Final report of the Hearing Officer in case COMP/M.2220 - GE/Honeywell

(pursuant to Article 15 and modified under Article 16(2) of Commission Decision 2001/462/EC, ECSC of 23 May 2001 on the terms of reference of Hearing Officers in certain competition procedures (OJ L 162, 19.6.2001, p. 21))

(2004/C 42/05)

(Text with EEA relevance)

The draft decision submitted to the Commission gives rise to the following observations regarding the right to be heard:

1. The parties to the envisaged merger (hereafter referred to as "the parties") complained about the time limit which the Commission had imposed on them for responding to the statement of objections. Pursuant to Article 21 of Commission Regulation (EC) No 447/89 of 1 March 1998 on the notifications, time limits and hearings provided for in Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings (OJ L 61, 2.3.1998, p. 1), the Commission, when setting such deadlines, takes into account both the time necessary for the preparation of the submission and the urgency of the case. In the present case the Commission had fixed an initial time limit of two weeks and one day, which thereafter was extended by one further day. Given the complex nature of the case, this time limit was short, but it was still appropriate within the narrow time frame provided for Commission decisions under the Merger Control Regulation. Moreover, during the oral hearing the parties were granted the opportunity of completing their written statements orally in a full day session. My conclusion therefore is that the rights of defence have been respected in this regard.

2. The parties took the view that the Commission had not granted them full access to the case file because an economic model which the Commission used in the statement of objections to quantify the effect of the envisaged merger on the remaining competitors had not been fully released to the parties. The reason for this was that the model had been implemented by data provided by a third party (Rolls Royce) which constituted sensitive commercial information. Upon the request of the Hearing Officer, the undertaking concerned disclosed parts of its information to the parties' economic advisers on the basis of a confidentiality agreement, but it was not willing to grant a full waiver. The question is whether the Commission has struck a fair balance between the parties' rights of defence and third parties' right to have their business secrets and other confidential information protected from disclosure and, furthermore, to what extent the information provided by Rolls Royce may be used to support objections against the parties. This question can however remain undecided, as the Commission no longer relies on the economic model referred to above in its draft decision.

3. The parties also claimed that they were not given proper access to the submissions by several airlines that had complained about the merger, except for an anonymous summary of all the complaints. Given the sensitivity of their position vis-à-vis the parties to the proposed merger, the airlines had requested the outmost confidentiality and anonymity for their statements. By drafting and releasing the anonymous summary, the Commission has correctly fulfilled its obligation both to safeguard business secrets and other confidential information, such as the identity of the aforementioned complainants, and to ensure that the parties had sufficient knowledge of the complaints. The way in which this matter was handled is in line with the case law of the Court of First Instance.

4. The parties moreover accused the Commission of not having proceeded in an objective manner. They maintain that facts were used in a highly selective fashion or simply disregarded when they did not suit the Commission's case. However, the text of the draft decision shows that such reproach is unjustified as it deals with all of the relevant facts and arguments, irrespective of whether they are unfavourable or favourable to the parties.

5. The parties finally expressed doubts about the impartiality of the enquiry which the Commission conducted in order to assess the competition impact of the proposed package of commitments. In this context it should be stressed that from the outset the Commission rejected undertakings of a merely behavioural nature. The proposed structural undertakings were examined in depth and considered as insufficient to address the major competition problems regarding the markets of engines for large commercial aircraft, of avionics and of non-avionics. However, given the fact that the parties still had the possibility to improve the proposed commitments, the Commission initiated a technical market test of all structural undertakings to assess whether, in case of a significant improvement of the package so far offered by the parties, the proposed undertakings could already form the basis for a final settlement. This enquiry, with a limited scope and purpose, which for the reasons explained in the draft decision led to a negative result, meets the standards of objectivity required by EC competition law. The latter is true both with regard to the methodology used and the selection of the respondents who were chosen in a non-discriminatory manner amongst competitors and customers having actively participated in the proceedings and with an adequate knowledge of the industry to provide technical information to the Commission.

6. The draft decision only contains objections in respect of which the parties have been afforded the opportunity of making known their views.

Done at Brussels, 28 June 2001.

Helmuth Schröter