ORDER OF THE COURT OF FIRST INSTANCE (Seventh Chamber)
13 February 2008(*)
(Taxation of costs)
In Case T‑310/00 DEP,
Verizon Business Global LLC, legal successor in title to MCI, Inc., established in Wilmington, Delaware (United States), represented by P. Alexiadis and M. Cole, solicitors,
applicant,
supported by
Federal Republic of Germany, represented by W.-D. Plessing and by B. Muttelsee-Schön, acting as Agents,
intervener,
v
Commission of the European Communities, represented initially by P. Oliver, N. Khan and P. Hellström, and subsequently by Messrs Oliver and Khan, acting as Agents,
defendant,
supported by
French Republic, represented by G. de Bergues and F. Million, acting as Agents,
intervener,
APPLICATION for taxation of the costs to be recovered from the Commission by the applicant following the judgment of the Court of First Instance of 28 September 2004 in Case T‑310/00 MCI v Commission [2004] ECR II‑3253,
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Seventh Chamber),
composed of N.J. Forwood (Rapporteur), President, E. Moavero Milanesi and L. Truchot, Judges,
Registrar: E. Coulon,
makes the following
Order
Facts, procedure and forms of order sought
1 On 28 June 2000, the Commission adopted Decision 2003/790/EC, declaring a concentration incompatible with the common market and the EEA Agreement (Case COMP/M.1741 – MCI WorldCom/Sprint) (OJ 2003 L 300, p. 1, ‘the contested decision’), on the basis, in particular, of Article 8(3) 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between undertakings (OJ 1989 L 395, p. 1, corrigendum in OJ 1990 L 257, p. 13, ‘the Merger Regulation’), since repealed by Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1).
2 By application lodged at the Registry of the Court of First Instance on 27 September 2000, WorldCom, Inc. brought an action for annulment of the contested decision.
3 By order of the President of the First Chamber of the Court of First Instance of 16 May 2001, the Federal Republic of Germany and the French Republic were granted leave to intervene in support of the forms of order sought by WorldCom and the Commission respectively.
4 On 21 July 2002, WorldCom and most of its subsidiaries in the United States filed a voluntary petition for reorganisation under Chapter 11 of the United States Bankruptcy Code before the Bankruptcy Court for the Southern District of New York.
5 Following a hearing specifically devoted to examination of the questions raised by the action regarding admissibility, the interest in bringing proceedings and the power of the Commission to adopt the contested decision, the Court of First Instance annulled that decision by its judgment of 28 September 2004 in MCI v Commission (Case T‑310/00 [2004] ECR II‑3253) and ordered the Commission to bear, in addition to its own costs, those of MCI, Inc., the legal successor in title to WorldCom.
6 On 6 January 2006, Verizon Communications, Inc. acquired MCI following its emergence from the voluntary reorganisation proceedings. For the purpose of the present proceedings, Verizon Business Global LLC is to be regarded as legal successor in title to MCI (both, ‘the applicant’).
7 By letter of 20 March 2006, the applicant submitted a proposal for an amicable settlement on costs to the Commission.
8 By letter of 7 July 2006, the Commission submitted its detailed observations on that proposal to the applicant. The Commission stated that it was unable to provide a firm view on the quantum of the claims or make any payment until it had been given additional information and documents.
9 A certain amount of information and certain supporting documents were made available to the Commission on 17 October 2006.
10 By letter of 22 November 2006, the Commission submitted to the applicant a detailed analysis of the proposal included in the latter’s letter of 20 March 2006, in the light of the information and documents forwarded on 17 October 2006.
11 When the parties failed to reach an agreement on the amount of recoverable costs, the applicant, by application lodged at the Court Registry on 31 January 2007, brought the present application for taxation of costs pursuant to Article 92(1) of the Rules of Procedure of the Court of First Instance.
12 By a document lodged at the Court Registry on 12 April 2007, the Commission submitted its observations on the application.
13 The applicant claims that the Court should:
– order the Commission to pay to it the sum of EUR 938 000;
– order the Commission to pay the costs relating to the present application for taxation of costs.
14 The Commission contends that the Court should set the total amount of recoverable costs at EUR 175 000.
Law
Arguments of the parties
15 In an annex to its application, the applicant states that the amount of EUR 938 000 claimed includes:
– EUR 405 900 in Solicitors’ fees (Partner) at an average hourly rate of EUR 495;
– EUR 304 000 in Solicitors’ fees (Associate) at an average hourly rate of EUR 320;
– EUR 196 000 in Counsel’s fees;
– EUR 10 200 in Experts’ fees;
– EUR 22 000 for other disbursements.
16 In addition, the applicant produces, in the annex to its application, copies of invoices and other documents which were submitted to the Commission to substantiate its claim.
17 As a preliminary point, the applicant submits that its application in the main proceedings addressed numerous legal issues, which it had to plead appropriately and fully. While the Court of First Instance ultimately chose to split the oral proceedings, thereby addressing the grounds relating to the applicant’s interest in bringing the proceedings and the Commission’s power to adopt the decision in the initial hearing, that did not relieve the applicant of its obligation to plead its case in full, and does not represent a bar to recovery of its legitimately incurred costs relating to the issues that the Court of First Instance did not deal with. In its defence, the Commission itself described the proceedings as being of ‘considerable importance’.
18 Further, the applicant submits, first, that the contested decision was 90 pages in length and addressed questions concerning the Commission’s power to adopt the decision, the existence of three distinct relevant product markets and a number of procedural and methodological matters.
19 The applicant submits, secondly, that its application raised important new questions concerning the Commission’s powers under the Merger Regulation, the definition of the relevant product market, the assessment of dominance and the proper conduct of the administrative procedure. Many of those questions had not been examined in the course of the administrative procedure and their examination required extensive research.
20 The applicant submits, thirdly, that, in its reply, it had, on the one hand, to address the issues of the admissibility of the application and its interest in bringing proceedings raised by the Court of First Instance of its own motion – in particular whether the principles set out by the Court of First Instance in Cases T‑102/96 Gencor v Commission [1999] ECR II‑753 and T‑22/97 Kesko v Commission [1999] ECR II‑3775 applied in the present case –, and, on the other hand, to respond to the arguments put forward by the Commission in its defence, in particular as regards the issues of competence and the alleged substantive and methodological errors in the contested decision.
21 The applicant submits, fourthly, that it had to lodge observations on the statements in intervention filed by the Federal Republic of Germany and, particularly, the French Republic.
22 The applicant submits, fifthly, that it had to respond to the request of the Court of First Instance for observations and supporting documents regarding its ongoing interest in bringing proceedings after court-supervised reorganisation proceedings had begun in the United States.
23 Sixthly and finally, the applicant submits, as regards the oral procedure, that while its preparations for the oral hearing focused on the paragraphs in the Report for the Hearing addressing the issues of admissibility, interest in bringing proceedings and the power of the Commission to adopt the contested decision, it also prepared its case in relation to the remaining substantive issues, to ensure that its interests would not be prejudiced should issues related to these pleas be examined by the Court of First Instance. Moreover, the oral hearing required the preparation of Queen’s Counsel (QC).
24 The Commission contends that the application for taxation makes no attempt to address the objections set out in the Commission’s letters of 7 July and 22 November 2006.
25 The application for taxation itself contains no information on the total number of hours worked or their breakdown by reference to the different tasks performed by the lawyers as part of the proceedings before the Court of First Instance, enabling the Court to check whether the calculation is correct (see, in this respect, order in Joined Cases T‑226/00 DEP and T‑227/00 DEP Nan Ya Plastics and Far Eastern Textiles v Council [2003] ECR II‑685, paragraph 44; order of the Court of First Instance of 29 October 2004 in Case T‑77/02 DEP Schneider Electric v Commission, not published in the ECR, paragraph 58; and order in Case T‑243/01 DEP Sony Computer Entertainment Europe v Commission [2005] ECR II‑1121, paragraph 31). As regards the annexes to that application, one sets out the overall number of hours worked by the applicant’s solicitors, but not the number of hours worked by its counsel. The remainder of the annexes consists of invoices and two pieces of correspondence. The Commission questions whether it is in the interest of the sound administration of justice to allow a party to submit an application for taxation in that form. The Commission contends that, in circumstances such as these, the Court of First Instance is entitled to dismiss the application without further analysis and resolve the parties’ dispute summarily by awarding the applicant the sum that the Commission has offered, namely EUR 175 000.
26 Should the Court of First Instance find it necessary to consider the application for taxation further, the Commission submits, essentially, that both the number of hours worked by the applicant’s lawyers and the hourly rates they demand are clearly excessive. The Commission refers, in this respect, to the detailed observations contained in its letter of 22 November 2006.
Findings of the Court
27 Article 92(1) of the Rules of Procedure provides:
‘If there is a dispute concerning the costs to be recovered, the Court of First Instance hearing the case shall, on application by the party concerned and after hearing the opposite party, make an order, from which no appeal shall lie.’
28 Under Article 91(b) of the Rules of Procedure ‘expenses necessarily incurred by the parties for the purpose of the proceedings, in particular the travel and subsistence expenses and the remuneration of agents, advisers or lawyers’ are to be regarded as recoverable costs. It follows from that provision that recoverable costs are limited, first, to those incurred for the purpose of the proceedings before the Court of First Instance and, second, to those which were necessary for that purpose (see order in Case T‑342/99 DEP Airtours v Commission [2004] ECR II‑1785, paragraph 13, and the case-law cited there).
29 It is settled case-law that the Community Courts are not empowered to tax the fees payable by the parties to their own lawyers, but may determine the amount of those fees to be recovered from the party ordered to pay the costs. When ruling on an application for taxation of costs, the Court of First Instance is not obliged to take account of any national scale of lawyers’ fees or any agreement in that regard between the party concerned and his agents or advisers (see order in Airtours v Commission, paragraph 17, and the case-law cited there).
30 It has also consistently been held that, in the absence of relevant Community provisions laying down fee-scales, the Court must make an unfettered assessment of the facts of the case, taking into account the purpose and nature of the proceedings, their significance from the point of view of Community law as well as the difficulties presented by the case, the amount of work generated by the proceedings for the agents and advisers involved and the financial interests which the parties had in the proceedings (see order in Airtours v Commission, paragraph 18, and the case-law cited there).
31 It is on the basis of those criteria that the amount of recoverable costs in the present case must be assessed.
The financial interests which the parties had in the proceedings
32 It must be borne in mind that, by the contested decision, the Commission prohibited the then largest concentration in the world. In 1999, WorldCom’s worldwide turnover amounted to approximately USD 37 billion and that of the other party to the concentration, Sprint Corp., totalled approximately USD 17 billion. Consequently, the case in the main proceedings had important repercussions and the financial interests at stake were considerable, not only for the applicant but for all the relevant markets as well.
The purpose and nature of the proceedings, their significance from the point of view of Community law and the difficulties presented by the case
33 In the first place, the Court of First Instance notes that, as regards its purpose and nature, the case in the main proceedings was extremely complex from a factual, economic and technical point of view, particularly as it called into question, first, the definition of the relevant service market, which the Commission had identified as the ‘market for the provision of top-level or universal connectivity’, and, second, the Commission’s assessment that the concentration in issue would have led to the creation or the strengthening of a dominant position on that market.
34 However, it must be added that, owing to their involvement in the entire administrative procedure, the applicant’s lawyers were already perfectly familiar with the complex economic and technical aspects of the case. Consequently, the Commission rightly pointed out that most of the substantive issues raised in the case in the main proceedings had already been raised, in almost identical terms, in response to the statement of objections.
35 In the second place, the Court of First Instance considers that, as regards the definition of the scope of the Merger Regulation, the case in the main proceedings raised a number of new and sensitive legal questions from the point of view of Community law, particularly as regards the Commission’s power to adopt a decision under that regulation. In particular, the following questions arose:
– in order to assess whether a concentration has a Community dimension, must account be taken of the turnover of a joint venture controlled jointly by one of the undertakings which is party to the concentration and one or several third-party undertakings, that situation not being specifically dealt with under Article 5 of the Merger Regulation;
– to what extent does the Commission retain power where, following a sale of shares taking place after the notification of the concentration in issue, the turnover of the notifying parties falls below the threshold provided for under the Merger Regulation, with the result that, on the date on which the decision is adopted, the transaction no longer has a Community dimension;
– to what extent is the Commission entitled to adopt a decision prohibiting a concentration once the notifying parties have formally withdrawn their notification and advised the Commission that they were abandoning the proposed concentration as notified;
– does the Commission act ultra vires where it takes a view, in its decision, on commitments (proposed remedies) which were formally withdrawn by the notifying parties and, if so, what are the legal consequences of its exceeding its powers in the context of an application for annulment.
36 In addition, the case in the main proceedings allowed the Court of First Instance to clarify, in furtherance of its earlier case-law, the extent to which an undertaking – which, for reasons partly linked to the Commission’s opposition, has definitively abandoned its proposed concentration – has an interest in seeking the annulment of the decision declaring that transaction to be incompatible with the common market.
37 It must be pointed out, however, that the importance or the legal difficulty of the questions raised were not deemed to be such as to justify referral of the case in the main proceedings to a Chamber sitting in extended composition, in accordance with Article 14(1) of the Rules of Procedure.
The volume of work done
38 Even though, in the circumstances of this case, it was open to the applicant to entrust the defence of its interests to several lawyers at the same time, in order to ensure that it obtained the services of lawyers with greater experience while entrusting high volume work to lawyers charging lower fees, the primary consideration of the Court of First Instance is nevertheless the total number of hours of work which may appear to be objectively necessary for the purpose of the proceedings before the Court, irrespective of the number of lawyers who may have provided the services in question (orders in Nan Ya Plastics and Far Eastern Textiles v Council, paragraph 44, and Airtours v Commission, paragraph 30).
39 It must be held, in this respect, that the difficulty of the legal questions raised, the complexity of the facts and the financial interests at issue in the case justified the applicant’s lawyers devoting a significant amount of work to it.
40 However, the Court of First Instance is not able, in the light of the explanations provided by the applicant in its application for taxation of costs, to regard as objectively necessary for the purpose of the proceedings before the Court of First Instance the amount of costs corresponding to all the lawyers’ fees claimed.
41 Firstly, even though it is clear from the foregoing that the dispute did require a significant amount of work from the applicant’s lawyers, the total amount of lawyers’ fees claimed nevertheless, at first sight, appears extremely high as an absolute value.
42 Secondly, the applicant’s lawyers represented the applicant during the administrative procedure, which allowed them to acquire in-depth knowledge of the matter that they were able to use during the procedure before the Court. In the course of the administrative procedure, the applicant had already put forward a large part of the arguments which it subsequently submitted to the Court of First Instance. That circumstance, in part, facilitated the lawyers’ work and reduced the time devoted to the preparation of the application (see, to that effect, order of the Court of First Instance of 19 December 2006 in Case T‑228/99 DEP WestLB v Commission, not published in the ECR, paragraph 72, and the case-law cited there).
43 Thirdly, it must be pointed out that the average hourly remuneration which the applicant seeks to have applied amounts – according to the information provided in the annex to the application – to EUR 495 for a partner (solicitor) and EUR 320 for an associate (solicitor). The applicant provided no information on the average hourly remuneration for its counsel. In its letter of 22 November 2006, the Commission took this to be EUR 450.
44 The Court of First Instance considers that those hourly rates seem excessive in the present case and that even a lower rate of around EUR 300 per hour can be regarded as appropriate only as remuneration for the services of a professional with a particularly large amount of experience, able to work very efficiently and fast (order in WestLB v Commission, paragraph 75; see also, to that effect, order of the Court of First Instance of 26 January 2006 in Joined Cases T‑79/96 DEP and T‑260/97 DEP Camar v Council and Commission, not published in the ECR, paragraph 67).
45 Fourthly, it must be noted that, according to a calculation based on figures provided in the annex to the application, the total number of hours of work for which the applicant seeks payment is made up of 820 hours worked by a partner (solicitor) and 950 hours worked by an associate (solicitor). To this is added an unspecified number of hours worked by counsel, which could be assessed at 435 hours, on the basis of the Commission’s estimate referred to in paragraph 43 above, which the applicant did not dispute.
46 Taking into consideration the nature of the case, the content of the procedural documents submitted by the applicant in the course of the written procedure and the limited purpose of the hearing, the Court of First Instance considers that that number of hours, which corresponds to more than 275 working days at 8 hours a day, exceeds very significantly what can be regarded as necessary for the purpose of the proceedings before the Court.
47 Fifthly, it must be borne in mind that the ability of the Court to assess the amount and value of work carried out is dependent on the accuracy of the information provided (see order in Airtours v Commission, paragraph 30, and the case-law cited there).
48 However, the applicant did not submit to the Court of First Instance any breakdown attributing the hours worked by the lawyers concerned to the different tasks performed in the context of the proceedings before the Court.
49 The itemised account included as an annex to the application provides only an overall figure for each category of lawyer involved (solicitor (partner), solicitor (associate) and counsel), with an average hourly rate given only for solicitors. The application for taxation of costs does not provide any detailed breakdown of that overall figure according to the number of hours devoted by the lawyers to each different task to allow the Court of First Instance to verify that that calculation is appropriate.
50 Moreover, the fee invoices included as an annex to the application have a purely probative and instrumental function. Therefore, it is not the task of the Court of First Instance to search for and identify among those documents those that could make up for the lack of precise information and detailed explanations in the application itself.
51 Those omissions are particularly regrettable since the Commission, in its letters of 7 July and 22 November 2006, submitted a series of thorough and detailed observations which the application for taxation entirely fails to address.
52 In these circumstances, it would have been particularly important for the applicant to show the need for those hours of work, by providing precise information on the tasks accomplished by its various lawyers for the purpose of the proceedings, on the number of hours devoted to each of those tasks and on the hourly rates applied.
53 The lack of more detailed information on hourly rates and the time spent on each stage in the proceedings makes it especially difficult to verify precisely the costs incurred for the purpose of the proceedings before the Court and those which were necessary for that purpose, and requires the Court to apply a strict test when assessing the fees recoverable in this case (see order of the Court of First Instance of 25 January 2007 in Case T‑214/04 DEP Royal County of Berkshire Polo Club v OHIM – Polo/Lauren (Royal County of Berkshire Polo Club), not published in the ECR, paragraph 18, and the case-law cited).
54 In the light of all the foregoing considerations, and having regard to the objections expressed by the Commission in its letters of 7 July and 22 November 2006 – which the applicant did not seriously try to refute for lack of relevance or merit –the amount of recoverable costs must be fixed at EUR 175 000, comprising EUR 78 000 for the application stage, EUR 54 500 for the reply stage, EUR 9 000 for the correspondence stage with the Court of First Instance, EUR 6 000 for the stage of observations on the statements in intervention and EUR 27 500 for the stage of the oral procedure.
The expenses of the present proceedings
55 Unlike Article 87(1) of the Rules of Procedure, which provides that a decision as to costs is to be given in the final judgment or in the order which closes the proceedings, there is no such provision in Article 92 of those Rules. The reason for that is that the Court, when determining the recoverable costs, takes account of all the circumstances of the case up until the time that the order for taxation of costs is made. Therefore, there is no need to rule separately on the expenses incurred for the purpose of the present proceedings (see, to that effect, order in Case C‑104/89 DEP Mulder and Others v Council and Commission [2004] ECR I‑1, paragraph 87).
56 Taking into account the outcome of the present proceedings, the amount of recoverable costs should not be increased by adding an amount relating to the present proceedings for taxation of costs (see, to that effect, order in Mulder and Others v Council and Commission, paragraph 88).
On those grounds,
THE COURT OF FIRST INSTANCE (Seventh Chamber)
hereby orders:
The total amount of costs to be paid by the Commission to Verizon Business Global LLC is fixed at EUR 175 000.
Luxembourg, 13 February 2008.