Judgment — ECLI:EU:C:2018:371
Date: 2018-05-31
Language of the case: Danish
Court formation: Fifth Chamber
Subject matter: Competition;Agreements, decisions and concerted practices
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - decision unnecessary
Origin: Denmark

summary of its understanding of the Commission’s approach. The ambit of that statement is therefore somewhat ambiguous. In any event, that statement is not compatible with the subsequent conclusion reached, in paragraphs 84 and 85 of that judgment, in relation to the circumstances of that case — with which I agree — that the acquisition of a minority shareholding cannot, generally speaking, be regarded as a partial implementation of a concentration capable of giving rise to a measure adopted on the basis of Article 8(4) and (5) of that regulation. (24) 68. I would argue, moreover, that an interpretation of the scope of the standstill obligation under Article 7 of Regulation No 139/2004 which is disconnected from that of the concept of ‘concentration’ would create a grey area where certain measures which, although within the periphery of a concentration but not in and of themselves inextricably linked to the transfer of control, would be caught thereby. However, if the reach of that grey area were greater than the scope of the concept of a ‘concentration’, it would imply extending that obligation beyond the scope of the regulation itself as expressed in Article 1 thereof. That would be unsustainable. 69. Such a broad interpretation would, moreover, go beyond what is necessary in order to maintain an effective merger control. As mentioned above in points 33 to 36, it would seem excessive to consider the standstill obligation to be an indispensable tool. Indeed, the Commission has powers under Article 8(4) and (5) of Regulation No 139/2004 to order the restoration or maintenance of conditions of effective competition, in particular, to order the dissolution of a concentration. The risk alone of having to pay the costs associated with such an order, for merging undertakings, is certainly dissuasive. Requiring merging undertakings to wait until clearance is given even in respect of measures which are not in themselves inextricably linked to the transfer of control would be excessive and might cause unnecessary delays. 70. In addition, Regulation No 139/2004 expressly sets out under which circumstances it is to be applicable even prior to the actual emergence of a concentration. For instance, under Article 4(1) of Regulation No 139/2004, a concentration normally presupposes the conclusion of an agreement, the announcement of a public bid, or the acquisition of a controlling interest. However, the second subparagraph of Article 4(1) allows parties to notify a concentration even before it has arisen if the intention to merge is unequivocal, such as a public announcement of a bid which would result in a concentration (‘intended concentrations’). The third subparagraph of Article 4(1) of the regulation then sets out the specific circumstances when Regulation No 139/2004 is to apply even though no concentration has arisen yet, and distinguishes in that regard between ‘notified concentrations’ and ‘concentrations’ (the inverted commas appearing in the provision itself). Pursuant to the first sentence of the third subparagraph of Article 4(1), intended concentrations amount to a ‘notified concentration’ for the purpose of the regulation. Under the second sentence of that subparagraph, an intended concentration is also to be equivalent to a ‘concentration’, but only as regards the procedure set out in Article 4(4) and (5) of the regulation. 71. Against that backdrop, and given the fact that the term ‘notified concentration’ does not appear in Article 7 of Regulation 139/2004, (25) I am led to conclude that Article 7 — and hence the standstill obligation — does not apply as regards intended concentrations. That confirms that the EU legislature did not want the standstill obligation to apply where a concentration has not yet materialised. 72. That is not to say that the term ‘implemented’, as used in Article 7(1) of Regulation No 139/2004, ought not to carry a broad meaning, thereby ensuring that partial implementations can be monitored by the Commission. (26) Be that as it may, a concentration can necessarily only be ‘implemented’ if it exists. 73. The arguments submitted by the Danish Government and the Commission to justify the idea that application of the standstill obligation should not be linked in any way to the concept of ‘concentration’ leave me unpersuaded. 74. First, linking the standstill obligation with the concept of ‘concentration’ in no way undermines the system of ex ante review of concentrations set up under Regulation No 139/2004. 75. Second, the fact that the Commission might, in its administrative practice, have adopted a broad approach as to what falls to be classified as premature implementation of a concentration is irrelevant. The Commission’s practice does not bind the Court. 76. Third, a distinction between internal preparatory measures and external preparatory measures, as essentially advocated by the Danish Government, has no basis in Regulation No 139/2004. That regulation instead refers to ‘a change of control on a lasting basis’, regardless of whether that change is the result of internal or external measures. 77. Fourth, the findings of the General Court in Electrabel v Commission, (27) cited by the Danish Government and the Commission, concern, as essentially noted by Ernst & Young, the gravity of the infringement of the standstill obligation and the proportionate nature of the fine imposed in consequence thereof, and not the existence as such of such an infringement. 78. On the basis of the foregoing considerations, I am of the opinion that the obligation to suspend a concentration set out in Article 7(1) of Regulation No 139/2004 does not affect measures which, although taken in connection with the process leading to a concentration, precede and are severable from the measures actually leading to the acquisition of the possibility of exercising decisive influence on a target undertaking. (e) Application to the circumstances of the main proceedings 79. By the second question referred, the referring court wishes the Court to state its position on the circumstances of the case pending before it. 80. In preliminary ruling proceedings, the application of the interpretation of EU law given by the Court to the facts is a matter for the national courts, which are in a better position than the Court to establish and weigh all the relevant circumstances. Still, the Court may provide the national court with all the elements of interpretation which may be of assistance in adjudicating on the case pending before it. (28) 81. In the main proceedings, on the one hand, the merger agreement itself was subject to approval by the Competition Council and was not to be implemented before that approval was given. 82. On the other hand, as stated in the request for a preliminary ruling, the termination of the cooperation agreement between KPMG DK and KPMG International was not subject to the same requirement of approval, and notice was given before receipt of the merger approval. 83. The contested decision held that, in doing so, KPMG DK had infringed the standstill obligation. Implicitly at least, it thus appears that the KFST considered that the termination of the cooperation agreement should be classified as a partial implementation of the merger. 84. Plainly, I agree with the Danish Government that the two operations mentioned above in points 81 and 82 were not self-standing, but interrelated. The merger agreement provided that KPMG DK was to terminate its cooperation with KPMG International. Termination of the cooperation agreement was therefore a necessary prerequisite for that merger to take effect. 85. However that does not suffice. The termination did not, in any way, contribute to a shift in control between KPMG DK and EY. 86. Although it can be argued, as the Danish Government does, that the termination of the cooperation agreement was part of the merger agreement, it was not inextricably linked to the transfer of control, giving EY the possibility of exercising decisive influence on KPMG DK, as defined in Article 3(2) of Regulation No 139/2004. (29) The effect of that termination was simply that KPMG DK was no longer part of the KPMG network and would revert to the status of independent trader in the market for accountancy services. Although the termination might have had some effect on the market, it would not have meant that KPMG DK would no longer have been a competitor for EY. (30) 87. Indeed, accepting such a line of argument would mean that any measure implemented by EY or KPMG DK between signing the merger agreement and the competition authority’s approval potentially could have been caught by the standstill obligation. However, for the reasons given above in point 71, the mere intention to effect a concentration does not give rise to the standstill obligation. 88. Therefore, a preparatory measure of that type does not, in my view, fall to be classified as a premature implementation of a concentration. 3. The third and fourth questions referred 89. By its third and fourth questions, the referring court essentially wishes to know whether it is of relevance to the standstill obligation that the measure claimed to be a premature implementation of a concentration had any market effects and, if so, which criteria may be used to show such an effect and the evidentiary threshold which must be satisfied in that regard by the competition authority when investigating an alleged infringement of that obligation. 90. Those questions are asked since the contested decision recognised that while it was not feasible for the KFST to determine with certainty whether the termination of the cooperation agreement caused some of KPMG DK’s clients to recommend a change of auditor at their general meetings, it held that it was only necessary to show a potential to have market effects. Ernst & Young counters that those recommendations were simply issued following the regular practice of large Danish companies when selecting or changing auditors, and that the KFST’s assessment of the merger was made at the point of time of the year where a change of auditor normally takes place. 91. From my answer to the first two questions and, in particular, the criterion relating to the potential of the measure under scrutiny to have market effects (see points 53 to 56 above) it follows that, in my opinion, the possible market effects of a measure are of no relevance for application of the standstill obligation. Rather, that obligation must be complied with at the same time as, and in so far as, a concentration which meets the applicable thresholds arises. 92. Should the Court take a view which differs from mine, I shall limit myself to the following brief observations in the alternative. 93. The Court has held that, in the field of merger control, the prospective analysis called for, 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. That standard applies both as regards decisions authorising a concentration and decisions prohibiting it. (31) 94. Should the Court, unlike me, consider the criterion of potential market effects to be relevant, notwithstanding the overlap with the substantive assessment of the compatibility of the concentration with the common market, I see no obvious reason why the standard of review, mentioned in the previous point, ought not to apply — mutatis mutandis — to decisions finding implementation. The assessment to be performed would be reminiscent of that concerning requests for derogation from the standstill obligation under Article 7(3) of Regulation No 139/2004, which require, inter alia, taking account of the threat to competition posed by the concentration. 95. In accordance with ordinary rules of evidence, it is for the Commission (or the relevant competition authority) to prove the alleged infringement. (32) That authority must therefore show, on the basis of an assessment of different hypotheses involving various chains of cause and effect, that the hypothesis in which the measure at issue is capable of giving rise to a significant impediment to effective competition is the one which is the most likely. (33) 96. As regards the type of evidence which may be relied on by the Commission (or the relevant competition authority), the principle which prevails in EU law is that of the unfettered evaluation of evidence. Specifically, as long as the evidence has been lawfully adduced, the only relevant criterion for the purpose of assessing its probative value relates to its credibility. (34) In that regard, there is no requirement to use a particular method or test. (35) 97. It is for the referring court to determine whether the Danish competition authorities have shown, on the basis of an assessment of different hypotheses involving various chains of cause and effect, that the hypothesis in which the termination of the cooperation agreement was capable of giving rise to a significant impediment to effective competition is the one which is the most likely. In concrete terms, it must therefore be deemed more plausible than the line of argument submitted by Ernst & Young concerning the typical behaviour of large Danish companies. IV. Conclusion 98. On the basis of the foregoing, I propose that the Court should answer the questions referred by the Sø- og Handelsretten (Maritime and Commercial Court, Denmark) to the effect that, on a proper interpretation, the obligation to suspend a concentration set out in Article 7(1) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) does not affect measures which, although taken in connection with the process leading to a concentration, precede and are severable from the measures actually leading to the acquisition of the possibility of exercising decisive influence on a target undertaking. 1 Original language: English. 2 Council Regulation of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (OJ 2004 L 24, p. 1). 3 Lovbekendtgørelse nr. 869 af 8. juli 2015, Lovtidende 2015 A (Consolidated Law No 869 of 8 July 2015). 4 Judgment of 18 October 1990, Dzodzi, C‑297/88 and C‑197/89, EU:C:1990:360, paragraphs 36 to 43. See also, inter alia, judgments of 17 July 1997, Leur-Bloem, C‑28/95, EU:C:1997:369, paragraph 34; of 11 January 2001, Kofisa ItaliaKofisa Italia, C‑1/99, EU:C:2001:10, paragraph 32; of 14 December 2006, Confederación Española de Empresarios de Estaciones de ServicioConfederación Española de Empresarios de Estaciones de ServicioConfederación Española de Empresarios de Estaciones de ServicioConfederación Española de Empresarios de Estaciones de ServicioConfederación Española de Empresarios de Estaciones de ServicioConfederación Española de Empresarios de Estaciones de ServicioConfederación Española de Empresarios de Estaciones de Servicio, C‑217/05, EU:C:2006:784, paragraph 19; and of 15 January 2002, Andersen og JensenAndersen og JensenAndersen og Jensen, C‑43/00, EU:C:2002:15, paragraph 18. 5 See judgment of 14 March 2013, Allianz Hungária Biztosító and OthersAllianz Hungária Biztosító and OthersAllianz Hungária Biztosító and OthersAllianz Hungária Biztosító and OthersAllianz Hungária Biztosító and Others, C‑32/11, EU:C:2013:160, paragraph 20 and the case-law cited. 6 See, to that effect, judgment of 14 March 2013, Allianz Hungária Biztosító and OthersAllianz Hungária Biztosító and OthersAllianz Hungária Biztosító and OthersAllianz Hungária Biztosító and OthersAllianz Hungária Biztosító and Others, C‑32/11, EU:C:2013:160, paragraphs 20 and 21. 7 See Article 17 of the Legge 10 ottobre 1990, n. 287 — Norme per la tutela della concorrenza e del mercato (Law No 287 of 10 October 1990 adopting provisions for the protection of competition and the market, GURI No 240 of 13 October 1990, p. 3). 8 See Articles 15 to 17 of the Konkurences likums (Law on Competition) of 4 October 2001 (Latvijas Vēstnesis, 2001, No 151). 9 See Section 96(1) of the Enterprise Act 2002 and ‘Mergers: Guidance on the CMA’s jurisdiction and procedure’, Competition and Markets Authority, United Kingdom, January 2014 (available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/384055/CMA2__Mergers__Guidance.pdf (last accessed 1 December 2017)), points 6.1 and 6.2, and footnote 298. 10 See Article 7(1) and (2) of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1; corrigendum republished in OJ 1990 L 257, p. 13). 11 Judgment of 6 July 2010, T‑411/07, EU:T:2010:281, paragraphs 62 and 65. Reference is also made to judgment of 12 December 2012, Electrabel v CommissionElectrabel v CommissionElectrabel v Commission, T‑332/09, EU:T:2012:672, paragraph 42. 12 Judgment of 12 December 2012, T‑332/09, EU:T:2012:672, paragraphs 245 to 247. Appeal dismissed by judgment of 3 July 2014, Electrabel v CommissionElectrabel v CommissionElectrabel v Commission, C‑84/13 P, not published, EU:C:2014:2040. 13 Recital 34 of Regulation No 139/2004 reads: ‘To ensure effective control, undertakings should be obliged to give prior notification of concentrations with [an EU] dimension following the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest … The implementation of concentrations should be suspended until a final decision of the Commission has been taken. However, it should be possible to derogate from this suspension at the request of the undertakings concerned, where appropriate. In deciding whether or not to grant a derogation, the Commission should take account of all pertinent factors, such as the nature and gravity of damage to the undertakings concerned or to third parties, and the threat to competition posed by the concentration. In the interest of legal certainty, the validity of transactions must nevertheless be protected as much as necessary.’ 14 In the case leading to the judgment of 12 December 2012, Electrabel v CommissionElectrabel v CommissionElectrabel v Commission, T‑332/09, EU:T:2012:672, the Commission had imposed a fine of EUR 20 000 000 for infringing the standstill obligation. On appeal, the Court did not consider the existence of an infringement; see judgment of 3 July 2014, Electrabel v CommissionElectrabel v CommissionElectrabel v Commission, C‑84/13 P, not published, EU:C:2014:2040. In the case giving rise to the judgment of 26 October 2017, Marine Harvest v CommissionMarine Harvest v CommissionMarine Harvest v Commission, T‑704/14, EU:T:2017:753 (appeal pending before the Court of Justice, C‑10/18 P) the Commission imposed a fine of EUR 10 000 000 on the applicant undertaking for infringing that obligation (in addition to a fine of EUR 10 000 000 for a violation of Article 4(1) of Regulation 139/2004). 15 Indeed, as noted by the Commission, a link exists between merger-specificity and whether, as stated in the last part of the first question referred, the implementing action forms part of the actual change of control or merging of the activities of the participating undertakings. Both relate to the concept of ‘concentration’, which I shall revert to infra. 16 See Article 1(1) of Regulation 139/2004. 17 In that regard, as is apparent from recital 34 of Regulation No 139/2004, ‘in deciding whether or not to grant a derogation, the Commission should take account of all pertinent factors, such as the nature and gravity of damage to the undertakings concerned or to third parties, and the threat to competition posed by the concentration. In the interest of legal certainty, the validity of transactions must nevertheless be protected as much as necessary’ (emphasis added). 18 See also, to that effect, judgment of 26 October 2017, Marine Harvest v CommissionMarine Harvest v CommissionMarine Harvest v Commission, T‑704/14, EU:T:2017:753, paragraph 58 and the case-law cited. 19 That such internal preparatory measures fall outwith the scope of the standstill obligation seemed common ground among the parties participating in the oral procedure. 20 See, as regards Article 3(1) of Regulation No 4064/89, judgment of 23 February 2006, Cementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v Commission, T‑282/02, EU:T:2006:64, paragraph 109. In dismissing, by judgment of 18 December 2007, Cementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v CommissionCementbouw Handel & Industrie v Commission, C‑202/06 P, EU:C:2007:814, the appeal lodged against that judgment, the Court did not take a position as regards that finding (see paragraph 44). 21 Reference is made, moreover, to recital 20 of Regulation No 139/2004, according to which ‘it is … appropriate to treat as a single concentration transactions that are closely connected in that they are linked by condition or take the form of a series of transactions in securities taking place within a reasonably short period of time’. 22 See judgment of 26 October 2017, Marine Harvest v CommissionMarine Harvest v CommissionMarine Harvest v Commission, T‑704/14, EU:T:2017:753, paragraph 126. 23 Judgment of 6 July 2010, Aer Lingus Group v CommissionAer Lingus Group v CommissionAer Lingus Group v Commission, T‑411/07, EU:T:2010:281, paragraph 83. 24 Reference ought also to be made to the order of 18 March 2008, Aer Lingus Group v CommissionAer Lingus Group v CommissionAer Lingus Group v Commission, T‑411/07 R, EU:T:2008:80, regarding the request for interim measures lodged in that same case which held, at paragraph 94, that ‘even if Article 7 of [Regulation No 139/2004] were to be interpreted as prohibiting only a change of control pending the Commission’s review, and not steps short of change of control …, it would remain legitimate for the Commission to ask the parties not to take any action which might lead to a change of control’. 25 That is in contrast with, for example, Article 6(2), Article 8(1) and (2), Article 9(1), Article 10(2) and (3) and Article 11(5) of Regulation No 139/2004. 26 See, in that regard, Modrall, J.R., and Ciullo, S., ‘Gun-Jumping and EU Merger Control’, European Competition Law Review, issue 9, Sweet & Maxwell, 2003, p. 424, at p. 429 (I am not taking a position on the scenarios mentioned there). 27 Judgment of 12 December 2012, Electrabel v CommissionElectrabel v Commission, T‑332/09, EU:T:2012:672, paragraphs 246, 247 and 280. 28 See, to that effect, judgment of 5 June 2014, I, C‑255/13, EU:C:2014:1291, paragraph 55 and the case-law cited. 29 The representative of Ernst & Young actually argued at the hearing that KPMG DK had no choice but to give notice of termination of the cooperation agreement when it did as otherwise KPMG International could have terminated the cooperation agreement with immediate effect on the grounds of unfair practice. 30 The matter under consideration therefore differs significantly from that at issue in the judgment of 26 October 2017, Marine Harvest v CommissionMarine Harvest v CommissionMarine Harvest v Commission, T‑704/14, EU:T:2017:753, where the Commission and the General Court considered an initial acquisition of 48.5% of the shares of the target company in itself to give rise, de facto, to a change in control, instead of a subsequent public offer which gave the applicant 87.1% of the shares of the target undertaking. 31 Judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v ImpalaBertelsmann and Sony Corporation of America v ImpalaBertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraphs 46 to 49. 32 See, for example, Article 2 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101] and [102 TFEU] (OJ 2003 L 1, p. 1), as amended. 33 See, to that effect, judgment of 15 February 2005, Commission v Tetra LavalCommission v Tetra LavalCommission v Tetra Laval, C‑12/03 P, EU:C:2005:87, paragraph 43. 34 See, to that effect, order of 12 July 2016, Pérez Gutiérrez v CommissionPérez Gutiérrez v CommissionPérez Gutiérrez v Commission, C‑604/15 P, not published, EU:C:2016:545, paragraph 38 and the case-law cited. 35 See, by analogy, judgment of 6 October 2015, Post DanmarkPost Danmark, C‑23/14, EU:C:2015:651, paragraph 57.