Final report of the Hearing Officer in case COMP/M.2283 - Schneider/Legrand

(drawn up in accordance with Article 15 of Commission Decision 2001/462/EC, ECSC of 23 May 2001 on the terms of reference of Hearing Officers in certain competition proceedings (OJ L 162, 19.6.2001, p. 21))

(2004/C 86/10)

(Text with EEA relevance)

During this case two questions were addressed to the Hearing Officer by Schneider's advisers by letters of 19 and 21 December 2001.

One relates to the derogation decision adopted by the Commission on 4 December 2001 pursuant to Article 7(4) of the Merger Regulation and the other concerns access to the file in the context of preparation of the Commission's decision under Article 8(4) of the Merger Regulation on the arrangements for demerging Schneider and Legrand.

The Article 7(4) derogation decision

The Commission granted Schneider Electric a derogation under Article 7(4) of the Merger Regulation allowing it to exercise the voting rights attached to the shares it holds in Legrand via a trustee (Salustro Reydel Management) appointed by Schneider under contract.

The trustee accepted this task under terms and conditions agreed by the parties.

Article 2(1) of those terms and conditions stipulated that the trustee was, for the duration of its appointment, to exercise in the name and on behalf of Schneider Electric the voting rights attached to the preference shares and preferrred dividend shares issued by Legrand and held by Schneider Electric, at all the ordinary, extraordinary and special general meetings which Schneider Electric was invited to attend as a shareholder.

Schneider Electric nevertheless wished to accompany its trustee at the general meeting of 19 December 2001 in order, through being present physically, to be informed of the proceedings at the same time as the journalists and other Legrand shareholders. Schneider Electric made this request on the day before the general meeting, which had been convened four weeks in advance of the appointed date.

After contacting the trustee, the Directorate-General for Competition replied by e-mail on the same day, refusing the request.

By letter, which I received on 19 December 2001, while the general meeting was in progress, Schneider Electric challenged the Commission's stance and requested me to confirm the Commission's final position on this issue.

I replied on 20 December 2001 stating that the Hearing Officer's terms of reference do not allow him to replace the Competition Directorate-General's analysis of the merits of a case with his own, but that his role is basically to ensure that, since it is one of the fundamental rights of the defence, the parties' right to be heard before a decision concerning them is taken has been respected.

I also stated that I could not see, a priori, how Schneider's rights of defence would be affected through not being present at the general meeting of Legrand shareholders while being represented by its trustee, and I stressed my willingness to continue the discussion of the substantive aspects of the issue on the basis of arguments to be put forward by Schneider Electric.

By letter of 21 December 2001, in reply, Schneider Electric asked me to rule on whether the conditions in which the Commission departments had refused its request physically to attend Legrand's general meeting breached its rights of defence.

My opinion, which I communicated to Schneider Electric by letter of 15 January 2002, examined separately the formal and the substantive aspects of the question.

From a formal standpoint, I told Schneider Electric's advisers that by acting so late they had placed themselves in a difficult position with regard to the exercise of their right to be heard. They had thus created an emergency which lay outside the normal modus operandi of official relations between the Competition Directorate-General and businesses. If such relations are to function normally, requests have to take the form of a reasoned written submission to the appropriate level of authority, allowing the departments reasonable time to examine them. In the circumstances, I am convinced that the Competition Directorate-General cannot reasonably be accused of having ignored Schneider's request, when Schneider received a response from the Head of Unit on the same evening and that position was, at the request of Schneider's advisers, confirmed on the following morning.

As far as the substance of the issue is concerned, the question is whether the fact that Schneider was prevented from accompanying its trustee at the general meeting constitutes in itself a breach of its rights of defence. I consider, a priori, that that is not the case.

The powers vested in the trustee were freely negotiated between the parties over and above the statutory provisions governing relations between trustees and principals.

Those powers furthermore specifically include, naturally, the authority to safeguard Schneider's proprietary interests, the "issues affecting proprietary interests" having been carefully defined. Consequently, a priori, Schneider's rights of defence are not breached if the company is represented by its trustee at general meetings.

I nevertheless reiterated my willingness to continue the discussion, if Schneider Electric considered it worthwhile, on the basis of substantive arguments which I mentioned in my letter of 19 December 2001 and which Schneider had not so far presented.

Neither does the reply from Schneider Electric's advisers, dated 17 January 2002, include the requested reasoning as to the substance of the issue.

The Article 8(4) decision

In its letter of 21 December 2001 Schneider Electric raised concern with regard to the arrangements for exercising its right of access to the file. I was asked to ensure that Schneider was able effectively to put forward its views on the positions expressed by Legrand.

Schneider was granted access to the file on 10 January 2002, as soon as the non-confidential versions of the latest documents provided by Legrand were furnished to the Commission. A final access to the file under the same conditions had been arranged at the time of writing of this report.

Furthermore, Schneider Electric requested a hearing on the statement of objections; this took place on 26 November 2001 and did not give rise to any challenges regarding exercise of the rights of the defence.

The draft final decision under Article 8(4) of the Merger Regulation concerning the demerger of Schneider and Legrand does not contain any objections other than those communicated to the company in the statement of objections of 24 October 2001.

I consider that, in all respects, Schneider Electric's rights of defence have been guaranteed during these proceedings.

Serge Durande