Case T-411/07

Aer Lingus Group plc

v

European Commission

(Competition – Concentrations – Decision declaring a concentration incompatible with the common market – Concept of concentration – Disposal of all the shares acquired, so as to restore the situation prevailing before the implementation of the concentration – Refusal to order appropriate measures – Lack of competence of the Commission)

Summary of the Judgment

1.      Competition – Concentrations – Commission decision refusing to initiate proceedings under Article 8(4) of Regulation No 139/2004 – Concentration declared incompatible with the common market – Purchase of securities not granting control – Concentration which has not been implemented – Inapplicability of Article 8(4) of Regulation No 139/2004

(Council Regulation No 139/2004, Art. 8(4) and (5))

2.      Competition – Concentrations – Examination by the Commission – Obligation to suspend the concentration – Derogation in the case of public bids – Conditions – Effects

(Council Regulation No 139/2004, Art. 7(2))

3.      Competition – Concentrations – Competence of the Commission – No power to adopt binding measures pursuant to Article 21(3) of Regulation No 139/2004

(Council Regulation No 139/2004, Art. 21(3))

1.      Where a notified concentration which has been declared incompatible with the common market has not been ‘implemented’ and one of the two undertakings which are parties to the concentration has acquired a shareholding in the other undertaking, without that shareholding conferring control on it, the Commission may dismiss an application to initiate the procedure under Article 8(4) of Regulation No 139/2004 on the control of concentrations between undertakings, and refuse to adopt provisional measures under Article 8(5) of that regulation, even if, during the evaluation of the compatibility of the concentration, the Commission classed the latter and the acquisition of the shareholding as a ‘single concentration’.

In order to assess the lawfulness of such a decision in the light of the power invested in the Commission to require an undertaking to dissolve a concentration, the reference point must be the relevant moment established by Article 8(4) of the merger regulation, which envisages a ‘concentration’ which ‘has already been implemented’ and which ‘has been declared incompatible with the common market’.

Any transaction or group of transactions which brings about ‘a change of control on a lasting basis’ by conferring ‘the possibility of exercising decisive influence on the undertaking concerned’ is a concentration which is deemed to have arisen for the purposes of the merger regulation. Such concentrations have the following characteristics in common: where before the operation there were two distinct undertakings for a given economic activity, there will only be one after it. Unlike in the case of a merger in which one of the two undertakings concerned ceases to exist, the Commission thus has to determine whether the result of the implementation of the concentration is to confer on one of the undertakings the power to control the other, that is to say a power which it did not previously hold. That power to control is the possibility of exercising decisive influence on an undertaking, in particular where the undertaking with that power is able to impose choices on the other in relation to its strategic decisions. The acquisition of a shareholding which does not, as such, confer control as defined in Article 3 of the merger regulation does not constitute a concentration which is deemed ‘to have arisen’.

In addition, the concept of concentration cannot be extended to cases in which control has not been obtained and the shareholding at issue does not, as such, confer the power of exercising decisive influence on the other undertaking, but forms part, in a broader sense, of a notified concentration examined by the Commission and declared incompatible with the common market following that examination, without there having been any change of control within the above meaning. The Commission is not granted such a power under the merger regulation. According to the actual terms used in Article 8(4) of the regulation, the power to require the disposal of all the shares acquired by an undertaking in another undertaking exists only ‘to restore the situation prevailing prior to the implementation of the concentration’. If control has not been acquired, the Commission does not have the power to dissolve the concentration.

Such a conclusion is not affected by the fact that the Commission considers, during the examination procedure, that the shareholding acquired falls within the scope of the notified concentration and constitutes, with it, a ‘single concentration’. At the stage of the examination procedure, the Commission is not concerned with ‘restoring the situation prevailing prior to the implementation of the concentration’ in the event that it were to adopt a decision declaring incompatibility, even where the notified concentration has been implemented. Those concerns arise only once a final decision has been adopted and when it is necessary to draw consequences from that decision after it becomes apparent that the situation at hand is not in accordance with it.

(see paras 58-59, 63-66, 79, 88)

2.      The obligation to suspend the implementation of the concentration until it has been authorised by the Commission is subject to an automatic derogation in the case of public bids or acquisition of control by means of a series of transactions in securities involving various sellers. To be able to benefit from that derogation, the interested parties must notify the Commission of the concentration without delay and not exercise the voting rights attached to those securities. That derogation effectively transfers the risk of having the operation prohibited to the acquirer. If, after the examination procedure, the Commission considers that the notified operation must be prohibited, the securities acquired to implement the concentration have to be disposed of.

(see para. 82)

3.      Article 21(3) of Regulation No 139/2004 on the control of concentrations between undertakings, which states that ‘[n]o Member State shall apply its national legislation on competition to any concentration that has a Community dimension’, does not confer the power on the Commission to adopt a measure producing binding legal effects of such a kind as to affect the interests of an undertaking which is a party to a concentration.

(see para. 90)