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Decisions in Doubt

It wasn't all that surprising when in 2002 the European Court of First Instance (CFI) reversed former Competition Commissioner Mario Monti's decision to block Schneider Electric's $9.2 billion bid to acquire Legrand, a competing French manufacturer of electrical equipment. After all, it was but one of three decisions by Monti that the CFI reversed that year.

But when the CFI in July 2007 ordered the European Commission (EC) to pay damages of $545 million to Schneider for not allowing the company to respond to the commission's objections to the merger review, it was a stunner: the first time the court had awarded damages to a firm for losses incurred from the commission's prohibition of a merger.

Human Error

MyTravel based its claim on two allegations. The first was that the commission had erred in its assessment of the transaction's substantive effect on competition, more specifically whether it gave rise to a position of collective dominance in the relevant market. The second attacked the commission's treatment of the commitments offered by MyTravel to remedy its anti-competitive concerns.

Using the same standard for determining liability that it did in Schneider, the court decided that the facts of this case did not merit damages, even though it had overturned the EC's ruling prohibiting the merger.


Julius Melnitzer

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