Keywords

Summary



Keywords

1. Competition – Concentrations – Examination by the Commission – Obligation to take a decision on a request for referral within a period of 10 days

(Council Regulation No 139/2004, Art. 22(3))

2. Competition – Concentrations – Examination by the Commission

(Council Regulation No 139/2004)

3. Competition – Concentrations – Examination by the Commission – Commission’s powers limited to transactions with a Community dimension

(Art. 10 EC; Council Regulation No 139/2004, Art. 1(1) and (21))

4. Competition – Concentrations – Examination by the Commission – Commission’s obligations vis-à-vis a complainant complaining of a breach of the notification requirement

(Council Regulation No 139/2004)

5. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004, Art. 5)

6. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(European Parliament and Council Regulation No 1606/2002, Art. 4; Council Regulation No 139/2004, Art. 5; Commission Regulation No 707/2004)

7. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004; Commission Notice 98/C 66/04)

8. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Art. 95(1) EC; European Parliament and Council Regulation No 1606/2002; Council Regulation No 139/2004, Arts 1 and 5)

9. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004; Commission Notice 98/C 66/04, points 26 and 27)

10. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004; Commission Notice 98/C 66/04, points 26 and 27)

11. Competition – Concentrations – Concentration having a Community dimension – Criteria for assessment

(Council Regulation No 139/2004, Art. 5(1); Commission Notice 98/C 66/04, points 9 and 13)

Summary

1. Article 22(3) of Regulation No 139/2004 on the control of concentrations between undertakings requires the Commission to take a decision on a request for referral within a period of 10 days and provides that if no decision is taken an implicit decision agreeing to referral will exist.

With regard to the issue of determining the Community dimension of the concentration, the Commission is not required to give a ruling on the dimension before adopting a decision on the request for referral, since, if that were so, it would not be in a position to examine that question with all due care.

(see para. 64)

2. Regulation No 139/2004 on the control of concentrations between undertakings does not lay down any specific procedure for establishing the Community dimension of a concentration. The fact that the Commission did not inform the complainant about the procedure whereby it intended to examine whether or not the concentration had a Community dimension would only affect the legality of the decision adopted at the end of that procedure if it led to infringement of the rights of the defence.

(see paras 72-73)

3. As regards the Commission’s having exclusive competence to examine concentrations with a Community dimension, it does not follow automatically that the Commission has exclusive competence to determine whether a concentration has such a dimension.

In that regard, according to the wording of Regulation No 139/2004 on the control of concentrations between undertakings, it is incumbent first of all on undertakings to make the initial assessment of a concentration’s dimension and to determine as a result which authorities should be notified of the planned concentration. Then when a concentration is notified not to the Commission but to the authorities of one or more Member States, it is for those authorities, in particular in the light of the obligation of loyal cooperation contained in Article 10 EC, and in the light of Article 21 of the regulation, which provides that the Commission has exclusive competence to examine whether concentrations having a Community dimension are compatible with the corresponding prohibition on Member States applying their national competition law to such concentrations, to check that the concentration referred to them does not have a Community dimension, specifying that it is always possible for the Commission to decide that, contrary to the opinion of the authorities of the Member States the concentration does have a Community dimension and falls within its exclusive competence.

(see paras 98-99)

4. Regulation No 139/2004 on the control of concentrations between undertakings makes no specific provision expressly requiring the Commission to ensure on its own initiative that any concentration which is not notified to it does not actually have a Community dimension. However, when a complaint is referred to it by an undertaking which considers that a concentration that has not been notified to the Commission has a Community dimension, the Commission is required to decide on the principle of its competence as supervising authority. In that context, in principle, it is for the complainant to prove the merits of its complaint, on the understanding that it is for the Commission, in the interest of sound administration, to conduct a thorough and impartial examination of the complaints made to it and to provide reasoned answers to the complainant’s arguments with a view to establishing that the concentration falls within the Commission’s exclusive competence.

(see para. 100)

5. In the context of determining whether a concentration has a Community dimension, the Commission cannot be required to ensure on its own initiative in every case that the audited accounts submitted to it give a true and fair view of the position and to carry out an examination of all the adjustments that may be envisaged. It is only when its attention is drawn to specific problems that the Commission must examine them.

(see para. 115)

6. In the context of determining whether a concentration has a Community dimension, Regulation No 139/2004 on the control of concentrations between undertakings refers necessarily, for practical reasons, to the turnover in the preceding financial year. The reason for this is that there are normally audited accounts only for the last complete financial year, the accounts for more recent periods lack the safeguards provided by audited accounts.

As regards a concentration which took place in 2005, the accounts for the preceding financial year, within the meaning of Article 5 of the regulation, are those for 2004. An undertaking having an obligation to prepare annual accounts that are to be audited only has one sort of official accounts namely those which have been prepared and audited in accordance with the relevant law. Under Article 4 of Regulation No 1606/2002 on the application of international accounting standards, the IFRS were not applicable and obligatory until 2005. ‘Reconciliation’ of the accounts for 2004 with IFRS principles is provided for under Regulation No 707/2004 amending Regulation No 1725/2003 adopting certain international accounting standards in accordance with Regulation No 1606/2002, in order to facilitate the transition between the old and the new standards by providing shareholders and investors with a reference point with which to compare the 2005 accounts, the first accounts prepared according to the new standards. Moreover, the ‘reconciled’ accounts for 2004, prepared for comparative purposes only, do not provide the same safeguards as the official accounts prepared according to the general accounting principles and subject to audit. It follows that the fact that the new IFRS accounting rules were in force on the date a public offer in 2005 was announced, is irrelevant.

(see paras 128-129)

7. If the Community system in relation to mergers allows account to be taken of events that have taken place in the life of the undertaking since the end of the last accounting year, such as transfers or acquisitions of undertakings during the current financial year, that premiss is designed, in principle, as is clear from the Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, to take into account changes that have taken place in the financial position of the undertaking and not to conduct a full review of the accounting treatment of a financial position which has remained stable. It would run counter to the requirements of legal certainty and speed pursued by the Community legislature to make applicability of the Community merger regulation dependent in every case on a complete review by the Commission of the accounting systems of the undertakings concerned.

(see para. 132)

8. The objective of measuring the economic strength of undertakings does not oblige the Commission, in an individual case in which Articles 1 and 5 of Regulation No 139/2004 on the control of concentrations between undertakings apply, to make an overall assessment of the merits of the various accounting approaches provided for by Community law, in particular where accounts exist which have been audited according to just one of those standards where the standard concerned was in fact the one required by both national law and the Community law applying at the relevant time.

On the other hand, the fact that the Community legislature envisaged that the international accounting standards adopted under Regulation No 1606/2002 on the application of international accounting standards should result in a true and fair view of the financial position of an undertaking does not imply ipso facto the technical superiority of such standards for the purpose of Article 5 of Regulation No 139/2004 on concentrations in comparison with the accounting standards applicable under the laws of the Member States up to 1 January 2005. Regulation No 1606/2002, adopted on the basis of Article 95(1) EC, constitutes a harmonisation measure and does not contain any value judgments with regard to the various national standards.

(see paras 144-145)

9. It is clear from that Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, that the turnover of the undertakings concerned must be calculated on the basis of reliable, objective and easily identifiable figures. Although paragraph 26 of the notice states that ‘as a general rule therefore the Commission will refer to audited or other definitive accounts …’ and ‘is, in any case, reluctant to rely on management or any other form of provisional accounts in any but exceptional circumstances’, that does not mean that the notice places audited accounts on an equal footing with ‘other definitive accounts’. Paragraph 26 of the notice cannot be interpreted as offering a number of options from which it is possible to choose freely, but as being designed to cover particular situations in which there are no audited accounts for the preceding year. Paragraph 27 of the notice moreover only refers to the most recent audited accounts and not to ‘other definitive accounts’.

(see para. 146)

10. The exceptional circumstances which allow the Commission to rely on management or any other form of provisional accounts, mentioned in paragraphs 26 and 27 of the Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, refer solely, except as regards differences with regard to the accounting standards of States that are not members of the European Union, to significant, permanent changes affecting the financial position of the undertakings concerned (acquisitions or divestments subsequent to the date of the audited accounts, factory closures).

(see para. 179)

11. As stated in paragraph 9 of the Notice on the calculation of turnover under Regulation No 4064/89 on the control of concentrations between undertakings, the concept of ‘turnover’ as used in Article 5 of the regulation refers explicitly to ‘the amounts derived from the sale of products and the provision of services’.

By way of exception, the notice envisaged the possibility, in certain circumstances, of calculating the turnover in a different way than by reference to the aggregate of sales of products or the provision of services. In that regard, paragraph 13 of the notice states that the turnover of a service undertaking which acts as an intermediary may consist solely of the amount of commissions which it receives. This paragraph of the notice concerns a particular category of intermediaries within the services sector only, whose sole remuneration is the amount of commission they receive. It is therefore an exception to the general rule that the relevant turnover must be calculated on the basis of the total amount of sales. The concept of intermediary must therefore be interpreted strictly.

It follows that as the activity of distributors involves, in particular, purchasing electricity or gas from their suppliers and then distributing it and selling it to the end consumers, it cannot be classified as the provision of services limited to supplying a product on behalf of generators and other operators. Such an undertaking cannot therefore from a legal point of view be regarded as a mere intermediary within the meaning of paragraph 13 of the notice nor can it in principle be covered by the exception envisaged in it, since the revenue derived from distribution falls within the undertakings’ ordinary activities within the meaning of Article 5(1) of Regulation No 139/2004.

(see paras 203, 208, 210-211, 216)