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7 October 2013
The first week of June was party time for English football, nati-onal champions and the Slaughter and May competition team. Conversely, it was a bad one for golden shares, France and the European Commission (EC).
In its busiest week for some time, the Court of First Instance (CFI) announced two decisions that have encouraging implications for European M&A. Corporate lawyers don't get much good news out of Brussels. Some even mutter darkly that the eurocrats behind GE-Honeywell, Schneider-Legrand et al did as much damage to European merger activity as did 11 September. Then, on Friday (7 June), Luxembourg came to the rescue and the CFI issued a ruling on Airtours that was received as well in the UK as England 1, Argentina nil. In persuading the court to overrule the EC's 1999 decision to block the Airtours-First Choice merger, Slaughters' Malcolm Nicholson and Monckton Chambers' John Swift QC laid waste to huge swathes of the EC's competition policy, in particular theories on collective dominance.
The court was scathing about the EC's handling of the case and, crucially, noted serious factual, as well as legal, errors. Some competition lawyers believe that the EC will now think twice before making controversial decisions and consequently believe that the ruling may encourage a spate of mergers. Unfortunately for Airtours, the decision is about three years too late; the company, now rebranded as MyTravel, can't afford First Choice any more. Maybe a few FTSE 100 companies in consolidating sectors can have a whip-round to help out with Slaughters' fees.
The ruling may also have implications for the four other merger review decisions awaiting the court's attention: Sprint-Worldcom, GE-Honeywell and Schneider-Legrand. However, the EC is still considering whether to appeal the CFI's judgment. Should it do so, it may redirect the court to look at Gencor, where it took a very different view on collective dominance, as James Flynn of Brick Court Chambers, who was on the losing side, can testify.
The EC is drawing up guidelines on market power for the end of the year, and is also conducting a root and branch review of merger policy. But although the CFI's ruling may encourage the EC to be tidier with issues of fact, anyone who thinks EC staff will just drop their views on collective dominance should read EC Competition Commissioner Mario Monti's post-ruling press release. Perhaps the most encouraging aspect of Airtours is that the CFI looks like it is maturing and beginning to find its feet. A vigilant watchdog is just what the EC needs.
At the post-Airtours press conference, Monti played up the week's other big decision, which was on golden shares. There are now officially two types of golden shares - the good and the bad. The CFI sent home the bad French and Portuguese governments with their tails between their legs; Belgium's golden shares were found to be good in a notable victory for the Belgium government's law firm Landwell. The ruling was a silver lining to a very dark cloud for the EC and for Monti, who has been trying to outlaw golden shares for years. It will curb protectionism from member states and boost cross-border M&A. Even better, the draft takeover directive, which has been on ice awaiting the outcome of this case, can get moving through the creaking Brussels system again.
So, ample opportunities for schadenfreude over nasty protectionist European governments and the EC. All that and England beat Argentina. What more could any St George-loving corporate lawyer want?