Companies will have an uphill battle to claim damages for flawed merger decisions by Europe’s top competition regulator, after a court threw out a claim by Thomas Cook, the international tour operator, for more than £500m (€623m, $880m) in compensation.
Tuesday’s ruling is likely to be a big relief for the European Commission, though competition officials said only that they “welcomed” it.
Lawyers suggested that the ruling might give Brussels more confidence in blocking deals, which it has done only rarely in recent years.
“This sends the message that there is a different standard for an annulment [of a merger decision] and an action for damages,” said Jonas Koponen, partner at the Linklaters law firm in Brussels.
Thomas Cook, a UK company, had been seeking damages following a faulty decision by Brussels to bar a merger of Airtours and First Choice nine years ago.
Airtours later became part of MyTravel, and in turn merged into Thomas Cook.
The Commissions’s decision, which was influenced by worries about concentration in the short-haul package holiday market, was annulled three years later by the Luxembourg-based Court of First Instance because of errors in the regulator’s assessment.
Airtours went on to claim £517m in damages plus interest. It argued that that not being able to close the deal had cost it profits and efficiency savings, and that the money spent mounting the bid had been wasted.
Its hopes of success were boosted last year when France’s Schneider Electric won the right to damages over a 2001 decision that vetoed its merger with rival Legrand. In a ground-breaking ruling, judges said Brussels had been guilty of a “grave and manifest disregard” for the limits of its power when it barred that deal.
But on Tuesday the same court ruled that Thomas Cook’s damages action could not succeed because EU antitrust officials had not committed a sufficiently serious infringement when they analysed the holiday companies’ prospective merger. Lawyers for the leisure company had maintained that “the commission would have been more correct if it had tossed a coin at every point”.
The court said the economic situation in this case had been “especially complex” and the commission enjoyed “a discretion in maintaining control over . . . competition policy, which means that rigorously consistent and invariable practice in implementing the relevant rules cannot be expected of it”.