Ryanair Holdings Plc ("Ryanair") v Competition Commission ("CC") (1st Respondent) Aer Lingus Group Plc ("Aer Lingus") (2nd Respondents)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Etherton,Lord Justice Lewison,Lord Justice Pill |
| Judgment Date | 13 December 2012 |
| Neutral Citation | [2012] EWCA Civ 1632 |
| Docket Number | Case No: C3/2012/2210 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 December 2012 |
[2012] EWCA Civ 1632
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM COMPETITION APPEAL TRIBUNAL
Marcus Smith QC, Dr Clive Elphick, Dermot Glynn
[2012] CAT 29
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice Etherton
and
Lord Justice Lewison
Case No: C3/2012/2210
and
Lord Pannick QC and Brian Kennelly (instructed by Cleary Gottlieb Steen and Hamilton LLP) for the Appellants
Daniel Beard QC and Alison Berridge (instructed by Treasury Solicitors) for the 1 st Respondents
James Flynn QC and Daniel Piccinin (instructed by Cadwalader, Wickersham & Taft LLP) for the 2 nd Respondents
Hearing date : 16th November 2012
The appellant, Ryanair Holdings plc ("Ryanair"), and the second respondent, Aer Lingus Group plc ("Aer Lingus"), operate well known airlines. Following a reference by the Office of Fair Trading ("the OFT"), pursuant to section 22 of the Enterprise Act 2002 ("the EA"), the Competition Commission is currently conducting an investigation under Chapter 1 of Part 3 of the EA (mergers) into Ryanair's 29.82% shareholding in Aer Lingus. The European Commission ("the EC") is concurrently exercising its jurisdiction under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings ("the Merger Regulation") to consider Ryanair's current public bid for the entirety of Aer Lingus' share capital.
The Competition Commission has rejected Ryanair's claim that, by virtue of the EC's exclusive jurisdiction under Article 21(3) of the Merger Regulation ("Article 21(3)") and the duty of Member States under Article 4(3) of the Treaty on European Union ("TEU") to assist the European Union ("the EU") to carry out its tasks ("the duty of sincere co-operation"), the Competition Commission has no jurisdiction to continue its investigation or ought not to exercise any such jurisdiction pending completion of the EC's review under the Merger Regulation.
This is Ryanair's appeal from the decision of the Competition Appeal Tribunal ("the CAT") dated 8 August 2012 by which, broadly speaking, it dismissed Ryanair's application for an order pursuant to EA s.120 that the Competition Commission's decision to continue with its investigation, including the Competition Commission's notice under EA s. 109 requiring Ryanair to produce certain information and documents, be quashed or stayed.
The legal framework
The duty of sincere co-operation
Article 4(3) TEU provides:
"Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.
The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union.
The Member States shall facilitate the achievement of the Union's tasks and refrain from any measure which could jeopardise the attainment of the Union's objectives."
There are important observations on the principle of sincere co-operation in MTV Europe v BMG Records (UK) Ltd [1997] 1 CMLR 867 (" MTV Europe"); Masterfoods Ltd v HB Ice Cream Ltd [2000] ECR I-11369 (" Masterfoods") and National Grid Electricity Transmission plc v ABB Ltd [2009] EWHC 1326 (" National Grid"). It is sufficient for the purpose of this appeal to refer to the reasoning and decision of the Chancellor in National Grid, with which I agree. That case concerned "follow-on" actions for damages which relied, for the establishment of liability, on the decision of the EC that there had been serious antitrust infringements of competition law by way of cartel arrangements. The question was whether there should be a stay of the English proceedings pending the conclusion of appeals by the defendants to the Court of First Instance ("the CFI") (now the General Court) and any subsequent appeals to the European Court of Justice ("the ECJ") (now the Court of Justice of the European Union). The Chancellor refused a stay but ordered that the action be not fixed for hearing against any defendant until after the period of three months had elapsed from the exhaustion by that defendant of its rights of application for annulment to the CFI or of subsequent appeal to the ECJ. The Chancellor said the following at paragraph [24] of his judgment:
"24. At one stage counsel for Areva submitted that the terms of paragraph 58 of the ECJ's judgment in Masterfoods required the national court to abstain from any further proceedings in the action save any which could properly be described as "interim measures to safeguard the interests of the parties pending final judgment". He submitted that any requirement for service of defences, disclosure of documents or other normal interlocutory steps in preparation for a trial were outside the scope of what the ECJ considered to be permissible. I reject that submission. First, the terms of paragraphs 55 and 57 show that it is for the national courts to decide when to stay its proceedings. The object is to avoid any decision running counter to that of the Commission or the community courts. Paragraph 58 deals only with the position when the national court has stayed the proceedings. It says nothing about the obligations of the national courts before that stay has become effective. Indeed it would be contrary to the very division of functions to which the ECJ referred in paragraphs 47 to 49 to conclude that it had the jurisdiction to interfere with the procedures of the national courts in areas where there was no risk of conflicting decisions. Given that objective it is for the national court to consider, in accordance with its own procedures, how best to achieve it."
In reaching his conclusion the Chancellor relied upon the following passages in the judgment of Sir Thomas Bingham MR in MTV Europe about the consequences of the duty of sincere co-operation where the EC is exercising its concurrent jurisdiction in respect of a matter which is also the subject of pending antitrust proceedings in the UK:
"[28] There is, in my judgment, nothing which suggests that in a case where the answer is not clear in favour of the plaintiff or the defendant, the national court must at once stay the proceedings pending a decision by the Commission. The Court's concern is to avoid inconsistent decisions. There is no ground for seeking to prohibit the preparation of an action for trial so long as it does not lead to a decision in advance of a decision by the Commission."
"[29] … I find nothing in [Case C-250/92Gøttrup-Klim Grovvareforening v. Dansk Landbrugs Grovvareselskab AmbA] to suggest that the European Court of Justice was intending to forbid national judges, in cases where the outcome was not clear, from allowing the preparation of proceedings to go ahead until a point short of decision. Moreover I can, for my part, see no reason why the Court of Justice should seek to intrude into that area. The Court of Justice has always respected the power of national courts to order their own procedure so long as no Community interest is adversely affected, and I can see no reason why it should wish to step in here."
The Merger Regulation
Article 1 of the Merger Regulation defines the transactions falling within its scope and grants to the EC exclusive jurisdiction within the EU to scrutinise those transactions on competition grounds. Article 1 provides that the Merger Regulation "shall apply to all concentrations with a Community dimension". It goes on to define "Community dimension" by reference to the turnover of the undertakings concerned in the concentration.
Article 3(1) provides:
"A concentration shall be deemed to arise where a change of control on a lasting basis results from:
(a) the merger of two or more previously independent undertakings or parts of undertakings, or
(b) the acquisition … whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings".
Article 3(2) provides:
"Control shall be constituted by rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on an undertaking…"
Article 2 sets out the substantive test against which mergers falling within the jurisdiction of the EC are assessed, focusing on the concept of a "significant impediment to effective competition". It provides:
"(2) A concentration which would not significantly impede effective competition in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared compatible with the common market.
(3) A concentration which would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the common market."
Article 4 contains provisions for notifying the EC of concentrations with a Community dimension prior to their implementation and following, among other things, the announcement of a public bid.
Article 6 contains provisions for a two stage consideration of the concentration by the EC. In the first, shorter, phase the EC decides...
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