Posted by Chantal Lavoie, 4 February 2016
In its judgment of 28 January 2016, the Court of Justice (the Court) upheld the judgment of the General Court (GC) which found that the Commission had fully complied with an earlier judgment annulling one of its decisions by adopting a new retroactive decision correcting the acts leading to the annulment. The judgment puts an end to a decade long saga around the Commission’s 2004 decision to conditionally approve the acquisition by Lagardère of the publishing assets of Vivendi Universal Publishing (Vivendi) and the subsequent approval of Wendel as a suitable purchaser for the assets to be divested.
This judgment concerns only the Commission decision re-approving Wendel as a suitable purchaser. The adoption of a second decision had been rendered necessary following the GC’s annulment of the Commission’s first decision approving Wendel. The judgment is of interest for at least two reasons. First, it is one of the few judgments dealing with the consequences of a judicial annulment of a Commission ‘post-clearance’ decision under merger control rules. Indeed, the annulled decision at stake is not the clearance decision but rather a separate subsequent decision approving the purchaser of the assets to be divested under the commitments offered by Lagardère. Whilst Article 10 of the Merger Regulation provides some guidance on the consequences and procedure to be followed as a result of a judicial annulment of a clearance or prohibition decision, it is not of relevance in the context of ‘post clearance’ decisions relating to the implementation of commitments contained in a clearance decision. Second, the judgment provides useful clarification on the scope of the Commission’s obligation under Article 266 TFEU to comply with judgments of the Court of Justice of the European Union.
The case dates back to January 2004 when the Commission approved Lagardère’s proposal to acquire the publishing assets of Vivendi, subject to divestment of part of the assets to a purchaser independent of Lagardère. Several purchase offers were made and Lagardère ultimately selected Wendel’s offer (to the detriment of other offers, including that made by Editions Odile Jacob). The Commission approved Wendel as a suitable purchaser in July 2004 based in part on the trustee’s report finding that the offer complied with the conditions set out in the commitments contained in the Commission’s conditional clearance decision. The relevant assets were then sold by Lagardère to Wendel in September 2004.
Editions Odile Jacob appealed against both the Commission’s conditional clearance decision and the Commission’s decision approving Wendel as a suitable purchaser.* In two separate judgments in 2010, the GC upheld the Commission’s conditional clearance decision but annulled the Commission’s decision approving Wendel on the ground that the trustee - preparing the report on which the decision was based - did not meet the pre-requisite conditions of independence. Appeals lodged against both GC judgments of 2010 were rejected by the Court in 2012. As a result of the GC’s annulment of the Commission’s decision, Lagardère submitted to the Commission in December 2010 a new request to re-approve Wendel and proposed the name of another trustee. The Commission approved the proposed trustee in January 2011 and in May 2011 adopted a retroactive decision from July 2004 re-approving Wendel as a suitable purchaser. Editions Odile Jacob appealed to the GC to have the Commission’s retroactive decision of May 2011 annulled. In 2014, the GC rejected the grounds for appeal.
Court confirms the legality of the Commission’s retroactive decision
The key points worth highlighting are as follows:
1. The Court clarifies the scope of the Commission’s obligation under Article 266 TFEU to “take the necessary measures to comply with the judgment of the Court of Justice of the European Union”. Editions Odile Jacob argued that the Commission did not comply with the GC’s judgment of 2010 when adopting its second decision re-approving Wendel. According to Editions Odile Jacob, the GC found not only the trustee’s report - on which the Commission’s approval decision was based - to be vitiated due to the trustee’s lack of independence, but also all other acts and recommendations of the trustee during its mandate. The Court rejected this ground of appeal. The Court confirms that, in order to comply with a judgment, the Commission is required to respect both the operative part of the judgment as well as the supporting reasoning of the court. In this instance, Editions Odile Jacob had challenged before the GC only the report of the trustee relied upon by the Commission in support of its decision approving Wendel and not any other acts and recommendations of the trustee. As a result the statement made by the GC in its judgment regarding the trustee’s mandate more generally was obiter and did not have force of ‘res judicata’. In order to fully comply with the GC’s judgment, it was therefore sufficient for the Commission to appoint a new trustee and adopt another decision approving a suitable purchaser. The Commission was not required to take any measures to comply with statements made by the GC as regards other acts or recommendations of the trustee prior to the report; these statements were obiter and are not part of the ‘judgment’ to be complied with for purposes of Article 266 TFEU.
2. The Court confirms the GC’s finding of legality of the Commission’s retroactive decision. It reaffirms the general rule set out in the case Amylum v Conseil that the principle of legal certainty precludes the adoption of retroactive Union acts, save in exceptional circumstances. These exceptional circumstances require two criteria to be met. First, the retroactive act must have a general interest objective. Second, the retroactive act must not prejudice the legitimate expectations of persons concerned. In this instance, the Court noted the GC’s finding that the retroactive decision pursued more than one general interest, namely the respect by the Commission of legality and the force of res judicata and filling the legal gap created by the annulment of the first decision approving Wendel. The Court did not consider further whether these general interest objectives were valid (or the second leg as to whether the retroactive act prejudiced the legitimate expectations of interested persons) as it concluded that Editions Odile Jacob had failed to show during the appeal that there were no general interest grounds in support of the retroactive decision.
The Court’s judgment clarifies that the Commission obligation to comply with the GC’s judgment was limited to appointing a new trustee and adopting a second decision approving a suitable purchaser. The Commission was not required to take any other measure, in particular with respect to acts having taken place prior to the adoption by the Commission of its first decision and which were outside the scope of the GC’s judgment. The Court also reaffirms the exceptional nature of retroactive Commission decisions. Unfortunately limited guidance is provided for applying the two-prong test of legality of retroactive decisions, particularly as regards the need not to prejudice the legitimate expectations of those concerned.
* Note that other judicial challenges were made in this case but are not mentioned herein as they are not relevant to the circumstances of this specific appeal.