Bertelsmann AG and Sony Corporation of America v Independent Music Publishers and Labels Association (Impala).
Date: 2008-07-10
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).
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.
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).
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.
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).
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.
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).
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).
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).
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.
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).
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.
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 a dopted (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).
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.