In short

The situation: The European Commission (“EC”) has issued its first decision (“Decision”) regarding the intersection of EU merger control rules and the recent growth of domestic foreign direct investment (“FDI”) regimes. The EC found that the Hungarian government’s decision to block a transaction under its domestic FDI rules violated the EC’s exclusive jurisdiction to review transactions with a “European dimension”, subject to certain exceptions.

The context: This decision contrasts with recent EC efforts to support the development of FDI screening regimes at national level.

Look forward: While the EC ruling may add another level of EU approval for certain transactions subject to EU merger control and national FDI reviews, it limits the circumstances in which a Member State may block a transaction under its national FDI rules. The decision also invites the merging parties to challenge member states’ attempts to block a transaction under national FDI rules when the EC is empowered to carry out an EU-level competition review.

The EC recently found that Hungary’s veto of Vienna Insurance Group’s (“VIG”) acquisition of the Hungarian subsidiaries of the AEGON Group, an insurance, pension fund and asset management company, violated EU merger control rules, which give the EC exclusive authority to review transactions that meet EU jurisdictional thresholds.

VIG’s acquisition of AEGON’s Hungarian subsidiaries was part of a larger transaction, including the acquisition of several subsidiaries based in the EU and other states. Hungary rejected VIG’s acquisition of the Hungarian subsidiaries under its FDI rules. The EC then cleared the main transaction unconditionally under the EU Merger Regulation (“EUTMR”).

The VIG transaction highlights the potential limits of national FDI rules stemming from EU merger rules. Article 21 EUTMR recognizes that Member States may take appropriate measures to protect the following legitimate interests:

1. Public security, media plurality and prudential rules; Where
2. Another public interest, provided it has been communicated to and approved by the Commission (within 25 working days) after an assessment of its compatibility with the general principles of EU law.

When an FDI review of a Member State pursues an interest not specifically recognized in point 1, the Member State must therefore notify its intentions to the EC before implementing its decision. The EC ruling found that the Hungarian authorities failed to (i) notify their intention to veto to the EC before its implementation; and (ii) demonstrate that the veto was justified by legitimate interests. The EC ordered Hungary to withdraw its veto by March 18. If Hungary does not withdraw its veto by that date, the EC could launch an infringement action before the European Court of Justice to overturn Hungary’s decision.

Look forward

The EU has encouraged the development of national FDI regimes, notably through the adoption of its March 2019 regulation on EU screening (to see our april 2019 white paper). Due to the EU Screening Regulation and a wider trend towards protectionism, there has been a significant increase in the number of Member States adopting FDI regimes, adding to the layers already (and increasingly more) complex antitrust and regulatory oversight in the EU (to see our April 2021 Remark regarding the EC’s expansive approach to non-reportable transactions). These FDI regimes empower national authorities to review, and possibly condition or prohibit, transactions that may threaten various national interests, including national security and public order. Although the EU Screening Regulation encourages Member States to adopt FDI rules, it does not promote a common set of rules or establish a one-stop shop for screening FDI in the EU. EU scale.

The EC decision recalls that even in the field of FDI, Member States cannot ignore the principles and rules of EU law. The decision is part of settled EU case law requiring Member States to justify and ensure the proportionality of measures which may restrict provisions of EU law, including limitations on the free movement of capital or the right of a company to carry out cross-border transactions within the EU Union. As a result, the EC decision may encourage member states to be more cautious or selective in applying FDI rules to matters involving both FDI and competition scrutiny at EU level. .

Finally, the EC decision draws attention to the obligation of Member States to inform the EC of certain measures likely to affect a concentration respecting the EU jurisdictional thresholds. Although the principle is clear, a Member State must communicate to the EC (and obtain its prior approval) any measure which does not genuinely aim to protect one of the interests recognized by the EUTMR (i.e. security media plurality and prudential rules) — the application of the rule in practice is less straightforward. EU and national authorities may have different views on what constitutes a recognized interest and what measures a Member State should notify. The absence of guidelines leaves room for different interpretations and, consequently, legal uncertainty and potential delays in the implementation of agreements that are subject to simultaneous examination at different levels.

Four takeaway meals

1. Unlike the EU competition law regime, there is no review of FDI at the EU level. Although Member States or the EC have exclusive competence to carry out competition reviews, Member States carry out FDI screening exclusively at the national level. Therefore, a transaction requiring filing at the community level competition frequently also involves one or more FDI examinations at the national level.
2. Although Member States generally have wide discretion in the field of FDI, a Member State must notify the EC of its intention to block a transaction subject to Community competition review if such a decision is not not based on the limited legitimate interests recognized by the EUMS (i.e. public security, media plurality and prudential rules). Any such notification will include a consideration of whether the measures are genuinely aimed at protecting a legitimate interest and may therefore lengthen FDI reviews.
3. Given the limited number of recognized legitimate interests and the lack of guidance on what might be considered other public interests under which a Member State may reject a reviewable transaction at EC level, the EC and Member States are likely to have different interpretations of these interests and what measures would be justified, appropriate and proportionate to achieve this interest.
4. In some transactions, merging parties may choose to file merger control notices with the EC or Member States. In these matters, parties should consider whether the possibility of EC oversight of a Member State’s FDI decision tips the balance in favor of filing with the EC, if they expect problems with a Member State’s FDI review.

The government will seek “flexibilities” in EU law that will allow VAT to be further reduced on fuel prices without financial penalties being imposed on the state, Taoiseach Micheál Martin has said.

Speaking as he arrived for a special summit of EU leaders at the Palace of Versailles in France, Mr Martin said the war in Ukraine had had a dramatic impact on energy prices and supply.

The Taoiseach also said it was possible that Irish Defense Force personnel could be deployed at some point around the EU-Ukraine border, on a peacekeeping or enforcement mission. Peace.

The Versailles meeting is hosted by French President Emmanuel Macron and discusses proposals to strengthen the EU’s energy independence as well as its defense capability.

Mr Martin said Ireland had benefited from historic derogations from VAT on fuel prices which allowed it to charge lower rates. However, in a situation where a State varies its rate, it risks losing the exemptions.

The government has already reduced excise duties on petrol by 20 cents per liter and on diesel by 15 cents per liter in response to dramatic increases in fuel prices since the outbreak of the war.

Mr Martin told reporters as he entered the palace grounds that if Ireland reduced VAT further it would lose the waiver and would have to accept a higher rate in future once the situation returned to normal normal.

He said the government was now looking for “flexibilities around this”. Finance Minister Paschal Donohoe was also advocating for this with the European Commission, he added.

The Taoiseach said three key points would be discussed by the 27 EU leaders. “(We will discuss) defense and security investments across Europe, with many member states reconsidering (their positions),” he said.

“The Ukrainian crisis has really changed the world order. Economic resilience and robustness will be a key element of tomorrow’s discussions in terms of key areas where Europe needs to be more resilient.

“New Initiatives”

“We have seen this in healthcare in the context of Covid-19. There are new initiatives in semiconductors, for example, to ensure that Europe is not too vulnerable, in terms of low production levels.

He said the third problem was energy dependency.

“There is a statement that we have been working on, around reducing dependence on Russian gas and oil over time. Obviously, some states are much more dependent on the import of (Russian) gas and oil. I think more strategically, we’ll see a much bigger focus in the medium term, on more renewables, effectively reducing dependencies.

He said the crisis created by the war was a global crisis that had a huge impact on energy prices. Regarding the national impact, he said the government had realized the significant impact of the dramatic escalation in oil and gas prices on the Irish economy.

Asked about the alleged price-fixing by some fuel suppliers in Ireland, he repeated his comments that it was “morally wrong in the context of barbaric warfare”. He said the Competition Authority’s role would be to ensure that there was no price-fixing or that there were no cartels operating.

Asked about the new sanctions imposed by the EU, Mr Martin said this would be done in collaboration with the EU, the United States, Canada and the United Kingdom.

“My rule of thumb is that we should have unity of purpose on this and we should move forward in unison.

“Because it will have the greatest impact in terms of pressure on Russia.”

He said it would be discussed at the meeting, but since it was not a formal council, he did not think a formal decision would be made at Versailles.

atrocities

Mr Martin said there was huge anger in Ireland over the atrocities in Ukraine. “We pay tribute to the journalists around the world who bring us these photographs and risk their lives to go behind the scenes or to show the war to the people. Because it creates a huge momentum against the Russian Federation and its war against Ukraine. In my view, that in itself will create pressure.

He also praised Mr. Macron for keeping communication channels open with Russian President Vladimir Putin in an effort to end the war.

Mr Martin said that while Ireland was militarily neutral, it did not prevent other member states from helping countries defend their citizens from attack.

Asked about the circumstances under which Irish Defense Force personnel could travel to Ukraine’s borders to help on a humanitarian basis, he said it was “always possible”.

“We are ready to help neighboring countries in terms of humanitarian crisis in terms of logistics along the border,” he said.

Mr Macron said before the meeting that the war had completely changed the architecture of Europe.

“Our democracy and our values ​​have been threatened. We have to accept that sometimes we have to pay the price,” Macron said as he entered the meeting.

“I will spare no effort to achieve this ceasefire,” he said.

The European Parliament has, by a large majority, adopted a resolution calling on the European Commission to take action to withhold funds from member states that fail to respect the rule of law. The document names Hungary and Poland as particular offenders.

The resolution was condemned by Poland’s ruling Law and Justice (PiS) party, which unsuccessfully proposed an amendment calling for the rule of law mechanism not to be applied due to the war in Ukraine and the the pandemic. He also called on the EU to immediately release Covid recovery funds that have been blocked for rule of law reasons.

In the resolution adopted today – with 478 votes in favor and 155 against – the European Parliament welcomed the recent decision of the European Court of Justice (ECJ) to reject an attempt by Poland and Hungary to prevent that EU funds are conditional on respect for the rule of law.

The parliament said it was now “high time” for the European Commission to “react to the continued breaches of the rule of law in some EU member states, which constitute a danger to the financial interests of the Union European”.

It asks the Commission to initiate the use of the conditionality mechanism by notifying the Member States concerned in writing. The measures should apply to both the EU’s general budget and the EU’s Covid recovery plan, the parliament said.

Among Polish MEPs, those from The Left (Lewica), Poland’s second largest opposition group, voted in favor of the resolution while those from the Civic Platform (PO), the largest, abstained. PiS MPs voted against.

The PiS has long opposed the conditionality mechanism, saying it would be used for political purposes to punish certain member states. The timing is particularly inappropriate to use it, argues the PiS, given the EU’s need for unity amid the war in Ukraine and the resulting refugee crisis.

“The Russians bombed a maternity ward in Mariupol. Meanwhile, Germany is blocking further sanctions against Russia and the European Parliament is voting in favor of sanctions against Poland,” PiS MP Sylwester Tułajew tweeted.

Yesterday, the European Conservatives and Reformists – a group in which the PiS is the dominant force – tabled an amendment calling for the rule of law mechanism not to be applied due to the war in Ukraine and the pandemic. He also called on the EU to release Covid funds, which have been frozen for Poland due to rule of law concerns.

After the rejection of this amendment, its author, MP PiS Bogdan Rzońca, said that “the left-liberal European Parliament has shown Putin that there is no solidarity within the EU and that it can harass and scare countries bordering Ukraine”, reports TVP Info.

He also accused Polish opposition parties of ‘not wanting the money to go to local authorities [in Poland] who are now helping refugees from Ukraine”.

PO – who voted against the amendment but abstained on the resolution – “agrees that this time of war is not the time for such resolutions”, said MEP Andrzej Halicki, quoted by TVN24. However, he also called on the PiS government to “end the [rule-of-law] dispute as soon as possible” in order to release EU funds.

Robert Biedroń, MEP and one of the leaders of The Left, said his group supported the resolution because “respect for the law, including the right to an independent tribunal that is not influenced by politicians , is a fundamental freedom…[and] the basis of the values ​​for which Ukrainian soldiers are dying today”.

Like Halicki, he also called on the PiS to release the funds by reversing its judicial policies. “In these times, you have to put aside unnecessary political arguments and do the right thing,” Biedroń told PAP. “The interest of 38 million Poles and more than 40 million Ukrainians is greater than the interest of a few politicized judges.”

Main image credit: KPRP (under public domain)

The pip fruit sub-group of the European Commission’s Fruit and Vegetable Market Observatory met today, by videoconference, to analyze the situation of the pear and apple campaigns.
The sub-group will analyze the state of prices and stocks of pears and apples in the EU and will exchange views on the current market situation. It will also analyze the campaign in countries outside the EU, in particular the campaign in the countries of the southern hemisphere, and the evolution of consumption.

The first fruit sub-group is one of the four sub-groups set up within the Expert Group of the Fruit and Vegetable Market Observatory, which aims to make as much information as possible available to the European sector and to provide it with greater transparency. These groups include Commission officials and representatives of sectoral organizations from the different Member States.

FEPEX is involved in the pome fruit subgroup through the European association FruitVegetablesEurope and is represented in the subgroup by Joan Serentill, president of the FEPEX pear and apple committee.

Spanish exports and imports of pears and apples
Apple exports in 2021 amounted to 110,362 tons, 17.5% less than in 2020, for a value of 90 million euros (-8%). However, in 2021, Spain imported more apples than it exported, since it imported 184,631 tonnes of apples, i.e. 3% more than in 2020, for 157 million euros ( + 3%).

Spanish pear exports in 2021 amounted to 122,411 tons worth 105 million euros, 14% more in volume and 17% more in value than in 2020. Imports of pears increased 32% in volume and 33% in value compared to the previous year, totaling 66,446 tonnes and 64.3 million euros, according to data from the Customs and Excise Department, processed by FEPEX.

Source: fepex.es

The European Union is in the grip of a “growing gas crisis” made worse by its reliance on Russia, Brussels will warn, as it pushes even harder for energy savings and a switch to renewables.

According to a draft paper on EU energy prices, due out on Tuesday and seen by the Guardian:

Gas and electricity prices will remain high and volatile until at least 2023. Compared to last autumn’s outlook, the situation has deteriorated.

Like the rest of the world, the EU has been grappling with soaring energy prices for months, but Russia’s invasion of Ukraine has sparked soul-searching about Europe’s gas dependence.

The Union imports 40% of its gas from Russia, a figure that has not changed for more than 15 years despite the repeated gas crises triggered by supply cuts from Moscow.

The guidance document also confirms that EU competition authorities are investigating Russian state energy company Gazprom for “unusual business behavior”. The Russian company’s European storage facilities are only 16% full, compared to 44% for non-Gazprom storage, raising suspicions that the Kremlin is using gas as a geopolitical tool.

The paper states:

The commission is currently investigating all allegations of possible anti-competitive business behavior on the part of Gazprom as a matter of priority and is gathering additional information from relevant market participants.

The draft, from last week, does not comment on the extension of EU sanctions to Russian oil. On Sunday, US Secretary of State Antony Blinken said Washington was “in very active discussions” with European allies over a ban on Russian oil.

The committee makes a series of recommendations, including calling for a swift agreement on EU energy efficiency legislation, which is expected to result in 17 billion cubic meters (bcm) of energy savings by 2025, under the EU Green Deal Plan.

The European Commission also wants more EU funds for new solar technologies, while member states are urged to use revenues from the EU’s carbon trading system to fund the switch to renewables.

European imports of liquefied natural gas reached almost 10 billion cubic meters in January, the highest monthly level on record, as the Union sought alternatives to Russian gas in preparation for Vladimir Putin’s attack on Ukraine.

The commission says it plans to engage in discussions with other major LNG buyers, namely China, Japan, South Korea and India, “with a view to avoiding in the future conflicting market conditions, which increase the price of energy supply for all”.

Separately, European Commission President Ursula von der Leyen said the EU was working on a package of new sanctions against Russia in response to “the Kremlin’s disregard for citizens”.

Speaking alongside Italian Prime Minister Mario Draghi, she said:

We will discuss the new enforcement package we are working on right now… We need to make sure there are no loopholes and the effect of sanctions is really maximized.

In view of the evolution of the situation in Ukraine, of the Kremlin’s carelessness with regard to the citizens: women, children, men, we are of course also working on other sanctions which could be justified.

She did not elaborate on those details, but went on to say that the EU must “get rid of dependence on Russian gas, oil and coal”.

“And just as Vladimir Putin thought he would destroy European unity, the exact opposite has happened. Cooperation is rock solid,” said European Council President Charles Michel.

Something remarkable in geopolitics happened last week. It’s not just that Germany has flip-flopped in its defense policy, which is quite remarkable; it is the fact that the European Union has indeed taken swift and historic decisions. When you have 27 sovereign states, getting an agreement normally takes a long time. Often a very long time.
It was Russia’s recognition of areas not controlled by the government of the Ukrainian oblasts of Donetsk and Luhansk on February 23 that got the ball rolling. In response, the EU adopted a set of sanctions targeting some politicians, businessmen, most senior commanders of the Russian armed forces and some banks. In total, asset freezes and travel bans were imposed on 23 people, 3 banks and a notorious internet “troll factory” in St. Petersburg. The immediate reaction to the EU announcement was disappointing. Some EU countries, such as Lithuania, had wanted to hit the Kremlin immediately with the harshest possible sanctions, but larger member states France, Germany and Italy argued for a more gradual approach.
They did not have long to wait since the next day, President Putin gave the order for the invasion of Ukraine. As Russian forces rained missiles down on its southern neighbor throughout the day, in the biggest state-on-state attack in Europe since World War II, EU leaders met again in emergency session and agreed on a wide range of sanctions that would freeze Russian assets en bloc and block its banks’ access to European financial markets. EU foreign policy chief Joseph Borrell described it as “the toughest package we have ever implemented”. Belgian Prime Minister De Croo asserted that “our sanctions will harm the Russian economy at its heart”.
Previously, a sense of helplessness was tangible after the West failed to stop a war their leaders saw coming. “We have not succeeded enough, not decisively enough, in preventing Russia from taking this step, which is a tragedy for Ukraine, a tragedy for Europe and a tragedy for Russia itself,” he said. Lithuanian President Gitanas Nauseda, whose country is on the front line. with Russia. Perhaps, but the EU countries that would face the greatest economic backlash were keen to keep the harshest measures in reserve, arguing that it was the most effective strategy. Nevertheless, most observers were amazed that the EU, normally a timber giant, could be so nimble in reaching a common agreement within hours, which normally would take months.
The momentum was maintained and the following day, Friday February 25, envoys from the 27 member states approved a new wave of measures, this time agreeing to freeze the assets of Putin himself, as well as his longtime top diplomat. , Sergei Lavrov. “They are responsible for the death of innocent people and the trampling of the international system. We as Europeans do not accept this,” said German Foreign Minister Annalena Baerbock. As she spoke, something else remarkable was happening in Berlin.
For years, the United States has pushed Germany to spend more on defense and invest more in its military. Until last week, those calls had largely fallen on deaf ears. Not because Germany considered it had to do no more as a member of NATO, or because it saw itself as a bridge between the West and Russia, or even because its economy and its business world are closely linked to Russia. It was a reason that is at the heart of how Germany sees itself as a country. German pacifism is a real thing, something that vibrates in German society. Over the years, there has never been broad public support for a more robust defense posture. Vladimir Putin changed all that. His invasion of Ukraine made Germany a reality, and there’s no denying how significant this moment is.
It was the day after Putin’s rambling speech recognizing the two breakaway regions in eastern Ukraine that Germany’s new chancellor, Olaf Scholz, announced he would block the Nord Stream 2 Baltic Sea gas pipeline project. of 10 billion euros intended to double the flow. Russian gas directly to Germany. It was quite a big decision, as Germany depends on Russia for more than a third of its gas. But an even bigger one came the following Saturday: Scholz promised to arm Ukraine with 1,000 anti-tank weapons and 500 Stinger missiles. It would also lift restrictions on German weapons sent to conflict zones by third parties. Finally, in an innovative speech to the German Bundestag, he notably committed Germany to devoting more than 2% of the country’s GDP each year to the army, thus achieving a NATO objective that Berlin had long delayed. It was nothing less than a Zeitenwende, a historic turning point in German defense policy and a massive investment in the struggling German armed forces. Putin’s invasion of Ukraine brought more clarity and change to German foreign and defense policy thinking in a matter of days than the United States and governments from Paris to Warsaw could. do in a decade.
Putin also restored something that had been broken for years: transatlantic unity. For years, Putin has been able to sit back and savor unseemly scenes of Western disunity, ranging from Britain’s Brexit exit from the EU in 2016, Hungary’s longstanding antipathy towards Brussels and , also, of the fracture created by former President Donald Trump which has far from completely healed under Joe Biden. For Putin, the timing seemed perfect for his invasion of Ukraine, as it had the potential to open the cracks of division even further, with a war on the continent forcing everyone out of their diplomatic comfort zones. Precisely the opposite has happened.
Hear what European Council President Charles Michel said in an interview with a small group of journalists last week. “And just as Vladimir Putin thought he would destroy European unity, the exact opposite has happened. The cooperation is rock solid,” he said. “That is what the circumstances of the story demand. Required by circumstances none of us could have imagined.
Last week, transatlantic relations were further strengthened by an agreed package of measures unprecedented in scope and unity, when Brussels and Washington announced financial sanctions within minutes of each other, all targeting Russia’s central bank and excluding the country from much of the SWIFT international financial system. transactional system. Another surprise came when the EU agreed to fund the purchase and delivery of arms and other equipment to a country under attack, described by European Commission President Ursula von der Layen as “a moment decisive”.
A furious Putin resorted to the old vernacular the West loved to use during the Cold War era of the Soviet Union and the Warsaw Pact – describing Western allies as “American satellites humbly flattering him, bow down to him, copy his conduct and joyfully accept the rules he proposes to follow”. Spitting venom, he continued: “So it’s fair to say that the whole Western bloc, shaped by the United States to their liking, represents an empire of lies.” The Western powers will have taken Putin’s anger and cynicism towards their unity as a compliment. After all, he made the EU great again.

John Dobson is a former British diplomat, who also worked in the office of British Prime Minister John Major between 1995 and 1998. He is currently a visiting scholar at the University of Plymouth.

On February 23, 2022, the General Court of the EU (GC) dismissed a claim for damages of 1.7 billion euros brought by United Parcel Service Inc. (UPS) against the European Commission (EC).¹ UPS requested compensation for losses resulting from the EC’s decision to block the merger of UPS with TNT NV (TNT).² The General Court, which had annulled the EC’s merger ban decision, found that the EC’s violation of UPS’s rights of defense constituted a serious breach of EU law, but dismissed the request for compensation from UPS, finding that there was no causal link between the breach and the damages claimed.

context

• January 2013: The EC has blocked UPS’s proposed acquisition of TNT because it would significantly impede competition in the market for international express small parcel delivery services in 15 EEA member states. In these Member States, the number of competitors would have been reduced to three – perhaps two – with DHL remaining the only real alternative to UPS. The EC also concluded that the merger would have resulted in higher prices for customers and, in this regard, relied heavily on economic analysis contested by the parties.
• January 2016: The EC cleared the merger between UPS competitor FedEx and TNT Express, closing the way for any consolidation for UPS.³
• March 2017: The GC reversed the EC ban decision, on the grounds that the EC violated UPS’s rights of defense because it did not share the final version of its economic analysis used to analyze the increases in price allegedly resulting from the transaction.⁴ The GC felt that UPS should have had the opportunity to comment on all the elements on which the EC intended to base its decision, and that this meant that it should have been able to review and comment on the changed business model.
• February 2018: UPS sued the EC, claiming €1.7 billion in compensation for the loss suffered as a result of the EC’s unlawful banning decision.
• January 2019: The Court of Justice of the European Union (CJEU) upheld the 2017 GC judgment.⁵ See our judgment alert here.
• February 2022: The Court has issued its judgment on UPS’s claim for damages.

Non-contractual liability of EU institutions

The GC has recognized that an individual’s right to seek damages in the event of a breach of law by a public administration (as set out in Article 340 of the Treaty on the Functioning of the European Union (TFEU )) is an essential guarantee of fundamental rights in the EU.

For EU institutions to incur non-contractual liability, three cumulative conditions must be met:

(i) the rule of law violated must have as its object the conferral of rights on individuals and the breach must be serious enough;

(ii) actual damage must be shown to have occurred; and

(iii) there must be a direct link causality link between the breach of the obligation and the damage suffered.

Breach of UPS’s procedural rights was a serious breach of EU law

The GC specified that a violation of a rule of law by the EC is sufficiently serious when the latter has manifestly and seriously disregarded the limits of its discretion. The standard is high, as a balance needs to be struck between protecting individuals against illegal EC behavior and the leeway that needs to be given to EU institutions so as not to paralyze their actions, especially when the CE must conduct complex economic transactions and legal assessments.

The EC argued that the breach of UPS’s rights of defense was not serious enough because the case law was not yet clear on the EC’s obligation to disclose business models to the parties. In any case, before finalizing the economic model, many exchanges on the model had taken place between the EC and UPS. Furthermore, the EC noted that it had been subject to the short and strict deadlines of the EU Merger Regulation and that the case at issue had been particularly complex.

The GC disagreed. If the imperative of administrative efficiency can be taken into account to assess the seriousness of the violation of the rights of defense of the parties, this cannot justify the non-disclosure of the final economic model to UPS.

The GC emphasized that the parties’ right to have access to the file is a necessary corollary of the rights of defense and can only be restricted to protect the legitimate rights of the parties concerned (for example, to prevent the disclosure of commercially sensitive information ). As economic analyzes are important tools for identifying the possible effects of the transaction, they must be made available to the parties before the adoption of the final decision.

Moreover, the economic model was available months before the ban decision was adopted. The EC had no discretion to communicate them to UPS; he just had to provide it. By failing to do so, the EC not only avoided a procedural constraint intended to preserve the legitimacy and fairness of EU merger control proceedings, but also placed UPS in a position where it did not was able to understand some of the reasons for the decision. Accordingly, the first condition of EC liability was met.

However, the General Court found that the EC’s failure to communicate the final business model to UPS resulted in an erroneous substantive assessment of the merger. While acknowledging that the EC had disregarded its own rules and had used an economic model that deviated significantly from current economic practice, the General Court did not find a sufficiently serious breach of the right to the EU giving rise to a non-contractual liability of the EU in this respect.

Consequently, the sufficiently serious breach was limited to a breach of procedural rights and did not extend to the substantive assessment of the concentration. This result may have influenced the GC findings on causation, as described below.

Absence of causal link between the alleged prejudice and the failure of the EC

UPS sought damages of 1.7 billion euros due to the EC ban decision. It included: (i) a shortfall of €1.6 billion, reflecting the net value of the synergies from the proposed UPS/TNT transaction; (ii) a payment of €200 million to TNT as a severance payment for not having concluded the transaction; and (iii) costs associated with UPS’s participation in the merger process of the subsequent FedEx/TNT transaction.

The General Court dismissed all of UPS’s claims on the basis of the absence of a causal link between the damages sought and the breach of UPS’s procedural rights by the EC.

lost profit

According to the GC, it could not be assumed that the UPS/TNT transaction would have been approved if UPS’s procedural rights had not been violated. In particular, the Tribunal concluded that UPS had failed to provide evidence that the errors made by the EC in the economic model were sufficient to invalidate it entirely and that the outcome of the case would have been different if the errors had not been committed.

This imposes a very high burden of proof on the party seeking damages. Essentially, for the EC to be liable, the EC’s error must be serious enough to indicate that, but for the error, the outcome of the case might have been different. This is a very high standard, which UPS said was in fact insurmountable. Presumably, the Tribunal’s conclusions would have been different if the serious violation had not been limited to a violation of procedural rights but had extended to the assessment on the merits.

The Tribunal also noted that the EC’s decision was not based solely on the business model and therefore the violation of the rights of defense was unlikely to have a decisive impact on the outcome of the examination. merger control. Furthermore, the Court held that UPS’s decision not to proceed with the proposed transaction following the EC prohibition decision and not to submit a new offer for TNT had the effect of severing all direct causal link between the breach of procedural rights and the alleged harm. The GC relied on Schneider Electric, where the CJEU overturned the previous GC decision which had found a sufficient causal link between the illegality of the EC and the damages claimed.⁶

FedEx/TNT transaction breakage and intervention fees

The Tribunal also found that the payment of the severance fee and UPS’s intervention in the FedEx/TNT transaction resulted from UPS’s business decisions and not from a breach by the EC of UPS’s procedural rights.

According to the GC, the payment of the severance fee to TNT resulted from a contractual obligation arising from the agreement between UPS and TNT and reflected the willingness of the parties to share the risk that the EC would not approve the transaction considered. Similarly, UPS’s participation in the merger control procedure of the subsequent FedEx/TNT transaction was the result of UPS’s free choice. Thus, the EC’s violation of UPS’s procedural rights could not “constitute the determinative cause” of the damages sought.

This effectively rules out the possibility that the EC may be liable for severance or transaction fees, even if it commits a serious breach of law and even if the parties are able to demonstrate that the outcome of the review of the EC could have been different if this breach.

Take away food

The judgment confirms that while the EC can, in principle, be held liable for damages if it infringes the rights of defense of the parties when examining the concentration, the criterion for proving such damages and above all their causal link with the authority’s error is practically insurmountable, because one already necessary to suspect based on the Schneider Electric judgment of 15 years ago. The judgment thus raises the question of whether any error made by the EC in the context of merger control can give rise to liability for the losses suffered by the parties.

The T&Cs effectively exclude the possibility of the parties being reimbursed for transaction fees, break fees or any other losses resulting from the parties’ “free choice” to enter into the transaction and to allocate the antitrust risk between them. Such a standard seems to ignore business reality.

Similarly, obtaining damages for lost profits is equally difficult, as the plaintiff is required to prove that the merger would have been approved had there not been a procedural error on the part of the company. ‘authority. For the non-contractual liability of the EU to be more than illusory, it must be reassessed whether the burden of proof must be reversed so that the EC has to prove that its procedural errors had no effect on the result. of its merger decision.

Giulio Preti (Legal trainee, White & Case, Brussels) is co-author of this publication.

1 Judgment of 23 February 2022, United Parcel Service v Commission, T-834/17, EU:T:2022:84 (the judgment).
2 Commission decision of 30 January 2013 in case M.6570 – UPS/TNT EXPRESS.
3 Commission decision of 8 January 2016 in case M.7630 – FEDEX/TNT EXPRESS.
4 Judgment of 7 March 2017, United Parcel Service v Commission, T-194/13, EU:T:2017:144.
5 Judgment of 16 January 2019, Commission v United Parcel Service, C-265/17 P, EU
6 Judgment of 16 July 2009, Commission v Schneider Electric, 440/07 P, EU:C:2009:459.

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More … than 677,000 Ukrainians have already fled Russia’s war against their country since Tuesday, and this number is increasing hour by hour.

“Rarely have I seen such an incredibly rapid exodus of people – the largest in Europe since the Balkan wars,” UN Refugee Commissioner Filippo Grandi told a Security Council meeting on Monday. United Nations.

European governments and aid organizations have been planning for their arrival for weeks, but the number of refugees has exceeded those expectations. The UN predicted that 4 million Ukrainian refugees could arrive in neighboring countries in the coming weeks.

Such a large influx would be a “huge burden on receiving states and would undoubtedly strain reception systems and related resources”, Grandi said.

So far, at least 280,000 Ukrainians have gone to Poland, 94,000 to Hungary, 40,000 to Moldova, 34,000 to Romania, 30,000 to Slovakia and tens of thousands to other European countries. A “significant number” also went to Russia, according to Grandi. Most of the refugees are women and children, including a growing number of unaccompanied children. Ukraine has drafted men between the ages of 18 and 60 to fight, banning them from leaving.

Attila Kisbenedek/AFP via Getty Images

Refugees arrive by crowded trains, by car and even on foot after traveling tens of kilometres, queuing at borders for safety and bringing whatever they could fit in their suitcases if they had time to pack. . Those who can afford it have found their own accommodation, but others are staying in government-run shelters, hotels paid for by private companies, churches, or with their families or ordinary citizens who have offered to host them. .

Currently, with the help of the international community, Ukraine’s neighbors are managing to manage the refugees they host. But for them to continue to do so successfully, they will need a lot more supplies and money, and quickly.

There are still long queues at the borders

Neighboring countries have kept their borders open, unlike other migration crises in the recent past. But crossing the border remains an arduous process.

Although Poland accepts refugees without passports, there were mile-long queues at border crossings where people had to wait up to 60 hours to be processed in freezing temperatures and slept in their cars, if at all. The traffic got so bad that the Polish government asked volunteers not to show up at the border unless they had made arrangements to meet the refugees in advance.

There is also a 20-hour queue in Romania, and it takes 24 hours to travel the roughly 60 kilometers from Odessa to Ukraine’s border with Moldova, according to the UN.

There have been reports black refugees, many of whom are third-country nationals who were students in Ukraine, face difficulties crossing. At the Polish border, Ukrainian guards sent blacks to back of the line last week, claiming that “Ukrainians” had priority. Polish authorities said anyone arriving at the border was allowed to cross.

“We strongly condemn this racism and believe that it undermines the spirit of solidarity that is so urgently needed today,” Kenya’s UN Ambassador Martin Kimani said at the Council meeting on Monday. security.

Ensuring that refugees in line have adequate access to food, water and medical support is also an issue. A Nepali man studying in Ukraine said he hadn’t eaten for three days while waiting to enter Poland, and another elderly woman died at one of the border checkpoints, according to The Washington Post.

NGOs tried to help. Chef Jose Andres’ World Central Kitchen, for example, delivered 4,000 meals in 18 hours at Medyka, currently Poland’s busiest border crossing. Polish authorities have also tried to streamline processing, but resources and staff at their borders are simply not equipped to handle the current volume of arrivals.

Wojtek Radwanski/AFP via Getty Images

European countries ensure Ukrainians have a place to go

The European community has mobilized to guarantee Ukrainians short- and long-term housing. Local governments have created temporary shelters and civilians are hosting refugees in their homes. The EU has also asked the 27 member countries to grant asylum to all Ukrainians for up to three years, which would give them access to social services and permission to work. EU Home Affairs Commissioner Ylva Johansson said on Sunday that an “overwhelming majority” supported the measure, but did not specify which countries opposed it.

In Poland, where at least 40% of Ukrainian refugees have gone so far, new arrivals are transported via tourist buses to one of nine reception centres, where they receive meals, medical care, beds and legal information and services. In the town of Korczowa, for example, a makeshift shelter with folding beds was set up inside a deposit. There, they can also meet as a family; Poland was already home to around 2 million Ukrainians before the latest Russian incursion.

Polish civilians also demanded their support for the refugees. Residents of Warsaw, the Polish capital, have announced around 2,500 apartments where refugees can stay. They also flocked to reception centers offering to transport or house refugees and bringing donations of food, water, clothing, sleeping bags, shoes, blankets, diapers, toys, sanitary products, batteries and charging cables for mobile phones.

Private companies have also funded housing for Ukrainians. Airbnb, for example, has offered free short-term accommodation to 100,000 Ukrainian refugees and is working with countries in the region to organize long-term stays. There is also an online directory of hotels and hostels that have openings for refugees.

The government, citizens and private businesses will need to continue to build capacity to prepare for even more arrivals, but other EU states have promised to share the responsibility by also welcoming refugees.

Ukrainian refugee population needs more humanitarian support in coming weeks

The needs of the Ukrainian refugee population in Europe are likely to only skyrocket in the coming weeks, and meeting those needs will require money.

Omar Marques/Getty Images

The UN, which has set up a Ukrainian Humanitarian Fund, requested a preliminary amount of $550.6 million from member states in addition to the $190 million it had already requested to help support reception efforts in neighboring countries. Humanitarian groups are still assessing the most urgent gaps in assistance, but this money will go towards shelter, emergency relief items, cash assistance, and mental health and psychosocial support for people. refugees.

For its part, the United States recently approved $54 million in humanitarian aid for Ukraine, and Congress plans to release an additional $2.9 billion. However, every day lawmakers deliberate delays the delivery of aid.

The European Commission also said its pledge of 90 million euros in aid on February 28 was just the start.

“Until there, [the needs of Ukrainian refugees] have been met, although I am seriously concerned about the likely further escalation in arrivals,” Grandi said on Monday.

European Union leaders could discuss the possibility of Ukraine joining at an informal summit in March, a senior EU official said on Monday, adding that the issue was important for Ukraine. in discussions with Russia on ending the conflict.

“I think one of the reasons why this is important for (Ukrainian) President (Volodymyr) Zelenskiy is also potentially in some of the discussions with Russia on a way out,” the official said, referring to the talks to put end to the conflict. But he warned that no process had yet been launched. “On (Ukraine’s) candidacy for EU membership, I think it’s important not to get ahead of ourselves,” said the official, who requested anonymity. .

“It obviously hasn’t been received yet, but this whole issue of the situation in Ukraine is something that the leaders are very concerned about.” European leaders President Charles Michel and European Commission chief Ursula von der Leyen will meet French President Emmanuel Macron and German Chancellor Olaf Scholz in Paris on Monday evening for talks.

“So I’m sure that will come up in these discussions. And of course we have very soon, on March 10 and 11, an informal meeting of the European Council and I imagine that the subject of Ukraine, which occupies many leaders “spirits, will at some point feature in these discussions,” the official said. Ukraine has an association agreement with the 27-nation bloc but wants to become a full member, which Russia opposes. Ukraine’s membership has so far not been discussed so as not to upset Moscow, but Russia’s invasion of Ukraine has changed things, the official said.

“This unprecedented Russian aggression that we see against Ukraine, the strong condemnation of this that we have seen by the EU, the outrage of the European Union, of the Member States, of public opinion – I think this is also likely to be a factor that will determine how we respond (to a membership application),” the official said. “If you go to the origins of some of these impasses, there were a large number of people who were ready to give their lives for a European perspective which was at the heart of the Maidan protests (in Kyiv in 2013-14), “said said the official.

“I think in any agreement that President Zelenskiy might reach with President Putin, seeking assurances, or getting a guarantee if you will, that there will be support, understanding for Ukraine joining one day to the European Union, is likely to be very important for the Ukrainian people,” he said. Slovenian Prime Minister Janez Jansa on Monday expressed his “full support” for a faster EU accession procedure. EU for Ukraine, while Czech Prime Minister Petr Fiala said it was necessary to give a clear signal that Ukraine was welcome, the CTK news agency reported on Monday.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)