ORDER OF THE COURT OF FIRST INSTANCE (First Chamber)
30 June 2009 (*)
(Competition – Concentration – Sony BMG joint venture – Action becoming devoid of purpose – No need to adjudicate)
In Case T‑464/04,
Independent Music Publishers and Labels Association (Impala, association internationale), established in Brussels (Belgium), represented by S. Crosby and J. Golding, Solicitors, and by I. Wekstein, lawyer,
applicant,
v
Commission of the European Communities, represented by X. Lewis and K. Mojzesowicz, acting as Agents,
defendant,
supported by
Bertelsmann AG, established in Gütersloh (Germany), represented by P. Chappatte and J. Boyce, Solicitors,
by
Sony BMG Music Entertainment BV, established in Vianen (Netherlands),
and by
Sony Corporation of America, established in New York, New York (United States),
represented by N. Levy, Barrister, and by R. Snelders and T. Graf, lawyers,
interveners,
APPLICATION for annulment of Commission Decision 2005/188/EC of 19 July 2004 declaring a concentration compatible with the common market and the functioning of the EEA Agreement (Case COMP/M.3333 – Sony/BMG) (OJ 2005 L 62, p. 30),
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (First Chamber),
composed of V. Tiili (Rapporteur), President, F. Dehousse and I. Wiszniewska-Białecka, Judges,
Registrar: E. Coulon,
makes the following
Order
Facts, procedure and forms of order sought
1 The applicant, Independent Music Publishers and Labels Association (Impala, association internationale) (‘Impala’) is an international association incorporated under Belgian law, whose members are 2 500 independent music production companies.
2 On 9 January 2004, the Commission of the European Communities received notification pursuant to Article 4 of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1), as rectified (OJ 1990 L 257, p. 13) and as amended by Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ 1997 L 180, p. 1), of a proposed concentration by which Bertelsmann and Sony Corporation of America, part of the Sony group, proposed to merge their global recorded music businesses.
3 On 20 January 2004, the Commission sent out questionnaires to a number of players on the market. The applicant replied to that questionnaire and lodged a separate submission, in which it set out the reasons why in its view the Commission should declare the operation incompatible with the common market. The applicant set out its concerns about further concentration in the market for recorded music and the impact that this would have, first, on market access, including in the retail sector, the media, the internet and, secondly, on consumer choice.
4 By Decision 2005/188/EC of 19 July 2004, the Commission declared the concentration compatible with the common market and the functioning of the EEA Agreement (Case COMP/M.3333 – Sony/BMG, OJ 2005 L 62, p. 30) (‘the contested decision’). Following that decision, Sony BMG Music Entertainment BV (‘Sony BMG’) was incorporated.
5 By application lodged at the Registry of the Court of First Instance on 3 December 2004, the applicant brought an action seeking the annulment of the contested decision and put forward five pleas in law in support of that application.
6 Following their applications to that effect, Bertelsmann, Sony BMG and Sony Corporation of America were granted leave to intervene in support of the form of order sought by the Commission.
7 By judgment of 13 July 2006 in Case T-464/04 Impala v Commission [2006] ECR II‑2289 (‘the judgment of the Court of First Instance’), the Court of First Instance granted the applicant’s application. The Court held that the first and second pleas in law were well founded and accordingly annulled the contested decision without examining the other pleas in law raised before it.
8 By application lodged at the Registry of the Court of Justice on 3 October 2006, Bertelsmann and Sony Corporation of America brought an appeal by which they requested that Court to set aside the judgment of the Court of First Instance.
9 On 3 October 2007 the Commission adopted a second decision, by which it once again declared the concentration between Bertelsmann and Sony Corporation of America compatible with the common market and the functioning of the EEA Agreement (Case COMP/M.3333 – Sony/BMG).
10 By application lodged at the Registry of the Court of First Instance on 13 June 2008, registered under number T-229/08, the applicant brought an action to challenge the second decision.
11 By judgment of 10 July 2008 in Case C-413/06 P Bertelsmann and Sony Corporation of America v Impala [2008] ECR I-0000 (‘the judgment of the Court of Justice’), the Court of Justice set aside the judgment of the Court of First Instance, referred the case back to that Court and reserved the costs.
12 By order of the President of the First Chamber of the Court of First Instance of 11 September 2008, the proceedings in Case T-229/08 were stayed in accordance with Article 77(c) of the Rules of Procedure of the Court of First Instance, until Impala lodged its statement of written observations pursuant to Article 119(1)(a) of the Rules of Procedure concerning the steps to be taken, as regards the present action, in response to the judgment of the Court of Justice.
13 By letter of 24 September 2008, Impala lodged its statement of written observations at the Registry of the Court of First Instance pursuant to Article 119(1)(a) of the Rules of Procedure. Those observations included an application for the proceedings to be stayed by reason of a new intervening event.
14 On 8 August 2008, the Commission received a notification of a proposed concentration by which Sony Corporation of America proposed to acquire control of the whole of Sony BMG by way of the purchase of shares representing the 50% interest of Bertelsmann in Sony BMG (Case COMP/M.5272 – Sony/Sony BMG) (OJ 2008 C 207, p. 14).
15 By decision of 15 September 2008, the Commission declared the concentration referred to in the preceding paragraph to be compatible with the common market (OJ 2008 C 259, p. 5) (‘the third decision’) and, accordingly, Sony BMG which had previously been a joint venture became a wholly-owned subsidiary of Sony Corporation of America.
16 In its observations lodged at the Registry of the Court of First Instance on 24 September 2008, the applicant claims that the Court should:
– order that the present action be stayed until the applicant has received a copy of the non-confidential version of the third decision and evidence of implementation of the new transaction by Sony and Bertelsmann has been put before the Court;
– reserve the costs;
– in the event that the case should proceed to final judgment, annul the contested decision, order the Commission to pay the applicant’s costs in accordance with the judgment of the Court of First Instance and order the interveners to pay the costs incurred in relation to the appeal;
– in the event that the Court dismisses the action, order each party to bear its own costs;
– in the event that the Court does not proceed to final judgment, order each party to bear its own costs.
17 By order of the President of the First Chamber of the Court of First Instance of 26 September 2008, the proceedings in Case T-229/08 were stayed in accordance with Article 77(d) of the Rules of Procedure until the delivery of the final ruling by the Court of First Instance in the present case.
18 The transaction which was the subject-matter of the third decision was implemented on 1 October 2008.
19 On 28 November 2008, the Commission lodged its observations on the further steps to be taken in the proceedings and on the application for the proceedings to be stayed. It informed the Court that the non-confidential version of the third decision had been sent to the applicant on 8 October 2008. It took the view that, once the applicant had had the opportunity to study that version, the question whether the proceedings had become devoid of purpose could be determined in accordance with Article 113 of the Rules of Procedure.
20 The Commission contends that the Court should:
– invite the parties to take a position on whether the proceedings have become devoid of purpose after the adoption of the third decision;
– alternatively, reject the application as unfounded in its entirety;
– order the applicant to pay the costs.
21 On 10 February 2009, the applicant lodged its observations on the question of the need to adjudicate on the action, in which it claims that the Court should:
– declare that the action has become devoid of purpose as a result of the adoption of the third decision;
– order that each party bear its own costs.
22 On 10 February 2009, Bertelsmann and Sony Corporation of America lodged their observations on the further steps to be taken in the proceedings, the application for the proceedings to be stayed and the question of the need to adjudicate on the action.
23 Bertelsmann contends that the Court should:
– invite the applicant to withdraw its application;
– alternatively, reject the application or declare that the proceedings have become devoid of purpose;
– order the applicant to bear the costs, including those of the interveners.
24 Sony Corporation of America contends that the Court should:
– reject the application;
– alternatively, declare that the proceedings have become devoid of purpose;
– order the applicant to bear the costs, including those of the proceedings before the Court of Justice.
25 By letter of 2 April 2009, the Commission indicated that it was in agreement with the applicant’s statement that the action had become devoid of purpose and took the view that there was no need to adjudicate on it.
Law
26 Article 113 of the Rules of Procedure provides that the Court may at any time, after hearing the parties, declare that the action has become devoid of purpose and that there is no need to adjudicate on it. It follows from Article 114(3) of the Rules of Procedure that, unless the Court otherwise decides, the remainder of the proceedings are to be oral.
27 In the present case, the Court considers that it has sufficient information from the documents before it and will therefore give its decision without taking any further steps in the proceedings.
28 In the course of these proceedings, the Commission adopted the third decision, by which it declared the acquisition by Sony Corporation of America of Bertelsmann’s 50% holding in the capital of Sony BMG to be compatible with the common market.
29 According to the applicant, as a result of that event, over which it could have had no control, it has no alternative but to accept that the present action has become devoid of purpose. The effect of that event is that a judgment would procure no advantage to it, and the action is accordingly no longer of any practical interest to it.
30 In that regard, the applicant states that it did not bring proceedings to challenge the third decision, because the Court would have been required to adjudicate on the present case and on Case T-229/08 before examining the third decision. By the time those actions had been decided, Bertelsmann would have been absent from the market for recorded music for many years. Furthermore, even if the three actions had been successful, Bertelsmann could not have been compelled to return to the market, so as to restore the competitive situation prevailing prior to the contested decision, that is to say, the presence of five major record companies.
31 It must also be noted that in their observations Sony Corporation of America and Bertelsmann do not oppose the Court putting an end to the proceedings otherwise than by adjudicating on the substance of the action.
32 In those circumstances, it is not necessary to adjudicate on the present action. Consequently, it is not necessary to adjudicate on the applicant’s request for the proceedings to be stayed.
Costs
33 The applicant requests that each party be ordered to bear its own costs, given that the present action has become devoid of purpose by reason of the transaction agreed upon between the parties to the concentration, which should not lead to the applicant being penalised in terms of costs. In addition, it submits that it has put forward sufficient grounds to justify a second annulment of the contested decision.
34 The Commission requests that the applicant be ordered to bear the costs.
35 Sony Corporation of America requests that the applicant be ordered to bear the costs, including those of the proceedings before the Court of Justice, since the applicant would gain no benefit from a further annulment of the contested decision. It is also necessary to take account of the applicant’s conduct during the proceedings, which led to a substantial amount of unnecessary costs being incurred.
36 Bertelsmann requests that the applicant be ordered to bear the costs, including those of the interveners.
37 In the judgment of the Court of First Instance, the Commission was ordered to bear its own costs together with three quarters of those incurred by the applicant, the applicant was ordered to bear one quarter of its own costs and the interveners were ordered to bear their own costs. In the judgment of the Court of Justice, costs were reserved. It is thus for the Court of First Instance, in the present case, to decide on the whole of the costs relating to the various proceedings in accordance with Article 121 of the Rules of Procedure.
38 Article 87(6) of the Rules of Procedure provides that the costs are to be at the discretion of the Court of First Instance where a case does not proceed to judgment.
39 In addition, the third subparagraph of Article 87(4) of the Rules of Procedure provides that Court of First Instance may order an intervener to bear its own costs.
40 In the present case, the circumstances which resulted in the case not proceeding to judgment were caused by an event which was unconnected with the conduct of the applicant and of the Commission. That event is one for which Sony Corporation of America and Bertelsmann are wholly responsible.
41 That being so, the Court considers that it would be equitable in those circumstances to order each party to bear its own costs.
On those grounds,
THE COURT OF FIRST INSTANCE (First Chamber)
hereby orders:
1. There is no longer any need to adjudicate on the present action.
2. Each party is to bear its own costs, both before the Court of First Instance and before the Court of Justice.
Luxembourg, 30 June 2009.