Case T‑53/21
(publication by extracts)
EVH GmbH
v
European Commission
Judgment of the General Court (Fifth Chamber, Extended Composition) of 20 December 2023
(Competition – Concentrations – German electricity and gas markets – Decision declaring a concentration compatible with the internal market – Obligation to state reasons – Concept of ‘single concentration’ – Right to effective judicial protection – Right to be heard – Definition of the market – Period of analysis – Assessment of the effects of the transaction on competition – Manifest errors of assessment – Undertakings – Duty of diligence)
1. Concentrations between undertakings – Examination by the Commission – Single concentration – Definition – Conditions – Interdependent operations conferring on one or more undertakings direct or indirect economic control over the activities of one or more other undertakings – Acquisition by independent undertakings of the control of different targets in an asset swap – Not included – No functional link between the operations at issue
(Council Regulation No 139/2004, recital 20 and Art. 3(1))
(see paragraphs 82-86, 97-102)
2. Acts of the institutions – Statement of reasons – Obligation – Scope – Decision to apply rules on concentrations between undertakings – Decision authorising a concentration operation
(Art. 296 TFEU; Council Regulation No 139/2004, Arts 2, 6(1)(c) and 8(2))
(see paragraphs 107-110, 112-116, 118, 119, 125)
3. Concentrations between undertakings – Administrative procedure – Obligations of the Commission towards qualified third parties – Right to be heard – Scope
(Council Regulation No 139/2004, Art. 18(4); Commission Regulation No 802/2004, Arts 11(c) and 16(1))
(see paragraphs 131-143, 146-148)
4. Concentrations between undertakings – Examination by the Commission – Commission decision declaring a concentration compatible with the internal market – Requirements arising from the principle of effective judicial protection – Obligation to publish – Scope – Publication of a résumé of the decision at issue more than one year after its adoption – No effect on the validity of that decision
(Arts 15, 296 and 297(2) TFEU; Charter of Fundamental Rights of the European Union, Art. 47; Council Regulation No 139/2004, Arts 6(1)(c), 8(2) and 20(1))
(see paragraphs 164-168)
5. Concentrations between undertakings – Examination by the Commission – Adoption of a decision finding a concentration transaction to be compatible with the internal market – Commitments of the undertakings concerned capable of rendering the notified operation compatible with the internal market – Margin of discretion – Judicial review – Limits
(Art. 263 TFEU; Council Regulation No 139/2004, Arts 2, 6(1)(c) and 8(2))
(see paragraphs 171-177)
6. Concentrations between undertakings – Examination by the Commission – Account taken of data provided by the parties to the transaction – Whether permissible
(Council Regulation No 139/2004, Arts 2, 6(1)(c) and 8(2))
(see paragraphs 185-188)
7. Action for annulment – Review of legality – Criteria – Account taken only of elements of fact and law existing at the date on which the contested measure was adopted – Line of argument referring to an analysis drawn up after the adoption of that measure but based on data existing on the date of adoption of that same measure – Admissibility – Conditions
(Art. 263 TFEU; Council Regulation No 139/2004, Arts 2 and 8(2))
(see paragraphs 194, 195, 198-201)
8. Concentrations between undertakings – Assessment of the compatibility with the internal market – Creation or reinforcement of a dominant position significantly hindering effective competition in the internal market – Examination by the Commission – Prospective analysis – Definition of the period of analysis – Criteria
(Council Regulation No 139/2004, Art. 2(2) and (3))
(see paragraphs 230-233, 406, 407)
9. Concentrations between undertakings – Examination by the Commission – Definition of the relevant market – Criteria – Substitutability of products – Demand-side substitutability – Assessment of the substitutability of the retail supply of electricity and gas under basic supply and special contracts respectively
(Council Regulation No 139/2004, Art. 2)
(see paragraphs 252-274)
10. Concentrations between undertakings – Examination by the Commission – Definition of the relevant market – Effect of Commission’s previous decision-making practice – None
(Council Regulation No 139/2004, Art. 2)
(see paragraphs 275-277, 308)
11. Concentrations between undertakings – Examination by the Commission – Definition of the relevant market – Concentration between two energy-supplying undertakings providing for an asset swap – Burden of proof on the party challenging the definition of the relevant markets – Need to adduce serious indicia of the genuine existence of a competition concern requiring an examination by the Commission – Failure to produce sufficient evidence by the party challenging the approach adopted
(Council Regulation No 139/2004, Arts 2, 6(1)(c) and 8(2))
(see paragraphs 313, 314)
12. Concentrations between undertakings – Examination by the Commission – Definition of the relevant market – Possibility for the Commission to leave that definition open – Conditions
(Council Regulation No 139/2004, Arts 2, 6(1)(b) and (c) and 8(2))
(see paragraphs 323, 329, 336)
13. Concentrations between undertakings – Assessment of the compatibility with the internal market – Creation or reinforcement of a dominant position significantly hindering effective competition in the internal market – Examination by the Commission – Assessment of the anticompetitive effects of the transaction – Evidence – High market share
(Council Regulation No 139/2004, recital 32 and Art. 2; Commission Notice 2004/C 31/03, paragraphs 17 and 18)
(see paragraphs 356-359)
14. Concentrations between undertakings – Examination by the Commission – Commission decision declaring a concentration compatible with the internal market – Assessment of the anticompetitive effects of the transaction – Burden of proof on the party challenging the Commission’s analysis in that regard
(Council Regulation No 139/2004, Arts 2, 6(1)(c) and 8(2))
(see paragraphs 391-395, 400, 401, 412, 413, 421, 423, 433-435, 440, 445, 454, 465, 467)
15. Concentrations between undertakings – Examination by the Commission – Economic assessments – Discretion – Duty of diligence – Scope
(Council Regulation No 139/2004)
(see paragraphs 489-493)
Résumé
In March 2018, RWE AG and E.ON SE, companies governed by German law, announced that they wanted to engage in a complex asset swap by means of three concentration operations (‛the overall transaction’).
By the first concentration operation, RWE, which is active across the whole supply chain of energy provision in several European countries, wished to acquire sole or joint control over certain generation assets of E.ON, an electricity provider which operates in several European countries. The second concentration operation consisted in the acquisition by E.ON of the sole control over the distribution and retail energy business, as well as some generation assets of Innogy SE, a subsidiary of RWE. As for the third concentration operation, it concerned the acquisition of 16.67% of E.ON’s shares by RWE.
The first and second concentration operations were reviewed by the European Commission, while the third concentration operation was reviewed by the Bundeskartellamt (Federal Competition Authority, Germany).
In April 2018, the German undertaking EVH GmbH, which generates electricity on German territory from both conventional and renewable energy sources, notified the Commission of its wish to participate in the procedure relating to the first and second concentration operations and, consequently, to receive the documents relating thereto. (1)
The second concentration operation was notified to the Commission on 31 January 2019. By decision of 7 March 2019, the Commission found that the concentration in question raised serious doubts as to its compatibility with the internal market and the Agreement on the European Economic Area (EEA) and that, consequently, it was necessary to initiate in-depth proceedings pursuant to Article 6(1)(c) of Regulation No 139/2004. In the course of those proceedings, however, the Commission found, in view of the commitments offered by E.ON in order to remedy the competition-related issues identified by the Commission, that those commitments were sufficient to dispel the serious doubts as to the compatibility of the concentration with the internal market. Consequently, by decision of 17 September 2019, it declared the concentration compatible with the internal market and with the EEA Agreement. (2)
EVH (3) brought an action before the General Court seeking the annulment of the decision at issue. In dismissing the action in its entirety, the Court bases itself, in part, on considerations similar to those that led it to dismiss, by judgment of 17 May 2023, (4) the action brought by EVH against the Commission’s decision declaring the first concentration operation compatible with the internal market, in particular, as regards the plea alleging incorrect division of the analysis of the overall transaction, the plea alleging infringement of the applicant’s right to effective judicial protection and its pleas relating to the definition of the period of analysis. When asked, moreover, to rule on various errors identified by EVH as being such as to vitiate the analysis put forward by the Commission and the inferences drawn by it, in particular in the definition of the relevant markets and in the analysis of the effects of the operation in question on competition, the Court exercises its powers of judicial review in that regard, taking account of the specific characteristics of the analysis to be carried out by the Commission by virtue of its prerogatives in control of concentrations.
Findings of the Court
First of all, the Court dismisses a series of pleas alleging incorrect division of the analysis of the overall transaction, infringement of the obligation to provide a statement of reasons, infringement of the applicant’s right to be heard and infringement of its right to effective judicial protection. As regards, more specifically, participation in the proceedings to which EVH could be entitled under the EC Merger Regulation, the Court observes that, in concentration control proceedings, when a third party requests to be heard and demonstrates a sufficient interest to that effect, it is for the Commission to inform it of the nature and object of the proceedings, in so far as is necessary to enable it effectively to put forward its views on the concentration, without thereby conferring on it a right of full access to all of the evidence in the file. In the present case, it is not disputed that the applicant was indeed aware of the nature and object of the proceedings at issue. In those conditions, EVH cannot criticise the Commission for having failed to provide it with all of the information in its possession or, consequently, of having disregarded its right to be heard.
Second, the Court examines the plea alleging manifest errors of assessment by the Commission in the assessment of the compatibility of the concentration at issue with the internal market. In that regard, the Court begins by observing that, in the exercise of the jurisdiction conferred on it by the EC Merger Regulation, the Commission has a certain discretionary power, in particular in respect of the complex economic assessments it is called upon to carry out thereunder. Consequently, the review by the EU judicature of the exercise of that discretion must take account of the discretionary margin thus conferred on the Commission.
That said, the Court finds, first of all, that the examination of the conditions in which the Commission handled the file does not reveal anything supporting EVH’s contention that the Commission’s analysis was based on an incomplete set of relevant data. The Court observes in that regard that the Commission must reconcile the need to carry out a complete investigation in order to have all the relevant facts for its assessment in its possession with the need for speed by which it is bound in all concentration control proceedings. In those circumstances, the Court finds that the Commission cannot be criticised for having based itself solely on the information provided by the parties to the concentration where there is nothing to suggest that it is inaccurate, provided that that is all of the relevant data to be taken into consideration in order to appraise a complex situation. The Court further observes that the applicant may submit studies drawn up specifically in order to challenge the lawfulness of the contested decision, provided that they are not an attempt to modify the legal and the factual framework submitted to the Commission previously as part of the procedure that led to the adoption of the contested decision. In the present case, however, the studies produced by the applicant are based on different data than what existed at the time of adoption of the contested decision, with the result that they are not such as to demonstrate that the Commission failed to take account of certain data. The Court further finds that the first market investigation was conducted correctly, before finding that the plea alleging a failure to take certain data into account is without foundation.
Next, after finding that EVH may not criticise the Commission for having defined the period of analysis incorrectly for reasons relating essentially to the prospective nature of the analysis required of it, in accordance with the considerations set out on that point in its judgment of 17 May 2023, the Court turns to the examination of the pleas alleging incorrect definition of the relevant markets. (5)
In that regard, the Court rules, in the first place, on the definition of retail supply markets for electricity and gas, challenged, in the present case, in terms of both the product and the geographical range. Noting at the outset, that, in order to draw a distinction in the product market between customers benefiting from basic supply and those benefiting from special contracts, the Commission based itself on a competitive analysis of the substitutability between basic contracts and special contracts for supplying the customer base concerned, finding, in the present case, that it was insufficient, the Court finds that EVH has not succeeded in demonstrating the error of assessment allegedly made by the Commission in drawing, in view of the preceding finding, a distinction between those two modes of supply. Similarly, in the definition of the geographical market, nor did the Commission make a manifest error of assessment in finding that the retail supply of electricity and gas to households and small-scale commercial customers as part of the basic supply had a local dimension, limited to the basic supply area concerned, and that the retail supply of electricity and gas to households and small-scale commercial customers under the special contracts had a national dimension with local aspects.
In the second place, as regards the markets for metering services and electromobility, the Court finds that the applicant could not, conversely, criticise the Commission for having left open the question of the definition of the relevant product market, as it had stated explicitly that none of the market definitions enabled a finding that there was a significant hindrance to effective competition following the concentration, without any manifest error of assessment having been demonstrated on that point. The Court finds that the same holds true for when the Commission finds that there are anticompetitive effects, irrespective of the definition employed, provided that, following the modifications made by the undertakings concerned, the concentration is no longer liable to hinder significantly effective competition, irrespective of the definition of relevant market.
Lastly, the Court examines the pleas alleging incorrect assessment of the effects of the concentration.
As regards, in the first place, the effects on the markets for the retail supply of electricity and gas, the examination of the evidence on which the Commission based its analysis does not reveal any manifest error of assessment by it, as it found that the concentration would not hinder significantly effective competition on the markets under consideration as part of the basic supply in Germany. It is also apparent from that examination that the Commission examined sufficiently the effects of the concentration on the markets under consideration in terms of the special contracts without committing any manifest error of assessment, in particular for the creation of capacity or incentives for a potential pricing strategy with negative margins to push out small competitors or to hold all of the first places in the internet price comparison rankings.
As regards, in the second place, the effects on the markets for the distribution of electricity and gas, the applicant may not criticise the Commission for having insufficiently examined the effects of the activities developed on those markets and for having conducted a manifestly incorrect assessment, in view of the evidence put forward by the Commission on that point.
In the third place, the Court reaches a similar conclusion in respect of the effects of the concentration on the markets for metering services and electromobility. As regards, more specifically, the latter, the Court finds that the Commission carried out a coherent and complete analysis, including off-motorway, of the competitive elements in terms of the smallest conceivable market, in particular in the light of the market share held by the parties to the concentration, their competitive proximity, the structure of the market and the barriers to entry; the applicant has not shown that the data used by the Commission were incorrect.
In the fourth and last place, the Court dismisses the plea alleging incorrect assessment of the effects of the customer solutions based on those customers’ data. In those circumstances, the Court finds, lastly, that the Commission may not be criticised for having disregarded in any way its obligation of diligence in the exercise of its prerogatives.
In the light of those considerations, the Court therefore dismisses the action in its entirety.