph 309 of the judgment under appeal, transparency of discounts from their impact on average net prices;

–        dismissing, in paragraph 429 of the judgment under appeal, the relevance of complex pricing structures when assessing transparency;
and

–        dismissing, in paragraphs 298, 306, 310 and 395 of the judgment under appeal, the relevance of price variations for assessing
transparency.

114    Impala suggests first of all that the fifth ground of appeal represents an attempt by the appellants to reopen the factual
assessments made by the Court of First Instance, rather than alleging errors of law.

115    In the alternative, Impala submits that the Court of First Instance applied the correct test for establishing market transparency
in the judgment under appeal, namely the test laid down in paragraph 62 of that court’s judgment in *Airtours* v *Commission*. In that regard, Impala contends in particular that the only factor that the Commission had found to be ‘less’ transparent
was that of campaign discounts. However, the Court of First Instance found that the underlying evidence on which the Commission
based its finding did not support that finding, despite the Court of First Instance having undertaken an exhaustive examination
of that evidence. The true position is that the fifth ground of appeal does not concern the legal test for market transparency,
but rather the assessment by the Court of First Instance of the factual elements that may establish that transparency. According
to Impala, the judgment under appeal does not misapply the test laid down in paragraph 62 of the judgment of the Court of
First Instance in *Airtours* v *Commission*, since that court neither applied a watered-down test nor did it fail to consider transparency at the required level.

116    Impala also challenges the arguments summarised in paragraph 113 of this judgment.

–       Findings of the Court

117    It is apparent from the Court’s case-law that the question whether the Court of First Instance applied the correct legal standard
when examining the evidence is a question of law, which is amenable, as such, to judicial review on appeal (see *Sumitomo Metal Industries and Nippon Steel*v *Commission*, paragraph 40). In the present case, the arguments of the appellants set out in paragraphs 110 to 112 of this judgment are
accordingly admissible on appeal.

118    As regards the three specific criticisms summarised in paragraph 113 of this judgment, only the second and the third are admissible.
The first of those criticisms does not relate to the relevance of a particular element relied on in order to establish that
a collective dominant position existed, but seeks, in reality, a reappraisal of the facts which, under the settled case-law
referred to in paragraph 29 of this judgment, falls, in principle, outside the jurisdiction of the Court of Justice on appeal
(see also to that effect, by way of analogy, Case C-260/05 P *Sniace* v *Commission* [2007] ECR I-0000, paragraphs 34 and 35). By contrast, the second and third specific criticisms invoke errors of law.

119    As regards the merits of this ground of appeal, it should be noted at the outset that the Court has already held, in substance,
that the concept of a collective dominant position is included in that of ‘dominant position’ within the meaning of Article
2 of the Regulation (see, to that effect, *Kali & Salz*, paragraphs 166 and 178). In that regard, the existence of an agreement or of other links in law between the undertakings
concerned is not essential to a finding of a collective dominant position. Such a finding may be based on other connecting
factors and would depend on an economic assessment and, in particular, on an assessment of the structure of the market in
question (see Joined Cases C-395/96 P and C-396/96 P *Compagnie maritime belge transports and Others*v *Commission* [2000] ECR I‐1365, paragraph 45).

120    In the case of an alleged creation or strengthening of a collective dominant position, the Commission is obliged to assess,
using a prospective analysis of the reference market, whether the concentration which has been referred to it will lead to
a situation in which effective competition in the relevant market is significantly impeded by the undertakings which are parties
to the concentration and one or more other undertakings which together, in particular because of correlative factors which
exist between them, are able to adopt a common policy on the market (see *Kali & Salz*, paragraph 221) in order to profit from a situation of collective economic strength, without actual or potential competitors,
let alone customers or consumers, being able to react effectively.

121    Such correlative factors include, in particular, the relationship of interdependence existing between the parties to a tight
oligopoly within which, on a market with the appropriate characteristics, in particular in terms of market concentration,
transparency and product homogeneity, those parties are in a position to anticipate one another’s behaviour and are therefore
strongly encouraged to align their conduct on the market in such a way as to maximise their joint profits by increasing prices,
reducing output, the choice or quality of goods and services, diminishing innovation or otherwise influencing parameters of
competition. In such a context, each operator is aware that highly competitive action on its part would provoke a reaction
on the part of the others, so that it would derive no benefit from its initiative.

122    A collective dominant position significantly impeding effective competition in the common market or a substantial part of
it may thus arise as the result of a concentration where, in view of the actual characteristics of the relevant market and
of the alteration to those characteristics that the concentration would entail, the latter would make each member of the oligopoly
in question, as it becomes aware of common interests, consider it possible, economically rational, and hence preferable, to
adopt on a lasting basis a common policy on the market with the aim of selling at above competitive prices, without having
to enter into an agreement or resort to a concerted practice within the meaning of Article 81 EC and without any actual or
potential competitors, let alone customers or consumers, being able to react effectively.

123    Such tacit coordination is more likely to emerge if competitors can easily arrive at a common perception as to how the coordination
should work, and, in particular, of the parameters that lend themselves to being a focal point of the proposed coordination.
Unless they can form a shared tacit understanding of the terms of the coordination, competitors might resort to practices
that are prohibited by Article 81 EC in order to be able to adopt a common policy on the market. Moreover, having regard to
the temptation which may exist for each participant in a tacit coordination to depart from it in order to increase its short-term
profit, it is necessary to determine whether such coordination is sustainable. In that regard, the coordinating undertakings
must be able to monitor to a sufficient degree whether the terms of the coordination are being adhered to. There must therefore
be sufficient market transparency for each undertaking concerned to be aware, sufficiently precisely and quickly, of the way
in which the market conduct of each of the other participants in the coordination is evolving. Furthermore, discipline requires
that there be some form of credible deterrent mechanism that can come into play if deviation is detected. In addition, the
reactions of outsiders, such as current or future competitors, and also the reactions of customers, should not be such as
to jeopardise the results expected from the coordination.

124    The conditions laid down by the Court of First Instance in paragraph 62 of its judgment in *Airtours* v *Commission*, which that court concluded, in paragraph 254 of the judgment under appeal, should be applied in the dispute before it, are
not incompatible with the criteria set out in the preceding paragraph of this judgment.

125    In applying those criteria, it is necessary to avoid a mechanical approach involving the separate verification of each of
those criteria taken in isolation, while taking no account of the overall economic mechanism of a hypothetical tacit coordination.

126    In that regard, the assessment of, for example, the transparency of a particular market should not be undertaken in an isolated
and abstract manner, but should be carried out using the mechanism of a hypothetical tacit coordination as a basis. It is
only if such a hypothesis is taken into account that it is possible to ascertain whether any elements of transparency that
may exist on a market are, in fact, capable of facilitating the reaching of a common understanding on the terms of coordination
and/or of allowing the competitors concerned to monitor sufficiently whether the terms of such a common policy are being adhered
to. In that last respect, it is necessary, in order to analyse the sustainability of a purported tacit coordination, to take
into account the monitoring mechanisms that may be available to the participants in the alleged tacit coordination in order
to ascertain whether, as a result of those mechanisms, they are in a position to be aware, sufficiently precisely and quickly,
of the way in which the market conduct of each of the other participants in that coordination is evolving.

127    As regards the present case, the appellants submit that, even though the Court of First Instance stated in paragraph 254 of
the judgment under appeal that it was following the approach adopted in its judgment in *Airtours* v *Commission*, in practice, it committed an error of law in inferring the existence of a sufficient degree of transparency from a number
of factors which were not, however, relevant to a finding of an existing collective dominant position. In that context, the
appellants object in particular to the fact that the Court of First Instance indicated in paragraph 251 of the judgment under
appeal that the conditions laid down in paragraph 62 of the judgment in *Airtours* v *Commission* could ‘in the appropriate circumstances, be established indirectly on the basis of what may be a very mixed series of indicia
and items of evidence relating to the signs, manifestations and phenomena inherent in the presence of a collective dominant
position’.

128    In this regard, as the Commission observed at the hearing, objection cannot be taken to paragraph 251 of itself, since it
constitutes a general statement which reflects the Court of First Instance’s liberty of assessment of different items of evidence.
It is settled case-law that it is, in principle, for the Court of First Instance alone to assess the value to be attached
to the items of evidence adduced before it (see, inter alia, Case C-136/92 P *Commission* v *Brazzelli Lualdi and Others*[1994] ECR I‐1981, paragraph 66, and Case C-237/98 P *Dorsch Consult* v *Council and Commission* [2000] ECR I‐4549, paragraph 50).

129    Similarly, the investigation of a pre-existing collective dominant position based on a series of elements normally considered
to be indicative of the presence or the likelihood of tacit coordination between competitors cannot therefore be considered
to be objectionable of itself. However, as is apparent from paragraph 125 of this judgment, it is essential that such an investigation
be carried out with care and, above all, that it should adopt an approach based on the analysis of such plausible coordination
strategies as may exist in the circumstances.

130    In the present case, the Court of First Instance, before which Impala raised arguments relating, in particular, to the parts
of the contested decision relating to market transparency, did not carry out its analysis of those parts by having regard
to a postulated monitoring mechanism forming part of a plausible theory of tacit coordination.

131    It is true that the Court of First Instance referred in paragraph 420 of the judgment under appeal to the possibility of a
‘known set of rules’ governing the grant of discounts by the majors. However – as the appellants rightly submit in the context
of the second specific criticism mentioned in paragraph 113 of this judgment, which relates to the question whether certain
discount variations established by the Commission in the contested decision were liable to call into question the possibility
of adequate monitoring of mutual compliance with the terms of any tacit coordination there may have been – the Court of First
Instance was content to rely, in paragraphs 427 to 429 of the judgment under appeal, on unsupported assertions relating to
a hypothetical industry professional. In paragraph 428 of the judgment, the Court of First Instance itself acknowledged that
Impala, the applicant before that court, ‘admittedly did not explain precisely what those various rules governing the grant
of campaign discounts are’.

132    It must be pointed out in that regard that Impala represents undertakings which, even if they are not members of the oligopoly
formed by the majors, are active on the same markets. In those circumstances, it is clear that the Court of First Instance
disregarded the fact that the burden of proof was on Impala in relation to the purported qualities of such a hypothetical
‘industry professional’.

133    In the light of the above and without there being any need to adopt a position on the third specific criticism mentioned in
paragraph 113 of this judgment, it must be held that, in misconstruing the principles which should have guided its analysis
of the arguments raised before it concerning market transparency in the context of an allegation of a collective dominant
position, the Court of First Instance committed an error of law.

134    That error vitiates the part of the judgment under appeal which concerns the examination by the Court of First Instance of
the arguments relating to the manifest errors of assessment committed by the Commission, including the finding of that court
in paragraph 377 of the judgment under appeal. However, it is not, of itself, capable of invalidating that court’s finding
in paragraph 325 of the judgment under appeal that, in substance, the contested decision had to be annulled because it was
inadequately reasoned. Further grounds of appeal thus fall to be examined.

The fourth ground of appeal, alleging an error of law in that the Court of First Instance exceeded the scope of its role in
carrying out judicial review

–       The judgment under appeal

135    In a number of paragraphs in the judgment under appeal, for example, in paragraphs 347 and 361, the Court of First Instance
used expressions such as ‘a high level of transparency of prices’ and ‘a high degree of transparency on the market’. Moreover,
in paragraph 299 of the judgment under appeal, the Court of First Instance described the finding in the contested decision
that list prices were ‘rather aligned’ as being ‘a prudent conclusion to say the least, as the alignment was in fact very
marked’. In paragraph 307 of the judgment, the Court of First Instance held that ‘the variation in the general levels of invoice
discounts applied by the parties to the concentration, as referred to at recital 78 to the [contested decision], is very low’.
In paragraph 317 of the judgment under appeal, the Court of First Instance inferred from the contested decision that ‘campaign
discounts have only a limited impact on prices’.

136    In paragraph 425 of the judgment under appeal, the Court of First Instance stated, as regards the contested decision, that
‘the calculation of the differential between minimum and maximum discounts by customer ... made for each of the parties to the
concentration was carried out incorrectly’. In paragraph 427 of the judgment, the Court of First Instance stated that the
data supplied by the parties to the concentration were ‘of doubtful relevance’.

137    In paragraph 434 of the judgment under appeal, the Court of First Instance held, in particular, as follows:

‘... the study drawn up by the economic advisers to the parties to the concentration does not present data that are sufficiently
reliable, relevant and comparable ... While it is indeed probable that the different types of retailer (supermarkets, independents,
specialist chains, etc.) apply different mark-up policies, and that there are differences within each category of operators,
and even differences for each individual operator, according to the types of album or their degree of success, it is very
unlikely, on the other hand, and the study contains no data in that regard, that a retailer will apply a different sales policy
for the same type of album. ...’

–       Arguments of the parties

138    The appellants, supported in that regard by the Commission, submit that the Court of First Instance exceeded the scope of
its role in carrying out judicial review, in breach of Article 230 EC and settled case-law, in substituting its own assessment
for that of the Commission, without proving the existence of manifest errors of assessment vitiating the contested decision
and without asking for a report from an economic expert to be obtained.

139    Moreover, in its examination of the contested decision, the Court of First Instance itself committed manifest errors of assessment
and fundamentally misconstrued the evidence before it as regards essential parts of the case, including in particular the
relevance, the complexity and the opacity of discounts.

140    Furthermore, the appellants consider that in paragraphs 425, 427 and 434 of the judgment under appeal the Court of First Instance
also distorted some of the evidence.

141    Impala considers that this ground of appeal represents, at least to a significant extent, an attempt to reopen the assessment
of the facts by the Court of First Instance, without any proof on the part of the appellants that that court misconstrued
the evidence before it.

142    In the alternative, Impala submits that the Court of First Instance had the relevant case-law concerning the scope of its
role in carrying out review in mind when it considered the contested decision, in view of its reference in paragraph 328 of
the judgment under appeal to paragraph 39 of the judgment in *Commission* v *Tetra Laval*, and that it did not therefore exceed the scope of its role in carrying out judicial review.

–       Findings of the Court

143    It is necessary at the outset to reject Impala’s argument alleging the inadmissibility of the fourth ground of appeal. Contrary
to what Impala contends, by this ground, the appellants do not merely challenge the assessment of the facts at first instance,
but invoke questions of law which are admissible on appeal.

144    As regards the substance, it should first of all be noted that the Commission has a margin of assessment with regard to economic
matters for the purposes of the application of the substantive rules of the Regulation, in particular Article 2. It follows
that the review by the Community judicature of a Commission decision relating to concentrations is confined to ascertaining
that the facts have been accurately stated and that there has been no manifest error of assessment (see *Kali & Salz*, paragraphs 223 and 224, and *Commission* v *Tetra Laval*, paragraph 38).

145    That being so, while the Court of First Instance must not substitute its own economic assessment for that of the Commission
for the purposes of applying the substantive rules of the Regulation, that does not mean that the Community judicature must
refrain from reviewing the Commission’s interpretation of information of an economic nature. Not only must the Community judicature
establish, among other things, whether the evidence relied on is factually accurate, reliable and consistent but also whether
that evidence contains all the information which must be taken into account in order to assess a complex situation and whether
it is capable of substantiating the conclusions drawn from it (see, to that effect, *Commission* v *Tetra Laval*, paragraph 39, and *Spain*v *Lenzing*, paragraphs 56 and 57).

146    Accordingly, as regards the present case, in so far as the Court of First Instance carried out an in-depth examination of
the evidence underlying the contested decision when considering the arguments raised before it, it acted in conformity with
the requirements of the case-law set out in paragraphs 144 and 145 of this judgment.

147    Nevertheless, that finding is not, of itself, sufficient to reject the fourth ground of appeal. As well as the question whether
the Court of First Instance exceeded the scope of its role in carrying out judicial review as regards the intensity of its
review of the factual basis of the contested decision, the appellants also maintain, as is mentioned in paragraph 139 of this
judgment, that, in examining the factors underpinning the contested decision, the Court of First Instance itself committed
manifest errors of assessment and fundamentally misconstrued the evidence before it.

148    The latter claims overlap partially with other grounds put forward in this appeal, namely, in the first place, the first,
second and seventh grounds, together with the first part of the third ground, relating to the manner in which the Court of
First Instance dealt with some of the evidence before it and, in the second place, the fifth ground, alleging that the Court
of First Instance misconstrued the legal criteria applying to a collective dominant position.

149    It is sufficient to hold in that respect, as is apparent from paragraphs 95, 102 and 133 of this judgment, that, in its examination
of the line of argument based on the existence of manifest errors of assessment, the Court of First Instance committed errors
of law in relation to both the manner in which some of the evidence was dealt with and the legal criteria applying to a collective
dominant position arising from tacit coordination.

150    Consequently, without it being necessary to adjudicate either on the appellants’ claims alleging distortion of the evidence
or on the question whether the Court of First Instance in fact substituted its own economic assessment in the judgment under
appeal for that of the Commission, it must be held that at least that part of the judgment under appeal dealing with the examination
of the arguments alleging the existence of manifest errors of assessment is vitiated by errors of law. As regards that part
of the judgment under appeal which concerns the inadequate reasoning of the contested decision, it remains necessary to address
the sixth ground of appeal.

The sixth ground of appeal, alleging an error of law in that the Court of First Instance applied an incorrect standard of
reasoning as regards decisions approving a concentration

–       The judgment under appeal

151    In paragraphs 255 to 276 of the judgment under appeal, the Court of First Instance summarised the relevant elements of the
contested decision for the purpose of examining the first plea raised before it. Paragraph 275 of the judgment reads as follows:

‘It follows from the foregoing that [it] was on the basis of product homogeneity, market transparency and also the use of
retaliation that the Commission concluded that there was no collective dominant position.’

152    In the judgment under appeal, the Court of First Instance reviewed various sections of the contested decision in order to
determine whether it contained reasoning which was adequate to make a finding of a lack of transparency of the market in question,
and its reply in each case decided the issue in the negative.

153    The Court of First Instance first of all examined the section of the contested decision which dealt specifically with market
transparency. In that regard, it stated in particular in paragraphs 289, 290 and 294 of the judgment under appeal as follows:

‘289      As regards the section on transparency, it must be observed, by way of preliminary remark, that it contains only three recitals,
although according to the [contested decision], and still more so according to the position defended by the Commission in
its written submissions to the Court, in the present case transparency is the essential, and indeed the only, ground for the
assertion that there is no collective dominant position on the markets for recorded music. It should also be noted that it
is not concluded in that section that the market is not transparent, or even that it is not sufficiently transparent to allow
tacit collusion. At the very most, it is stated, first, at recital 111 *in fine*, that the need to carry out monitoring at album level, in particular for campaign discounts, “could reduce transparency in
the market and may make tacit collusion more difficult” and, second, at recital 113 *in fine*, that “[h]owever, the Commission has not found sufficient evidence that, by monitoring retail prices or by contacts with
retailers, the majors have overcome in the past the deficits as regards the transparency of discounts, in particular campaign
discounts as described for the five larger Member States”. Clearly, such vague assertions, which fail to provide the slightest
detail of, in particular, the nature of campaign discounts, the circumstances in which such discounts might be applied, their
degree of opacity, their size or their impact on price transparency, cannot support to the requisite legal standard the finding
that the market is not sufficiently transparent to allow a collective dominant position.

290      Next, it appears that, apart from the two extracts mentioned above, all the factors set out at recitals 111 to 113 to the
[contested decision], far from demonstrating the opacity of the market, show, on the contrary, that the market was transparent.

...

294      It follows from the foregoing that, in the section of the [contested decision] dealing with the examination of transparency,
the Commission not only did not conclude that the market was opaque or not sufficiently transparent to allow a collective
dominant position, but, moreover, mentioned only factors capable of giving rise to great transparency in the market and of
facilitating the monitoring of compliance with collusion, with the sole exception of the rather limited and unsubstantiated
assertion that campaign discounts could reduce transparency and make tacit collusion more difficult. It must therefore be
stated that that section could clearly not, in itself, be considered to support to the requisite legal standard the assertion
that the market was not sufficiently transparent.’

154    The Court of First Instance next examined the reasoning set out in the contested decision relating to the possibility of a
‘common understanding on prices’ between the majors and analysed that reasoning in paragraphs 295 to 324 of the judgment under
appeal, by seeking evidence that would explain the alleged insufficiency of transparency on the markets in question. In that
regard, the Court of First Instance made, among others, the following findings:

‘315      It is thus apparent that the only element of opacity found in the contested decision consists in the assertion, at recital
80 (and at the corresponding recitals for the other large countries), that “[h]owever, it appears that campaign discounts
are less transparent than file discounts and that their monitoring requires also a careful observation of promotional developments
on the retail market”.

...

318      It should also be observed that the [contested decision] does not state that the market is opaque, or even that it is not
sufficiently transparent to allow coordination of prices, but at the most that campaign discounts are less transparent, although
the [contested decision] does not provide the slightest information as regards their nature, the circumstances in which they
are granted or their actual importance for net prices, or their impact on the transparency of prices.

319      It should further be borne in mind that, as stated above, the Commission described in the [contested decision] numerous elements
and factors which favour the transparency of the market and facilitate the monitoring of compliance with a collusive arrangement.

320      It follows that the few assertions relating to campaign discounts contained in the section of the [contested decision] dealing
with the examination of the coordination of prices in the large countries, in so far as they are imprecise, unsupported, and
indeed contradicted by other observations in the [contested decision], cannot demonstrate the opacity of the market or even
of campaign discounts. Those assertions are confined, moreover, to indicating that campaign discounts are less transparent
than file discounts, but do not explain how they would be relevant for the transparency of the market and do not make it possible
to understand how they in themselves might compensate for all the other factors of transparency of the market identified in
the [contested decision] and thus eliminate the transparency necessary for the existence of a collective dominant position.

...

324      It follows that the section dealing with the smaller countries, too, contains no reasoning for the finding that the market
is not transparent on account of the campaign discounts. In any event, the situation existing in the smaller countries cannot
constitute a valid ground for the finding relating to the degree of transparency in the markets in the large countries.

325      It follows from all of the foregoing that the complaint alleging insufficient reasoning for the finding relating to the transparency
of the market is well founded, which in itself is reason to annul the [contested decision].’

155    Paragraph 411 of the judgment under appeal reads as follows:

‘In its defence, the Commission did, admittedly, claim that it examined the other majors’ discounts, but that as those figures
could not be disclosed to the parties to the concentration, they could not be included in the [contested decision]. However,
that argument cannot be followed.’

156    Paragraph 530 of the judgment under appeal states as follows:

‘It follows from recital 157 to the [contested decision], and in particular from the final sentence thereof, that the Commission’s
conclusion that the concentration does not represent a sufficiently significant change to entail the probable creation of
a collective dominant position is expressly based on the conditions relating to the transparency of the market and to the
retaliatory measures.’

–       Arguments of the parties

157    The appellants submit, as their principal argument, that the Community system of control of concentrations, and more specifically
Article 10(6) of the Regulation, precludes the Court of First Instance from annulling a decision approving such a concentration
on the ground of inadequate reasoning.

158    In the alternative, the appellants submit that the Court of First Instance applied an excessively high standard of reasoning
that is inconsistent with settled case-law and fails to take account of the particular context and nature of proceedings for
the control of concentrations. In the first place, the Court of First Instance was wrong to require the Commission to explain
its departure from the statement of objections.

159    In the second place, the Court of First Instance erred in its review of the reasoning of the contested decision in failing
to take account of the particular context of a decision approving a concentration. In that regard, the appellants put forward
a number of arguments. First, they consider that it is necessary to impose less stringent requirements as regards the reasoning
of a decision approving a concentration than as regards a decision prohibiting a concentration. Secondly, the Court of First
Instance wrongly failed to review the reasoning of the contested decision from the perspective of knowledgeable industry professionals.
Thirdly, the short timescale separating the statement of objections from a decision approving a concentration calls for a
measure of restraint in the review of the reasoning of such a decision. Fourthly, the fact that the appellants are entitled
to implement the notified concentration pleads in favour of not annulling decisions approving a concentration lightly on the
ground that they are inadequately reasoned. Fifthly, the Court of First Instance committed an error of law in paragraph 411
of the judgment under appeal in requiring the Commission to publish details on pricing and discounting, taking into account
their confidential and sensitive nature.

160    In any event, contrary to the conclusions of the Court of First Instance, the appellants contend that settled case-law indicates
that the contested decision is adequately reasoned since it permitted Impala to ascertain the reasons underlying the decision
and the Court of First Instance to exercise its power of review. In that regard, the appellants argue, among other things,
that the finding of the Court of First Instance that the contested decision was inadequately reasoned sits ill with its conclusion
that the decision was vitiated by manifest errors of assessment.

161    Lastly, the appellants submit that the review by the Court of First Instance of the reasoning of the contested decision is
vitiated by the application of an incorrect standard of proof, the failure to observe the proper scope of judicial review
and the application of an incorrect test as regards transparency.

162    Without prejudice to its general plea of inadmissibility, Impala considers, first, that the appellants cannot make a general
rule out of the exception clause that is Article 10(6) of the Regulation. Secondly, according to Impala, the appellants are
incorrect in maintaining, in substance, that Article 253 EC may or may not be applied according to whether a decision relating
to a proposed concentration is negative or positive. Thirdly, Impala submits that the degree of reasoning required depends
on the context and legal framework within which a particular measure is adopted. It is entirely consistent with this principle
that the type of reasoning required should be adapted to the type of case involved. The present case is one in which the formal
proceedings were opened and which involved both substantial third-party opposition and a statement of objections.

163    As regards the appellants’ line of argument put forward in the alternative concerning the standard of reasoning applied by
the Court of First Instance, Impala contends that the Court merely mentioned extracts from the statement of reasons in order
to emphasise the inadequacy of the reasoning of the contested decision and the inconsistencies in it and that that court’s
finding that the reasoning in the contested decision was inadequate was based on the reasoning set out in it and not on its
inadequacy as compared with the reasoning of the statement of objections. Impala also submits that the Court of First Instance
did not disregard the context of proceedings for the control of concentrations.

164    Moreover, it does not follow from the fact that the Court of First Instance was able to make an in-depth review of the contested
decision that the reasoning of that decision was adequate. According to Impala, it is quite clear that the Court of First
Instance was unable to understand in particular why the Commission, when the evidence consistently pointed to there being
sufficient transparency to support a finding of collective dominance, nevertheless concluded that there was insufficient evidence
of transparency because campaign discounts were less transparent than other kinds of discounts. In Impala’s view, the real
reasons for the contested decision remain unknown.

165    As regards the appellants’ line of argument summarised in paragraph 161 of this judgment, Impala contends that the observations
of the Court of First Instance on certain aspects of the reasoning of the contested decision are based on a thorough examination
of the Commission’s analysis but, above all, on the internal inconsistencies within the contested decision itself.

–       Findings of the Court

166    It is clear from settled case-law that the statement of reasons required by Article 253 EC must be appropriate to the measure
at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the
measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable
the competent Community Court to exercise its power of review. The requirements to be satisfied by the statement of reasons
depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons
given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern,
may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of
law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard
not only to its wording but also to its context and to all the legal rules governing the matter in question (see, inter alia,
Case C-367/95 P *Commission* v *Sytraval and Brink’s France* [1998] ECR I‐1719, paragraph 63; Case C-42/01 *Portugal* v *Commission* [2004] ECR I‐6079, paragraph 66; and Case C-390/06 *Nuova Agricast* [2008] ECR I-0000, paragraph 79).

167    The institution which adopted the measure is not required, however, to define its position on matters which are plainly of
secondary importance or to anticipate potential objections (Joined Cases C-465/02 and C‐466/02 *Germany and Denmark*v *Commission* [2005] ECR I‐9115, *‘Feta’*, paragraph 106). Moreover, the degree of precision of the statement of the reasons for a decision must be weighed against
practical realities and the time and technical facilities available for making the decision (see Case 16/65 *Schwarze* [1965] ECR 877, 888, and Case C-350/88 *Delacre and Others*v *Commission* [1990] ECR I‐395, paragraph 16). Thus, the Commission does not infringe its duty to state reasons if, when exercising its
power to examine concentrations, it does not include precise reasoning in its decision as to the appraisal of a number of
aspects of the concentration which appear to it to be manifestly irrelevant or insignificant or plainly of secondary importance
to the appraisal of the concentration (see, to that effect, *Commission* v *Sytraval and Brink’s France*, paragraph 64). Such a requirement would be difficult to reconcile with the need for speed and the short timescales which
the Commission is bound to observe when exercising its power to examine concentrations and which form part of the particular
circumstances of proceedings for control of those concentrations.

168    It follows that where the Commission declares a concentration to be compatible with the common market on the basis of Article
8(2) of the Regulation the requirement to state reasons is satisfied when that decision clearly sets out the reasons for which
the Commission considers that the concentration in question, where appropriate following modification by the undertakings
concerned, does not create or strengthen a dominant position as a result of which effective competition would be significantly
impeded in the common market or in a substantial part of it.

169    In that regard, while it is true that the Commission is not obliged, in the statement of reasons for decisions adopted under
the Regulation, to take a position on all the information and arguments relied on before it, including those which are plainly
of secondary importance to the appraisal it is required to undertake, it none the less remains the case that it is required
to set out the facts and the legal considerations having decisive importance in the context of the decision. The reasoning
must in addition be logical and must not disclose any internal contradictions (see to that effect, by way of analogy, Case
13/60 *Geitling and Others*v *High Authority*[1962] ECR 83, 117; Case 41/69 *ACF Chemiefarma*v *Commission*[1970] ECR 661, paragraph 78; Case 158/80 *Rewe-Handelsgesellschaft Nord and Rewe-Markt Steffen*[1981] ECR 1805, paragraph 26; and Case 28/87 *Arendt*v *Parliament* [1988] ECR 2633, paragraphs 7 and 8).

170    It is in the light of these principles that the objections raised by the appellants under the sixth ground of appeal should
be examined.

171    As their principal argument, the appellants submit that a Commission decision approving a concentration cannot be annulled
on the ground of inadequate reasoning. They rely in particular in this regard on Article 10(6) of the Regulation.

172    It follows from paragraph 49 of this judgment that the purpose of that provision is to ensure legal certainty where, exceptionally,
the Commission has not adopted a decision within the prescribed period. Thus, the undertakings concerned are free to implement
their concentration as soon as approval is deemed to have been given.

173    As Impala observes, the line of argument of the appellants based on Article 10(6) of the Regulation has the result that decisions
approving concentrations do not have to be reasoned at all, as they cannot be challenged on the ground of lack of a statement
of reasons.

174    It should be noted that an inadequate statement of reasons in breach of Article 253 EC constitutes an infringement of essential
procedural requirements for the purposes of Article 230 EC and is, moreover, a plea which may, and even must, be raised by
the Community judicature of its own motion (see, to that effect, Case C-166/95 P *Commission*v *Daffix*[1997] ECR I‐983, paragraph 24). Furthermore, according to settled case-law, where it is necessary to interpret a provision
of secondary Community law, preference should as far as possible be given to the interpretation which renders the provision
consistent with the Treaty and the general principles of Community law (Case C-457/05 *Schutzverband der Spirituosen-Industrie* [2007] ECR I-8075, paragraph 22 and the case-law cited). It follows that Article 10(6) of the Regulation must be interpreted
and applied in the light of Articles 230 EC and 253 EC.

175    Thus, as is apparent from paragraph 49 of this judgment, Article 10(6) constitutes an exception to the general scheme of the
Regulation, which is laid down in particular in Articles 6(1) and 8(1) thereof, according to which the Commission is to rule
expressly on the concentrations which are notified to it, whether its decision be a negative or a positive one. It follows
that, not only can Article 10(6) of the Regulation not form the basis of a general presumption that concentrations are compatible
with the common market, it also cannot serve as a basis for an exception to the rule that a decision approving such a concentration
may be challenged on the ground of infringement of the duty to state reasons. The legitimate need for legal certainty in exceptional
situations, which that provision reflects, cannot go so far as to exclude decisions relating to concentrations in whole or
in part from review by the Community judicature.

176    The appellants’ line of argument based on Article 10(6) of the Regulation must therefore be rejected.

177    In the alternative, the appellants submit, among other things, that since the contested decision allowed Impala to ascertain
the reasons for the approval at issue and the Court of First Instance to exercise its power of judicial review, that court
did not observe the settled case-law of the Community judicature on the requirement to state reasons.

178    In that regard, as is apparent from paragraph 166 of this judgment, it is settled case-law, first, that the purpose of the
statement of reasons required by Article 253 EC is to enable the persons concerned to ascertain the reasons for the measure
and to enable the competent Community Court to exercise its power of review and, secondly, that the requirements to be satisfied
by the statement of reasons must be appraised by reference to the nature of the measure at issue and the context in which
it was adopted (see also Case 32/86 *SISMA*v *Commission*[1987] ECR 1645, paragraph 8; Case C-181/90 *Consorgan*v *Commission*[1992] ECR I-3557, paragraph 14; Case C-22/94 *Irish Farmers Association and Others*[1997] ECR I‐1809, paragraphs 39 to 41; Case C-114/00 *Spain*v *Commission*[2002] ECR I‐7657, paragraphs 62 and 63; Case C-195/99 P *Krupp Hoesch*v *Commission*[2003] ECR I-10937, paragraph 110; and *Aalborg Portland and Others*v *Commission*, paragraph 372).

179    In the present case, it is true that a certain imbalance in the contested decision between the presentation of the elements
tending to plead in favour of there being sufficient transparency and the presentation of the impact of the campaign discounts,
which plead, according to the Commission, against such transparency, may appear unfortunate. Nevertheless, in the light, first,
of the context in which the contested decision was adopted, marked in particular by the short space of time between the written
reply to the statement of objections and the hearing before the Commission, on the one hand, and the end of the formal proceedings,
on the other, and, secondly, the requirements laid down by the case-law referred to in paragraphs 166 to 169 of this judgment,
in particular paragraphs 166 and 167, the Court of First Instance could not, without committing an error of law, find that
the Commission had failed to comply with the duty to provide an adequate statement of reasons for the contested decision (see,
by way of analogy, Joined Cases 275/80 and 24/81 *Krupp Stahl*v *Commission*[1981] ECR 2489, paragraph 13, and Joined Cases 296/82 and 318/82 *Netherlands and Leeuwarder Papierwarenfabriek*v *Commission*[1985] ECR 809, paragraph 21).

180    In the first place, the contested decision showed the reasoning followed by the Commission in a way which subsequently allowed
a party such as Impala to challenge its validity before the competent Court. It would be unreasonable in that regard to require,
as did the Court of First Instance in paragraph 289 of the judgment under appeal, a detailed description of each of the factors
underpinning the contested decision, such as the nature of campaign discounts, the circumstances in which they might be applied,
their degree of opacity, their size or their specific impact on price transparency (see to that effect, by way of analogy,
Case C‐286/98 P *Stora Kopparbergs Bergslags*v *Commission*[2000] ECR I-9925, paragraphs 59 to 61, and Joined Cases C-341/06 P and C-342/06 P *Chronopost and La Poste*v *UFEX and Others*[2008] ECR I-0000, paragraph 108). That is all the more the case because Impala was, as is apparent in particular from paragraphs 7
and 10 of the judgment under appeal, closely associated with the formal proceedings (see, by way of analogy, Case C-120/99
*Italy*v *Council*[2001] ECR I-7997, paragraph 29, and Case C-304/01 *Spain*v *Commission* [2004] ECR I-7655, paragraph 50) and that it was, in addition, perfectly able to challenge the validity of the Commission’s
substantive appraisal in the contested decision before the Court of First Instance.

181    In the second place, as is apparent from, among others, paragraphs 275, 289 and 530 of the judgment under appeal, the Court
of First Instance was aware of the reasons for which the Commission decided to approve the concentration at issue. It also
devoted numerous paragraphs in its judgment to an analysis of whether those reasons were well founded. It must be pointed
out in that regard that the duty to state adequate reasons in decisions is an essential procedural requirement which must
be distinguished from the question whether the reasoning is well founded, which is concerned with the substantive legality
of the measure at issue (see *Commission*v *Sytraval and Brink’s France*, paragraph 67, and Case C‐310/99 *Italy*v *Commission*[2002] ECR I-2289, paragraph 48). The reasoning of a decision consists in a formal statement of the grounds on which that
decision is based. If those grounds are vitiated by errors, the latter will vitiate the substantive legality of the decision,
but not the statement of reasons in it, which may be adequate even though it sets out reasons which are incorrect. It cannot
therefore be claimed that it was impossible for the Court of First Instance to exercise its power of judicial review (see,
by way of analogy, *Chronopost and La Poste*v *UFEX and Others*, paragraph 112).

182    The appellants’ sixth ground of appeal should therefore be upheld, without it being necessary to adjudicate on the objections
referred to in paragraphs 158, 159 and 161 of this judgment.

183    Having regard to the above considerations, the present appeal must be declared to be well founded.

**The alleged cross-appeal**

184    The Commission’s response contains a separate section containing ‘additional observations’ on the ‘essential grounds’ of the
contested decision. In that section, the Commission contends that the Court of First Instance was wrong to characterise the
Commission’s findings in relation to the retaliatory measures as essential grounds of the decision. In the Commission’s view,
were it to be held in this appeal that the findings made in the contested decision in relation to lack of market transparency
were not incorrect in law, the decision should be declared to be lawful irrespective of whether it contains errors of law
concerning the retaliatory measures.

185    Impala interpreted the arguments contained in the Commission’s response as a cross-appeal and replied to them in a separate
document of 23 March 2007, relying on Article 117(2) of the Rules of Procedure of the Court. Subsequently, the parties were
allowed to lodge further documents on this matter, the last of which was lodged at the Court Registry on 16 July 2007, while
at the same time the question was left open whether Impala was entitled to invoke Article 117(2).

186    Under Article 117(2) of the Rules of Procedure, for a submission to be regarded as a cross-appeal, the party which relies
on it must seek to set aside, in whole or in part, the judgment under appeal on a plea in law which was not raised in the
appeal. Whether that is the case here is to be determined by reference to the wording, aim and context of the passage in question
in the Commission’s response.

187    It must be emphasised in that regard that nowhere in its response does the Commission use the expression ‘cross-appeal’. Moreover,
the Commission itself clearly stated during these proceedings, for instance at the hearing, that it had no intention of bringing
a cross-appeal by its ‘additional observations’.

188    In those circumstances, it must be held that those observations do not constitute a cross-appeal. Contrary to what Impala
submits, there is accordingly no need to adopt a position with regard to them.

**Referral of the case back to the Court of First Instance**

189    Under the first paragraph of Article 61 of the Statute of the Court of Justice, if the appeal is well founded, the Court of
Justice is to quash the decision of the Court of First Instance. It may itself give final judgment in the matter, where the
state of the proceedings so permits, or refer the case back to the Court of First Instance for judgment.

190    Since the Court of First Instance examined only two of the five pleas relied on by Impala in support of its action, the Court
of Justice considers that the present case is not in a state where judgment may be given. The case must therefore be referred
back to the Court of First Instance.

191    Since the case is to be referred back to the Court of First Instance, the costs relating to the present appeal proceedings
must be reserved.

On those grounds, the Court (Grand Chamber) hereby:

1.      **Sets aside the judgment of the Court of First Instance of 13 July 2006 in Case T-464/04 Impala v Commission ;**

2.      **Refers the case back to the Court of First Instance of the European Communities;**

3.      **Reserves the costs.**

[Signatures]

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- Language of the case: English.