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Case comment: Implications for the Standard of Proof in EC Merger Proceedings: Bertelsmann and Sony Corp of America v Impala (C-413/06), ECJ
Tijdschriftbijdrage - Tijdschriftartikel
On July 10, 2008, the European Court of Justice ("ECJ") set aside the judgment of the Court of First Instance ("CFI") in Case T-464/04 Impala v. Commission (hereinafter Impala), in which the CFI annulled the European Commission's (hereinafter: Commission) authorization of the creation of the Sony BMG joint venture. Following an action brought by Impala, an international association of independent music production companies, the CFI had found that the evidence relied upon by the Commission was not capable of supporting its conclusion that the concentration would not create or strengthen a collective dominance position on the part of the majors (i.e., Universal, Sony BMG, Warner, and EMI). According to the CFI, the decision at the most provided observations that are "superficial, indeed purely formal."
The Commission's 2004 clearance decision should be seen in light of the CFI's consecutive annulment of three prohibition decisions in 2002: Airtours v. Commission (hereinafter: Airtours), Schneider Electric v. Commission, and Tetra Laval v. Commission. The resoluteness by which the CFI criticized the Commission for its analysis of the evidence and questioned the rigor of its decisions in these judgments was unprecedented. It prompted the Commission to radically reform its merger control review process as a means to improve the quality of its decisions (e.g., advancing the use of economic analysis). The Sony/BMG decision should have been characteristic for the economic sophistication of merger control and the Commission's attempt to comply with the strong felt standard of proof. While the Commission expressed concerns about the high degree of concentration in the music industry, it concluded that the evidence available was "not sufficiently strong" to prove collective dominance and it thus approved the concentration. The fact that the decision was annulled for not meeting the requisite legal standard for authorizing a merger, was both ironic and challenging because it put the Commission on a knife-edge.
At first sight, the judgment of the ECJ, which essentially refers the case back to the CFI without giving a final judgment in the matter, is not likely to turn the tide. Impala thus continues to raise fundamental questions about the standard of proof incumbent on the Commission when dealing with merger cases. Nevertheless, the teachings of the ECJ on at least three issues related to the standard of proof are of crucial importance and will be commented upon below.
The Commission's 2004 clearance decision should be seen in light of the CFI's consecutive annulment of three prohibition decisions in 2002: Airtours v. Commission (hereinafter: Airtours), Schneider Electric v. Commission, and Tetra Laval v. Commission. The resoluteness by which the CFI criticized the Commission for its analysis of the evidence and questioned the rigor of its decisions in these judgments was unprecedented. It prompted the Commission to radically reform its merger control review process as a means to improve the quality of its decisions (e.g., advancing the use of economic analysis). The Sony/BMG decision should have been characteristic for the economic sophistication of merger control and the Commission's attempt to comply with the strong felt standard of proof. While the Commission expressed concerns about the high degree of concentration in the music industry, it concluded that the evidence available was "not sufficiently strong" to prove collective dominance and it thus approved the concentration. The fact that the decision was annulled for not meeting the requisite legal standard for authorizing a merger, was both ironic and challenging because it put the Commission on a knife-edge.
At first sight, the judgment of the ECJ, which essentially refers the case back to the CFI without giving a final judgment in the matter, is not likely to turn the tide. Impala thus continues to raise fundamental questions about the standard of proof incumbent on the Commission when dealing with merger cases. Nevertheless, the teachings of the ECJ on at least three issues related to the standard of proof are of crucial importance and will be commented upon below.
Tijdschrift: European Competition Law Review
ISSN: 0144-3054
Issue: 10
Pagina's: 608-612
Jaar van publicatie:2008
Trefwoorden:competition law, merger control, judicial review, standard of proof, Sony/BMG, Impala