The European Commission’s decision to prohibit UPS’s acquisition of TNT Express must be annulled due to procedural irregularity, the Court of Justice of the European Union has ruled.
On 30 January 2013, the European Commission prohibited the acquisition of TNT Express by UPS, saying it would lead to a significant impediment to effective competition in the international express delivery market for small parcels within the European Economic Area.
The decisive factor was based on an econometric analysis that led the Commission to conclude that there was a risk that prices would increase on the majority of the markets concerned.
UPS successfully brought an action against the prohibition before the General Court, with a judgement on 7 March 2017 annulling the Commission’s decision on the ground that UPS’s rights of the defence had been infringed.
The General Court found that the price concentration econometric model used by the Commission differed considerably from that disclosed to UPS during the administrative procedure, without the Commission giving UPS the opportunity to submit observations on the amendments made.
The judgement says that after disclosing the statement of objections, the Commission is not allowed to “modify the substance of an econometric model on which it intends to base its objections, without that modification being brought to the attention of the undertakings concerned and allowing them to submit their comments in that regard.”
The Court upholds the General Court’s findings that failure to disclose an econometric model to the parties of a merger can lead to the Commission’s decision being annulled, provided that the irregularity denied them the chance to better defend themselves.
It says: “The Court concludes that the General Court was entitled to find, without erring in law, that UPS’s rights of the defence were infringed, with the result that the decision should be annulled, provided that it has been sufficiently demonstrated by UPS that, but for that procedural irregularity, it would have had the opportunity better to defend itself.”