(Interim measures Control of concentrations Prohibition of a notified operation Article 8(4) and (5) of Regulation (EC) No 139/2004 Application for an order requiring the Commission to take measures against the other party to the prohibited concentration Measure incompatible with the distribution of powers between institutions Powers of the Commission Order addressed to an intervener Application for suspension of operation Admissibility Prima facie case Urgency Serious and irreparable damage Occurrence of damage dependent on future, uncertain events Insufficient reasons Weighing of all the interests involved)
- Under Article 3 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1) :
'1. 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, by one or more persons already controlling at least one undertaking, or by one or more undertakings, 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.
2. 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, in particular by:
(a) ownership or the right to use all or part of the assets of an undertaking;
(b) rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
3. Control is acquired by persons or undertakings which:
(a) are holders of the rights or entitled to rights under the contracts concerned; or
(b) while not being holders of such rights or entitled to rights under such contracts, have the power to exercise the rights deriving therefrom.
...'
- Article 8 of Regulation No 139/2004 provides:
'...
4. Where the Commission finds that a concentration:
(a) has already been implemented and that concentration has been declared incompatible with the common market, or
(b) has been implemented in contravention of a condition attached to a decision taken under paragraph 2, which has found that, in the absence of the condition, the concentration would fulfil the criterion laid down in Article 2(3) or, in the cases referred to in Article 2(4), would not fulfil the criteria laid down in Article 81(3) of the Treaty,
the Commission may:
require the undertakings concerned to dissolve the concentration, in particular through the dissolution of the merger or the disposal of all the shares or assets acquired, so as to restore the situation prevailing prior to the implementation of the concentration; in circumstances where restoration of the situation prevailing before the implementation of the concentration is not possible through dissolution of the concentration, the Commission may take any other measure appropriate to achieve such restoration as far as possible,
order any other appropriate measure to ensure that the undertakings concerned dissolve the concentration or take other restorative measures as required in its decision.
In cases falling within point (a) of the first subparagraph, the measures referred to in that subparagraph may be imposed either in a decision pursuant to paragraph 3 or by separate decision.
5. The Commission may take interim measures appropriate to restore or maintain conditions of effective competition where a concentration:
(a) has been implemented in contravention of Article 7, and a decision as to the compatibility of the concentration with the common market has not yet been taken;
(b) has been implemented in contravention of a condition attached to a decision under Article 6(1)(b) or paragraph 2 of this Article;
(c) has already been implemented and is declared incompatible with the common market.'
Facts
- The applicant, Aer Lingus Group plc ('the applicant' or 'Aer Lingus'), is a public limited company and the non-trading holding company of Aer Lingus Limited, a low-cost, low-fares international airline based in Ireland, providing scheduled air transportation services to and from Dublin, Cork and Shannon airports. Following its privatisation in 2006 by the Irish Government, which retained a shareholding of 25.35%, Aer Lingus shares were admitted to trading on 2 October 2006.
- On 23 October 2006, Ryanair Holdings plc ('Ryanair'), which had previously acquired, between 27 September and 5 October 2006, through its wholly-owned subsidiary Coinside Limited, a 19.21% stake in Aer Lingus, launched a public bid for the entire share capital of Aer Lingus.
- On 30 October 2006, Ryanair lodged with the Commission a notification of a proposed concentration pursuant to Article 4 of Regulation No 139/2004 relating to its projected acquisition of Aer Lingus.
- During the bid period, Ryanair acquired further shares in Aer Lingus and, by 28 November 2006, held 25.17% of the share capital in Aer Lingus.
- On 20 December 2006 the Commission adopted a decision under Article 6(1)(c) of Regulation No 139/2004 ('the Regulation') initiating phase II proceedings. In this decision the Commission considered that the separate acquisitions of shares referred to above and the public bid launched by Ryanair constituted a single concentration for the purposes of Article 3 of the Regulation.
- On 27 June 2007, the Commission adopted Decision C(2007) 3104 declaring the notified concentration to be incompatible with the common market ('the Prohibition Decision'), pursuant to Article 8(3) of the Regulation. The Commission concluded that the notified concentration would significantly impede effective competition in the common market or a substantial part thereof within the meaning of Article 2(3) of the Regulation, in particular as a result of the creation of a dominant position of Ryanair and Aer Lingus on 35 routes from and to Dublin, Shannon and Cork, and the creation or strengthening of a dominant position on 15 other routes from and to Dublin and Cork.
- By application lodged with the Registry of the Court of First Instance on 10 September 2007, registered under number T-342/07, Ryanair brought an action for annulment of the Prohibition Decision.
- Following the Prohibition Decision, Ryanair acquired a further 4.3% of the share capital of Aer Lingus, bringing its total shareholding to 29.4%.
- During the proceedings before the Commission prior to the Prohibition Decision, Aer Lingus submitted that the Commission should take a decision under Article 8(4) of the Regulation requiring Ryanair to divest itself of its minority stake in Aer Lingus should the Commission prohibit the concentration.
- On 27 June 2007, the Deputy Director General of the Directorate-General for Competition addressed a letter to the applicant indicating that, in the opinion of the services in charge of Merger Control, the Commission did not have the power under Article 8(4) of the Regulation to order Ryanair to divest itself of its minority shareholding, insofar as there was no indication that, with 25.22% of Aer Lingus shares, Ryanair would be in a position to exercise de jure or de facto control over Aer Lingus within the terms of Article 3(2) of the Regulation. For the same reasons, the letter stated that the Commission would lack the power to adopt interim measures under Article 8(5) of the Regulation.
- On 17 August 2007, Aer Lingus addressed to the Commission a request that it open proceedings against Ryanair under Article 8(4) of the Regulation and that it adopt interim measures under Article 8(5) thereof to prevent Ryanair from exercising its voting rights in Aer Lingus, or, alternatively, to state formally that the Commission does not have the power to adopt such measures. In addition, Aer Lingus requested that the Commission explicitly take a position on the interpretation of Article 21 of the Regulation.
- On 11 October 2007, the Commission adopted Decision C(2007) 4600 final rejecting Aer Lingus' request ('the Contested Decision').
The Contested Decision
- In the Contested Decision, the Commission took the view that, pursuant to Article 3 of the Regulation, a concentration arises only where an undertaking acquires control, control being defined as the possibility of exercising decisive influence. As to Article 8(4) of the Regulation, the Commission recalled that this provision allows it, where a concentration has already been implemented, to require the undertakings concerned to dissolve the concentration, in particular through the disposal of all the shares or assets acquired, so as to restore the situation prevailing prior to the implementation of the concentration.
- However, the Commission found that the concentration assessed in the present case had not been implemented, insofar as Ryanair had not acquired control of Aer Lingus. The transactions that were carried out during the Commission's proceedings could therefore not be considered to constitute implementation of the notified concentration.
- In particular, the Commission underlined that the minority stake held by Ryanair did not grant it, de jure or de facto, control of Aer Lingus within the meaning of Article 3(2) of the Regulation. The Commission added that, even though minority shareholdings may in certain circumstances lead to a finding of control, there were no indications that such circumstances were present in this case. In fact, according to the information available to the Commission, Ryanair's rights as a minority shareholder (in particular the right to block so-called 'special resolutions' under Irish company law) are associated exclusively with rights related to the protection of minority shareholders and do not confer control upon Aer Lingus. Furthermore, the Commission pointed out that Aer Lingus itself did not claim that the minority stake acquired would lead to control by Ryanair over Aer Lingus.
- Finally, the Commission stated that the present case differed from the situation in past cases where Article 8(4) had been applied, such as in the Commission Decision of 30 January 2002 setting out measures to restore conditions of effective competition pursuant to Article 8(4) of Council Regulation (EEC) No 4064/89 (Case COMP/M.2416 Tetra Laval/Sidel, OJ 2004 L 38, p. 1, 'the Tetra Laval/Sidel Case') and in the Commission Decision of 30 January 2002 requiring undertakings to be separated pursuant to Article 8(4) of Council Regulation (EEC) No 4064/89 (Case COMP/M.2283 Schneider/Legrand, OJ 2004 L 101, p. 134, 'the Schneider/Legrand Case'). In fact, in those cases, by contrast to the present situation, an acquisition had already been successfully completed and the acquirer had acquired control of the target.
- As concerns Aer Lingus' request that the Commission adopt interim measures pursuant to Article 8(5) of the Regulation, the Commission noted that the wording of this provision referred similarly to a situation where a concentration 'has already been implemented and is declared incompatible with the common market' and concluded therefore that it did not have the power to take interim measures in that case.
- In relation to Aer Lingus' request that the Commission adopt a position on the interpretation of Article 21 of the Regulation, the Commission noted that such a request amounted, in effect, to a request for a legally binding interpretation of a provision of Community law to be addressed to Member States, and that the Commission manifestly lacks the power to adopt such acts.
Procedure
- By application lodged at the Court Registry on 19 November 2007, registered under number T-411/07, the applicant brought an action for annulment of the Contested Decision on the basis of the fourth paragraph of Article 230 EC.
- By separate document lodged at the Registry on the same day, registered under number T-411/07 R, the applicant applied for the adoption of interim measures and for the suspension of the operation of the Contested Decision on the basis of Articles 242 EC and 243 EC, and of Article 104 of the Rules of Procedure of the Court of First Instance.
- On 12 December 2007 the Commission submitted its written observations on this application for interim measures.
- By a document lodged at the Registry on 27 November 2007, Ryanair applied for leave to intervene in support of the form of order sought by the Commission.
- By a document lodged at the Registry on 4 December 2007, Aer Lingus raised no objections to Ryanair's application for leave to intervene and stated that it made no confidentiality claims in relation to any of the documents which it had lodged with the Court in Case T-411/07 R.
- By a document lodged at the Registry on 5 December 2007, the Commission raised no objections to Ryanair's application for leave to intervene.
- By order of the President of the Court of First Instance of 7 December 2007, Ryanair was granted leave to intervene in support of the form of order sought by the Commission and to submit a statement in intervention, which it did on 19 December 2007.
- A hearing was held on 24 January 2008.
Forms of order sought
- The applicant claims that the President of the Court of First Instance should:
order the Commission to require Ryanair, until judgment in the main application or in Case T-342/07, whichever is the later:
not to exercise the voting rights or any other rights attached or deriving from the shareholding held by Ryanair in Aer Lingus (including, without limitation, attendance or voting at meetings, or the requisition of general meetings) except in accordance with a derogation granted by the Commission;
to vest the shares in question in a trustee and not to dispose of any of them except to a buyer, and in accordance with a procedure, approved by the Commission;
not to increase further its shareholding in Aer Lingus;
alternatively, adopt any order to similar effect against the Commission and/or Ryanair as the President may think fit;
suspend the Commission's decision of 11 October 2007 C(2007) 4600 final rejecting the applicant's request that proceedings be opened under Article 8(4) of the Regulation, in so far as necessary;
order the Commission to pay the costs.
- The Commission contends that the President of the Court should:
dismiss the application for suspension;
dismiss the application for interim measures;
order the applicant to pay the costs.
- Ryanair contends that the President of the Court should:
dismiss the application;
order the applicant to pay the costs associated with the intervention.
Law
- Under Articles 242 EC and 243 EC, in conjunction with Article 225(1) EC, the Court of First Instance may, if it considers that circumstances so require, order that application of the act contested before it be suspended or prescribe any necessary interim measures.
- Article 104(2) of the Rules of Procedure of the Court of First Instance provides that an application for interim measures must state the subject-matter of the proceedings, the circumstances giving rise to urgency, and the pleas of fact and law establishing a prima facie case for the interim measures applied for. Thus, the judge hearing the application may order suspension of operation of an act and/or interim measures if it is established that such an order is justified, prima facie, in fact and in law and that it is urgent in so far as, in order to avoid serious and irreparable harm to the applicant's interests, it must be made and produce its effects before a decision is reached in the main action. Those conditions are cumulative, with the result that an application for interim measures must be dismissed if any one of them is not satisfied (order in Case C-268/96 P(R) SCK and FNK v Commission [1996] ECR I-4971, paragraph 30). Where appropriate, the judge hearing the application must also weigh up the interests involved (see the order in Case C-445/00 R Austria v Council [2001] ECR I-1461, paragraph 73 and the case cited).
- In addition, in the context of that overall examination, the judge hearing the application has a wide discretion and is free to determine, having regard to the specific circumstances of the case, the manner and order in which those various conditions are to be examined, there being no rule of Community law imposing a pre-established scheme of analysis within which the need to order interim measures must be analysed and assessed (order in Case C-149/95 P(R) Commission v Atlantic Container Line and Others [1995] ECR I-2165, paragraph 23, and order of 3 April 2007 in Case C-459/06 P(R) Vischim v Commission, not published in the ECR, paragraph 25).
Admissibility
Arguments of the parties
- The Commission submits that the application for interim measures should be dismissed on the ground that none of the relief sought is of the type that can be granted in the framework of interim proceedings.
- First, the Commission argues that the interim measures requested go beyond the scope of what the applicant could obtain in the main proceedings, which cannot result in the automatic divestiture of Ryanair's minority shareholding. Should Aer Lingus prevail in the main proceedings, it would be for the Commission to take the necessary measures to comply with the Court's judgment, in accordance with Article 233 EC.
- In addition, the Commission points out that the applicant requests the adoption of measures having effect until the judgment in the main application or in Case T-342/07, whichever is the later. According to the Commission, extending the duration of the measures sought beyond the end of the main proceedings would be to deny the provisional nature of the interim measures procedure. It also argues that the present application for interim measures cannot relate to different and separate proceedings to which the applicant is not a party.
- Second, so far as concerns the request for suspension of the Contested Decision, the Commission submits that, according to consistent case-law, an application for suspension of operation cannot, in principle, be envisaged against a negative administrative decision.
- Third, so far as concerns the request that the President of the Court enjoin the Commission to order Ryanair to abstain from exercising its minority voting rights or to take certain positive steps, the Commission points out that, by this means, the applicant is seeking to escape the application of the case-law according to which the judge hearing the application for interim measures cannot issue directions to individuals who are not parties to the dispute.
- In the Commission's opinion, the fact that Ryanair has been granted leave to intervene does not confer upon it the status of a party.
- Fourth, so far as concerns the request that the President of the Court adopt any order to similar effect against the Commission and/or Ryanair as the President may think fit, the Commission considers that such a claim is vague and imprecise and does not, therefore, meet the criteria laid down in the Rules of Procedure. Consequently, it should be rejected as inadmissible.
- In its statement in intervention, Ryanair supports the Commission's submissions and considers that the application should be dismissed as inadmissible. It stresses, in particular, that the order sought goes beyond what could be obtained in the main proceedings and is inviting the judge hearing the application to disregard the constitutional balance between the Community institutions and to assume the role of the Commission. In addition, Ryanair submits that the interim measures are, in substance, requested not against the Commission, but against Ryanair itself, which is not a party to the proceedings. As such, Ryanair, as well as other affected parties, would be deprived of the procedural guarantees which they enjoy under the Regulation and under general principles of Community law, and would in particular be deprived of their rights of defence.
Findings of the President
- Without contending clearly that the present application should be rejected as being inadmissible in its entirety, the Commission states that none of the forms of order which the applicant seeks can be granted in the context of proceedings for interim measures.
- Each of these forms of order must be examined separately.
- First, as regards the duration of the measures requested, it must be pointed out that, according to Article 107(4) of the Rules of Procedure, an order of the type requested by the applicant may have only an interim effect, and is to be without prejudice to the decision on the substance of the case by the Court of First Instance. It follows that, in principle, the duration of such an order cannot extend beyond that of the main proceedings to which it relates. Accordingly, in so far as the applicant's request for measures 'until the judgment in the main application or in Case T-342/07, whichever is the later' involves the application of interim measures beyond the date of the judgment in the main application, such request must be rejected. Should any interim measures be granted in the present proceedings, such measures may apply only until the judgment in the main application.
- Second, as regards the request for suspension of operation of the Contested Decision, it should be noted that an application for suspension of operation cannot, in principle, be envisaged against a negative administrative decision, since the grant of suspension could not have the effect of changing the applicant's position (order of the President of the Second Chamber of the Court of Justice in Case C-206/89 R S. v Commission [1989] ECR 2841, paragraph 14, orders of the President of the Court of Justice in Case C-89/97 P(R) Moccia Irme v Commission [1997] ECR I-2327, paragraph 45, and in Joined Cases C-486/01 P(R) and C-488/01 P(R) Front national and Martinez v Parliament [2002] ECR I-1843, paragraph 73).
- By the Contested Decision, the Commission has rejected the applicant's request that it open proceedings under Article 8(4) of the Regulation and adopt interim measures under Article 8(5) of that regulation to prevent Ryanair from exercising its voting rights in Aer Lingus, or to formally state that the Commission does not enjoy the power to do so. The suspension of operation of this negative administrative decision would not, in itself, have any effect on the conditions governing the exercise of Ryanair's minority shareholding in Aer Lingus and thus would not have any consequence of use to the applicant.
- Since an order suspending the Contested Decision would be of no interest to the applicant, this request must be rejected, except to the extent to which suspension of the Contested Decision might be necessary for the purposes of adopting any other of the requests for interim measures applied for by Aer Lingus, should the President consider them to be admissible and well founded.
- Third, as regards the applicant's request for an order that the Commission require Ryanair not to exercise any rights attached to or deriving from the shareholding held by Ryanair in Aer Lingus, to vest the shares in question in a trustee and not to dispose of any of them except to a buyer, and not to increase further its shareholding in Aer Lingus, it should be noted that, in principle, the adoption of interim measures which would constitute an interference with the exercise of the Commission's powers, incompatible with the distribution of powers between the various Community institutions, as intended by the authors of the EC Treaty, cannot be entertained (see, to that effect, the orders of the President of the Court in Case T-213/97 R Eurocoton and Others v Council [1997] ECR II-1609, paragraph 40, and in Case T-107/01 R Sacilor Lormines v Commission [2002] ECR II-3193, paragraphs 52 and 53).
- In the present case, if it were to be decided in the judgment in the main application that, as contended by the applicant, the Commission has a power to order the measures set out in Article 8(4) and (5) of the Regulation, it would be for the Commission, should it consider it necessary in the context of the powers of control accorded to it in the field of concentrations, to adopt the restorative measures it deems appropriate, and to take the necessary measures to comply with the Court's judgment, in accordance with Article 233 EC. Accordingly, should the judge hearing the application for interim measures grant this request, it would amount to an injunction to draw precise inferences from the annulment decision, and such an order would exceed the Court's powers in the main action (order of the President of the Court in Case T-369/03 R Arizona Chemical v Commission [2004] ECR II-205, paragraph 67).
- Under the system for the division of powers established under the EC Treaty and by the Regulation, however, it is for the Commission, if it considers it necessary in the context of the powers of control accorded to it in the field of concentrations, and in particular by Article 8(4) and (5) of the Regulation, to adopt the restorative measures which it deems appropriate. It follows that, to the extent to which the applicant's first request seeks to obtain an order from the President requiring the Commission to apply Article 8(4) and (5) of the Regulation in a particular manner, such a request must be rejected as inadmissible.
- In relation to the applicant's request that the President of the Court make any such order or orders to similar effect against the Commission and/or Ryanair as the President may think fit, the Commission submits that this type of request is too vague, and, accordingly, inadmissible. The Commission bases this argument on established case-law of the Court to the effect that requests for interim measures pursuant to Article 243 EC cannot be vague and imprecise (see, to that effect, the orders of the President of the Court in Case T-228/95 R Lehrfreund v Council and Commission [1996] ECR II-111, paragraph 58, and in Case T-78/04 R Sumitomo Chemical v Commission [2004] ECR II-2049, upheld on this point on appeal in Case C-381/04 P, not published in the ECR).
- However, in cases where the content of the measures sought by the applicant is sufficiently clear from the rest of the application, the judge hearing the application may conclude that the request is not vague and imprecise in nature and thus consider it admissible. In the present case, it is clear from the first request that the applicant is seeking to obtain interim measures to ensure, inter alia, that Ryanair's rights as shareholder are not exercised pending a final decision on the case. As the Commission points out at paragraph 25 of its observations, 'what the applicant really wants is to prevent Ryanair from exercising its minority voting rights'. The scope of the measures requested for these purposes is made clear in the applicant's first request. Accordingly, the request for 'any such order or orders to similar effect against the Commission and/or Ryanair as the President may think fit' is, in this case, sufficiently clear to meet the conditions laid down in the Rules of Procedure.
- To the extent to which such a request, in practice, seeks to obtain an order from the President of the Court that the Commission exercise its discretion under Article 8(4) and (5) in a particular manner, however, based on the foregoing, this request is inadmissible.
- To the extent to which, on the other hand, the request seeks to obtain an order from the President addressed to the intervener, the Commission states that the judge hearing the application for interim measures cannot issue directions to individuals who are not parties to the dispute, that Ryanair should not be considered a party to the dispute, and that, accordingly, no interim measures can be addressed to it. In addition, even if Ryanair were to be considered a party to the proceedings, by virtue of its status as 'intervener', the Commission states, relying on settled case-law of the Court, that where the interim measures applied for may seriously affect the rights and interests of third parties, which in this case includes other Aer Lingus' shareholders, which, not being parties to the proceedings, have not been able to make their views known, such measures can be justified only if it appears that, without them, the applicant would be exposed to a situation liable to endanger their very existence (order of the President of the Court in Case T-12/93 R CCE Vittel and CE Pierval v Commission [1993] ECR II-785, paragraph 20).
- It should be pointed out that Article 243 EC states clearly that '[t]he Court of Justice may in any cases before it prescribe any necessary interim measures'. Such broad wording is obviously intended to grant sufficient powers to the judge hearing an application for interim measures to prescribe any measure which he deems necessary to guarantee the full effectiveness of the definitive future decision, in order to ensure that there is no lacuna in the legal protection provided by the Community Courts (see order of the President of the Court of Justice in Case C-180/01 P(R) Commission v NALOO [2001] ECR I-5737, paragraph 52 and the case-law cited). In order to ensure the full effectiveness of Article 243 EC, therefore, it cannot be excluded that the judge hearing the application may impose orders directly on third parties, if necessary. Such broad discretion should, in this respect, be exercised with due regard to the procedural rights, and in particular the right to be heard, of the addressees of interim measures and of parties directly affected by the interim measures. Of course, when deciding whether to grant the interim measures applied for in this type of case, the judge hearing the application will, in addition, have due regard to both the strength of the prima facie case and the imminence of serious and irreparable harm in the specific case at stake. Even where a third party has not had an opportunity to be heard in the context of proceedings for interim measures, it cannot be excluded that interim measures might be imposed on it, in exceptional circumstances and bearing in mind the temporary nature of interim measures, if it appears that, without such measures, the applicant would be exposed to a situation liable to endanger its very existence.
- Ryanair has been admitted to intervene in the present proceedings by order of the President of 7 December 2007, and it submitted its observations on 19 December 2007. In addition, Ryanair, like all of the other parties to the present proceedings, has had the opportunity to put forward its views at length in the course of the oral hearing. Ryanair's views are, therefore, taken into account in the present proceedings.
- It follows that the request for any such order or orders to similar effect against Ryanair as the President may think fit is admissible.
- Such a conclusion cannot be reversed by the Commission's argument that interim measures having the effect of suspending Ryanair's rights attaching to its shareholding in Aer Lingus would have an impact on third parties, and in particular on the other shareholders of Aer Lingus, and that because such other parties have not been heard in the present proceedings, no order having an impact on them can be granted. In this respect, it should be pointed out that, based on the foregoing, the wide powers of the judge hearing an application for interim measures are limited only, in so far as an impact on the rights and interests of third parties is concerned, in cases where such rights and interests may be seriously affected (order in CCE Vittel and CE Pierval v Commission, cited in paragraph 54 above, paragraph 20). In addition, even where the rights and interests of third parties may be seriously affected by the interim measures requested, such interim measures may nonetheless be granted 'if it appears that, without them, the applicants would be exposed to a situation liable to endanger their very existence' (order in CCE Vittel and CE Pierval v Commission, cited in paragraph 54 above, paragraph 20, and case-law cited therein). The judge hearing an application for interim measures carries out such assessments when balancing the different interests at stake. Accordingly, it cannot be excluded that, if all the applicable conditions are satisfied, interim measures may be granted in the present proceedings, notwithstanding a possible impact on the rights and interests of other shareholders in Aer Lingus.
The Merits
Prima facie case
Arguments of the parties
- The applicant submits that the factual and legal elements set out below demonstrate that there is a serious dispute regarding the correctness of the Commission's interpretation of Article 8(4) and (5) of the Regulation in the Contested Decision.
- First of all, the applicant contests the assertion in paragraph 12 of the Contested Decision, according to which 'negative effects cannot occur since Ryanair has not acquired, and may not acquire, control of Aer Lingus'. In the applicant's opinion this assertion is contrary to the facts, to sound economic theory and to previous Commission decisions.
- With regard to the first argument, the applicant stresses that Ryanair has used its shareholding to seek access to Aer Lingus' confidential strategic plans, has blocked special resolutions that would have assisted Aer Lingus in raising capital and/or making acquisitions, has requisitioned two Extraordinary General Meetings with the object of reversing Aer Lingus' strategic decisions, and has threatened its directors with litigation for breach of statutory duty towards it as a shareholder.
- These facts, according to the applicant, have had the result of distracting the management of Aer Lingus, embroiling the company in confrontation and legal disputes with Ryanair, and, inevitably, weakening Aer Lingus as an effective competitor of Ryanair.
- With regard to the second argument, the applicant submits that sound economic principles indicate that minority shareholdings such as Ryanair's shareholding in Aer Lingus distort competition between the companies concerned. In particular, as a shareholder of Aer Lingus having the right to receive a proportion of Aer Lingus' profits, Ryanair does not have incentives to compete with Aer Lingus, because it has a conflicting interest in maximising the value of its shareholding and ensuring that Aer Lingus is profitable. Shareholdings such as that of Ryanair, according to Aer Lingus, contribute significantly to anti-competitive outcomes.
- With regard to the third argument, in support of its claim, the applicant relies on the Commission's decisions in Tetra Laval/Sidel and Schneider/Legrand.
- In those two decisions, the Commission established that in particular circumstances the retention of a minority shareholding would impede the restoration of conditions of effective competition and would have disproportionate effects on the target company.
- Secondly, according to the applicant, the Commission's interpretation of Article 8 (4) and (5) is incorrect. The Commission, according to the applicant, has followed a purely textual approach, whereas a wider interpretation is more consistent with the purpose of the Regulation.
- In the applicant's submissions, in the Kali und Salz case (Joined Cases C-68/94 and C-30/95 France and others v Commission [1998] ECR I-1375) the Court of Justice, and in the Gencor case (Case T-102/96 Gencor v Commission [1999] ECR II-753) the Court of First Instance, faced with two possible interpretations of different provisions of the Regulation to those currently in issue, noted that the narrower interpretation would partially deprive the Regulation of its effectiveness, whereas the wider view was consistent with its text, even if not explicitly set out therein.
- In the same vein, the applicant claims that the natural meaning of Article 8(4) and (5) is consistent with the use of the powers set out therein to address a minority shareholding such as that of Ryanair, whereas that adopted by the Commission leaves the Community helpless in the face of the distortion of competition created by Ryanair's minority stake, which was acquired as part of a prohibited concentration and is therefore inconsistent with the purpose of the Regulation.
- In particular, the applicant submits that the Commission's interpretation fails to take account of the following recitals in the preamble to the Regulation: 2, 5, 7, 8, 14, 20 and 23.
- As far as Article 8(4) is concerned, instead of being guided by the recitals in the preamble to the Regulation, the Commission adopts a purely textual approach in paragraph 10 of the Contested Decision and takes the view that 'the concentration assessed in the present case has not been implemented' and that 'the transactions that have been carried out during the Commission's proceedings can therefore not be considered as part of an implemented concentration'.
- The first error committed by the Commission, according to the applicant, was to regard the 'transactions' which it must consider as somehow distinct from the concentration assessed in the Prohibition Decision. According to the applicant, it is apparent from paragraph 12 of the Prohibition Decision that the various 'transactions' referred to therein form an integral part of the prohibited concentration. Therefore, according to the applicant, the Commission, having acknowledged already in its decision of 20 December 2006 that such transactions and the public bid formed part of a single concentration for the purposes of Article 3 of the Regulation, misidentified the concentration to which Article 8(4) is applicable. Two requirements must be satisfied for Article 8(4) to apply: there must be a concentration and it must be found to be incompatible with the common market.
- The second condition being satisfied, according to the applicant, the main question is to establish whether the concentration so defined has been implemented. In this regard, the applicant claims that the Commission wrongly equates the meaning of 'implemented' in Article 8(4)(a) with 'acquire control' in the sense of Article 3(2) of the Regulation. In the applicant's view, Article 8(4)(a) does not refer to the 'acquisition of control', and only adopts the word 'implemented'. In the opinion of the applicant, the fact that the concentration was never fully consummated, because the Commission prevented it, does not mean that the concentration has not been implemented, albeit partially, through the transactions referred to in paragraph 12 of the Prohibition Decision.
- In support of this claim, at the oral hearing, the applicant sought to introduce as new evidence Commission press releases, which, according to the applicant, demonstrate that it is common practice for the Commission to consider steps short of control as 'implementation'. The applicant claims that the above documents, demonstrate that the Commission has in the past carried out surprise inspections to check whether the parties to a concentration had implemented an acquisition under review by the Commission, in breach of Article 7(1) of the Regulation.
- Thirdly, the applicant advances a legal ground based on Article 7 of the Regulation. Under Article 7(1), a concentration with a Community dimension may not be implemented until it has been declared compatible with the common market. Article 7(2) establishes that Article 7(1) does not prevent the implementation of a public bid or a series of transactions in securities, provided that the concentration is notified to the Commission and that the acquirer does not exercise the voting rights attaching to the securities acquired, except on the basis of a derogation granted by the Commission under Article 7(3).
- The applicant argues that paragraphs 1 and 2 of Article 7, read together, must prevent Ryanair from exercising its voting rights except in accordance with a derogation granted by the Commission under paragraph 3.
- The Commission argues that the applicant has failed to establish a prima facie case that would justify granting the interim measures sought. Firstly, as a starting point, the Commission observes that the Regulation applies only to concentrations in the sense of Article 3, and not to the acquisition of a minority shareholding that does not confer control within the meaning of Article 3(2), that is to say, decisive influence, and that it is not disputed that Ryanair's shareholding in Aer Lingus does not give it control of that company.
- Secondly, the Commission argues that defining several transactions as part of a single concentration ensures that all transactions are notified together to the Commission, and safeguards the 'one stop shop principle'. According to the Commission, however, this does not give the Commission jurisdiction to control minority shareholdings as such.
- Thirdly, the Commission submits that once the single concentration defined during the administrative procedure is broken up, Article 21(3) of the Regulation no longer precludes the Member States from applying their national legislation on competition to such a minority shareholding.
- Fourthly, as far as the teleological interpretation of the provisions in question is concerned, the Commission points out that Aer Lingus' interpretation of such provisions is contrary to the general purpose of the Regulation, which is to control concentrations in the sense of Article 3.
- Finally, the Commission argues that its previous decisions under Article 8(4) of the Regulation do not support Aer Lingus' contention that a concentration can be said to have been implemented in the absence of acquisition of control, since, in all previous cases, control had been acquired.
Findings of the President
- The applicant submits, in essence, that the Commission wrongly refused to take action under Article 8(4) and (5) of the Regulation against Ryanair's minority shareholding in Aer Lingus. In that respect, Aer Lingus contends that the minority shareholding in question has substantial negative effects on competition and submits that the Commission was wrong to conclude that it does not have the power in this case to take action under Article 8(4) and (5).
- With regard to the applicant's first claim, relating to the assertion in paragraph 12 of the Contested Decision that 'negative effects cannot occur since Ryanair has not acquired, and may not acquire, control of Aer Lingus', it is clear from a closer reading of the Contested Decision that such a statement is taken out of context: it did not form the basis for the Commission's decision not to adopt the measures requested by the applicant under Article 8(4) and (5), and is therefore irrelevant for the purposes of the present proceedings. Indeed, the rationale behind the Contested Decision is clearly that, according to the Commission, no concentration has been implemented in the circumstances at hand and that therefore the Commission has no powers to adopt measures under Article 8(4) and (5) in relation to the minority shareholding in question, irrespective of whether such minority shareholding might be deemed to give rise to competition concerns or not.
- It follows that the arguments brought by the applicant in support of this claim, namely those aimed at demonstrating that this claim is consistent with the facts of the case, 'sound economic theory', and previous Commission decisions, do not require further consideration.
- Based on the parties' arguments, as set out above and discussed during the oral hearing, the main question to be addressed by the President in the current proceedings for interim measures, as far as the requirement of a prima facie case is concerned, is whether the applicant has adequately demonstrated that, prima facie, the Commission wrongly interpreted the expression 'implemented' in Article 8 to imply an acquisition of control and that, on the other hand, the 'implementation' requirement should be construed to be satisfied by any actions or steps taken by the notifying party with a view to consummating the concentration. In other words, the issue is whether 'partial implementation' or implementation of any of the elements which together constitute the single concentration notified can constitute 'implementation' of that concentration and trigger the Commission's powers under Article 8(4) and (5).
- In support of its interpretation of Article 8(4) and (5), Aer Lingus cites the case-law of the Community Courts (paragraph 68 supra) in which the Court of Justice and the Court of First Instance concluded that, faced with two possible interpretations of the Regulation, the interpretation that better reflects the purpose of that Regulation should be adopted.
- In relation to the case-law relied upon by the applicant, it must be pointed out that in Kali und Salz the Court of Justice, and in Gencor the Court of First Instance, held that the provisions of the Regulation in question were to be interpreted by reference to the purpose of the Regulation because the precise scope of the provisions in question could not be conclusively assessed on the basis of their wording alone (Kali und Salz, at paragraph 168, and Gencor, at paragraph 148).
- Accordingly, before carrying out an analysis of Article 8(4) and (5) by reference to the purpose of the Regulation, it is first necessary to determine whether the wording of the provisions in question is not sufficiently clear and allows for the two different interpretations put forward by the applicant.
- In this regard it should first of all be noted that the definition of the English term 'implementation' may encompass both 'the having accomplished some aim' and 'the carrying into effect' and could therefore, in principle, leave room for confusion as to the precise scope of the provisions set out in Article 8(4) and (5). Whilst the use of the present perfect simple tense in the expression 'has already been implemented' in Article 8(4)(a) and (5)(c) of the Regulation might suggest that this expression refers to 'the having accomplished some aim', this consideration alone cannot be deemed to be sufficient to establish, even prima facie, the scope of the Commission's powers under Article 8 of the Regulation.
- However, it is settled case-law that the need for a uniform interpretation of Community regulations makes it impossible for a given piece of legislation to be considered in isolation and requires that, in case of doubt, it should be interpreted and applied in the light of the versions existing in the other official languages (see Case C-64/95 Lubella [1996] ECR I-5105, paragraph 17 and the case-law cited therein). Accordingly, it is necessary to ensure that the English version of Article 8(4) and (5) of the Regulation does not give the expression in question a different meaning from that of the other language versions, and such an expression must be interpreted and applied in the light of the versions which exist in the other official languages (see, to that effect, Case C-177/95 Ebony Maritime and Loten Navigation [1997] ECR I-1111, paragraphs 29 to 31). In this respect, it should be noted that in the French version of Article 8(4) the expression 'has already been implemented' is 'a déjà été réalisée', in the Italian version 'è già stata realizzata', and in the German version 'vollzogen wurde'. The way in which the expression 'implemented' is set out in the sample of other official languages analysed above indicates that, prima facie, the definition of 'implementation' envisaged under Articles 8(4) and 8(5) encompasses full consummation of the concentration.
- Secondly, this conclusion can, prima facie, be confirmed through a comparison of the French version of Article 8(4) and (5) with the French version of other Community legislation in which the term 'implementation' is clearly meant to indicate 'carrying into effect' rather than 'the act of accomplishing some aim'. An example of such use of the term 'implementation' can be found in recital 3 of the preamble to Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, which states that '... [s]uch simplified arrangements should only be accepted if the Commission has been regularly informed on the implementation of the existing aid concerned'. The term 'implementation' in this case appears in the French version of recital 3 as 'mise en oeuvre', and not as 'réalisation'.
- Thirdly, it must be borne in mind that once the Commission's powers under Article 8(4) are triggered, the Commission may require the undertakings concerned to 'dissolve the concentration', an expression which, prima facie, implies the existence of a concentration as defined in Article 3 of the Regulation, and therefore an acquisition of control. In this context, it must be noted that, in the present case, it is not disputed that, through its minority shareholding in Aer Lingus, Ryanair is not in a position to exercise de jure or de facto control over the applicant.
- It follows that, without its being necessary to discuss the applicant's arguments relating to the purpose of the Regulation in any detail, it may be concluded that the applicant has failed to demonstrate the existence of a prima facie case.
- This conclusion cannot be brought into question by the applicant's claim that the Commission treats partial implementation as precluded by Article 7(1), even as regards steps falling short of transfer of control, and indicates to parties that they should refrain from such steps. At the hearing the Commission confirmed that, although it has never adopted a formal position in relation to the question whether Article 7 prevents the acquisition of minority shareholdings, in the context of discussions with the notifying parties the Commission has adopted the policy of asking the acquirer to refrain from exercising any voting rights, whether arising from a controlling shareholding or a minority shareholding, until the end of the proceedings. In this regard, it should first be pointed out that, based on the distributions of competence discussed at paragraph 42 above, the interpretation of Community law is a prerogative of the Court of Justice and not of the Commission, and that, accordingly, the Commission's practice, albeit generally influential and important in determining whether any legitimate expectations may be justified, is not conclusive for present purposes. Secondly, as was pointed out by the Commission in the course of the hearing, even if Article 7(1) of the Regulation were to be interpreted as prohibiting only a change of control pending the Commission's review, and not steps short of change of control such as the exercise of voting rights arising from minority shareholdings, taking into account the strict time-limits within which the Commission must review a notified concentration and the combinations of factors which might give rise to control in any given case, it would remain legitimate for the Commission to ask the parties not to take any action which might lead to a change of control. In addition, although it is not, prima facie, a requirement arising from the Regulation, the notifying parties might consider it advantageous to facilitate the Commission's administrative process by complying with such a request and, thereby, to avoid the risk that the Commission might consider it necessary to carry out inspections at the parties' premises to verify whether any steps taken by the notifying parties do not in fact produce a change of control.
- In relation to the press releases, which, according to the applicant, demonstrate that it is common practice for the Commission to consider steps short of control as 'implementation', it should be noted at the outset that no explanation has been provided by the applicant as to why the press releases in question, one of which dates back to 1997, were not available to it at the time at which it filed its application and why they had to be introduced in the proceedings at such a late stage. However, irrespective of whether this late evidence is admissible or not, suffice it to state that such evidence is inconclusive as to the meaning of the expression 'implementation'. In particular, the information contained in the press releases discussed does not appear to have an impact on the considerations set out above.
- During the hearing, counsel for the intervener referred to the use of this Court's time by the applicant in submitting late evidence of this type as bordering on contempt of court. Without needing to rule on this serious allegation, the President finds that such evidence is in any event inconclusive, and that, also in this respect, it can be concluded that the applicant has failed to demonstrate the existence of a prima facie case.
- Under the applicant's first claim, namely that Ryanair's shareholding in Aer Lingus gives rise to serious competition concerns, the applicant argued that the refusal of the Commission to adopt measures under Article 8(4) to request disposal of Ryanair's minority shareholding is contrary to previous Commission decisions, and referred in particular to the Commission's decisions in Tetra Laval/Sidel and Schneider/Legrand. In this respect, for the sake of completeness, it should be pointed out that this evidence also cannot reverse the conclusions reached above. In particular, the fact that in Tetra Laval/Sidel and Schneider/Legrand the Commission found that the retention of a minority shareholding in the target in the notified transaction which had been prohibited under the Regulation would impede the restoration of effective competition, and therefore ordered the disposal of all the shares acquired, is irrelevant for the purposes of the present proceedings. Indeed, it is consistent with the above conclusions that the Commission's powers in those cases had been triggered by the 'implementation' of the transaction, in other words, by a change of control. Once the powers of the Commission had been triggered, the Commission was entitled, as specifically provided for under Article 8(4), to 'require the undertakings concerned to dissolve the concentration, in particular through the dissolution of the merger or the disposal of all the shares or assets acquired, so as to restore the situation prevailing prior to the implementation of the concentration'.
- As far as the applicant's submission based on Article 7 is concerned, namely that, since the proposed acquisition has not yet been declared compatible with the common market, Ryanair may acquire securities or implement a public bid in the context of the notified transaction only in so far as it does not exercise the voting rights attaching to the securities acquired, except under derogation from the Commission, suffice it to state that the same interpretation of the term 'implementation' set out above must apply mutatis mutandis to the applicant's arguments relating to Article 7.
- Accordingly, in relation to this legal ground also, Aer Lingus has failed to demonstrate the existence of a prima facie case.
- Finally, the applicant argues that the interpretation of Article 8(4) and (5) adopted by the Commission, in conjunction with the Article 21(3) prohibition of Member States applying their national legislation on competition to any concentration having a Community dimension, gives rise to a lacuna which is incompatible with the aim of the Regulation. In this respect it should first be noted that the same factual scenario, whereby an undertaking enjoys a minority shareholding in a competitor, not giving rise to control, and that such competitor might consider that the minority shareholding in question is harmful to competition, could very well occur in cases where such minority shareholding is not acquired in the context of a concentration. In this scenario, the Regulation would clearly not apply, and the impossibility for the Commission to scrutinise the minority shareholding in question under Article 8(4) and (5) of the Regulation would clearly not be deemed to constitute a lacuna in the ability of the Community to secure undistorted competition.
- As far as the operation of Article 21 is concerned, it should be pointed out, first, that Article 21(3) must be read in conjunction with Article 21(1). Article 21(1) provides that the Regulation alone is to apply to concentrations having a Community dimension as defined in Article 3 of the Regulation. In this light, in circumstances such as those in the present case, where a concentration has been notified, declared incompatible with the common market by the Commission and on this basis the public bid was abandoned, no concentration with a Community dimension as defined in Article 3 is in existence. Nor can a concentration with a Community dimension be contemplated by the parties in these circumstances, since any such concentration would be in violation of an existing Commission decision. On this basis, as the Commission sets out in its written observations, Article 21(3) cannot be said, prima facie, to apply since there is no concentration in existence, or contemplated, to which the Regulation alone must apply. The remaining minority shareholding is, prima facie, no longer linked to an acquisition of control, ceases to be part of a 'concentration' and lies outside the scope of the Regulation. Accordingly, Article 21, which under recital 8 to the Regulation is aimed at ensuring that concentrations generating significant structural changes are reviewed exclusively by the Commission in application of the 'one-stop shop principle', does not in principle, under these circumstances, prevent the application by national competition authorities and national courts of national legislation on competition.
- In this respect, the fact that the Commission's decision finding the concentration incompatible with the common market is being challenged before the Court of First Instance makes no material difference, since, on the basis of Article 242 EC, actions before the Court of Justice do not have suspensory effect. In addition, if the relevant national competition authorities were deterred from taking definitive measures by considerations relating to procedural economy, it would be open to such authorities to adopt interim measures to address any concern which they might identify pending judgment by this Court.
- Furthermore, as far as the existence of a regulatory lacuna is concerned, it should be pointed out that, whilst a minority shareholding of the type in question cannot, prima facie, be regulated under the Regulation, it might be envisaged that the EC Treaty provisions on competition, and in particular Article 81 EC and Article 82 EC, can be applied by the Commission to the conduct of the undertakings involved following the acquisition of the minority shareholding. In this regard it should be recalled that under Article 7(1) of Council Regulation (EC) No 1/2003 of 16 December 2002, where it finds that an infringement of Article 81 EC or of Article 82 EC has taken place, the Commission has the power to impose 'any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end'.
- Whilst Article 81 EC might, prima facie, be difficult to apply in cases, such as the present, in which the infringement in question arises from the acquisition of shares on the market and, therefore, the necessary meeting of minds might be difficult to establish, the applicant may ask the Commission to initiate a procedure under Article 82 EC if it believes that Ryanair enjoys a dominant position on one or more markets and is abusing that dominant position by interfering with a direct competitor's business strategy and/or by exploiting its minority shareholding in a direct competitor to weaken its position.
- It is also appropriate to point out that this scenario applies in cases, such as the present, in which all parties agree that no change of control has occurred for the purposes of the Regulation. However, should Ryanair, at a later stage, be found to enjoy or to have acquired control over Aer Lingus by virtue of its minority shareholding, then Article 8(4) and (5) might apply.
- Accordingly, in relation also to this legal ground, relating to the existence of a lacuna which is incompatible with the aim of the Regulation, it can be concluded that the applicant has failed to demonstrate the existence of a prima facie case.
- It follows that the applicant has failed to demonstrate the existence of a prima facie case.
Urgency
Arguments of the parties
- The applicant takes the view that the condition relating to urgency is satisfied in this case, in particular in so far as there is a risk that Ryanair could impose its wishes on Aer Lingus at any time.
- The applicant submits, first, that under the current shareholding structure of Aer Lingus Ryanair already enjoys the power to block special resolutions requiring a 75% majority. The applicant, furthermore, submits that Ryanair has already used its minority shareholding in Aer Lingus to block a proposal for a special resolution under which Aer Lingus would have been authorised to issue additional shares equivalent to up to 5% of its issued share capital without having first to offer those shares to existing shareholders.
- Secondly, Ryanair's weight when voting on ordinary resolutions is in practice more significant than the weight conferred on it by its shareholding for a number of reasons. In particular, on the assumption that only some 80% of Aer Lingus shares are going to be voted at a general meeting, which according to the applicant is the likely turnout based on the turnout at the first, and so far only, general meeting of Aer Lingus, Ryanair's actual voting weight tends towards 40%. Such weight is further increased by the fact that Ryanair is the largest shareholder in Aer Lingus and one with very significant aviation expertise and may, according to the applicant, have a potentially very significant influence on other shareholders.
- Thirdly, the applicant claims that there is a possibility that the Irish Government, Aer Lingus' second largest shareholder, may abstain from shareholder resolutions affecting the strategic direction of the company. In addition, there may be circumstances in which the Irish Government may be required to abstain from voting, for example where it is a related party to a transaction. According to the applicant, this might be the case where Aer Lingus intends to enter into agreements with the State-owned Dublin Airport Authority, for example, to redevelop the Aer Lingus head office site. In such circumstances, Ryanair's shareholding might in fact represent more than 50% of the votes likely to be cast.
- In addition, Aer Lingus puts forward a number of examples of circumstances in which Ryanair may interfere with Aer Lingus' business by taking advantage of the scenarios set out above. In particular, Ryanair may employ its shareholding in Aer Lingus to further its campaign against Dublin Airport's Terminal 2, which according to the applicant is crucial to Aer Lingus' expansion plans. Equally, Ryanair, based on its preference for Boeing aircraft, may interfere with Aer Lingus' plans to purchase Airbus aircraft. In its written pleadings, Aer Lingus reported Ryanair's intention to interfere with the decision of the Board of Aer Lingus to abandon a number of routes and to open new ones. At the hearing, however, it was confirmed that such attempts had been unsuccessful. According to the applicant the damage which would arise from Ryanair's exercise of its voting rights as a minority shareholder, should this result in the Board being defeated on an issue of commercial policy, would be both serious and irreparable, and the resulting disruption to Aer Lingus' business could not be remedied by the Court's judgment in the main application, or at all.
- At the oral hearing the applicant sought to introduce as new evidence information relating to, inter alia, a contract with Airbus for the delivery of Airbus wide-body aircraft which, according to the applicant, would need to be approved by the shareholders shortly after the hearing, and which constitutes a pivotal aspect of Aer Lingus' business strategy to exploit the opportunities arising from the Open Skies regime. Should the Board's initiatives relating to such opportunities not be approved by the shareholders of Aer Lingus in the short term, Aer Lingus would suffer serious and irreparable harm since such opportunities would not be available to Aer Lingus following a judgment in the main proceedings.
- Finally, the applicant claims that the Court should, in the present case, apply the 'precautionary principle', because, according to the applicant, once it has been shown that there is a non-negligible risk that Ryanair might cause or contribute to Aer Lingus suffering serious and irreparable damage, the Court is entitled to take protective measures without having to await further proof of the reality of that risk.
- The Commission, for its part, submits essentially that the urgency requirement is not satisfied.
Findings of the President
- According to settled case-law, the urgency of an application for interim relief must be assessed in the light of the need for an interlocutory order in order to avoid serious and irreparable damage to the party seeking the relief. It is for that party to prove that it cannot await the outcome of the main proceedings without suffering damage of that kind (see order of the President of the Court in Case T-151/01 R Duales System Deutschland v Commission [2001] ECR II-3295, paragraph 187 and the case-law cited).
- Where damage depends on the occurrence of a number of factors, it is enough for that damage to be foreseeable with a sufficient degree of probability (order in Arizona Chemical and Others v Commission, cited in paragraph 50 above, paragraph 71; see also, to that effect, the orders of the Court of Justice in Case C-280/93 R Germany v Council [1993] ECR I-3667, paragraphs 32 to 34, and of the President of the Court of Justice in Case C-335/99 P(R) HFB and Others v Commission [1999] ECR I-8705, paragraph 67). However, the applicant is still required to prove the facts which are deemed to show the probability of serious and irreparable damage (Arizona Chemical and Others v Commission, paragraph 72; see also, to that effect, HFB and Others v Commission, paragraph 67).
- In that regard, it must be pointed out that, in order to be able to determine whether the damage which applicants fear is serious and irreparable and therefore provides grounds for ordering interim measures, the judge hearing the application must have hard evidence allowing him to determine the precise consequences which the absence of the measures applied for would in all probability entail for each of the undertakings concerned.
- As a preliminary point, therefore, it should be underlined that the applicant's claim that the President should apply the 'precautionary principle', and that the Court is entitled to apply 'protective measures' without having to await proof of the reality of the risk alleged by the applicant is manifestly inconsistent with the principles and the case-law applicable to interim measures applications, and cannot be entertained.
- In the present case, the applicant submits that the interference in its business affairs by its shareholder and principal competitor Ryanair would place it in an extremely difficult position and that, as a consequence, it would suffer damage which would be serious and irreparable. The applicant, in particular, has put forward a number of scenarios in which Ryanair might be able to influence the outcome of voting in relation to a number of matters which are, according to the applicant, crucial to the growth plans that the Board of Aer Lingus has set for that company.
- In this regard, as a preliminary point, it should be emphasised that it is not being claimed by the applicant that Ryanair is in a position to exercise control over Aer Lingus. On the basis of the definition of control under Article 3(2), it follows that Ryanair cannot be understood to be in a position to 'exercise decisive influence' over Aer Lingus.
- Both in its written pleadings and in the course of the oral hearing, when it was given ample opportunity to present its case, moreover, the applicant has failed to provide sufficiently concrete evidence in relation to the type of harm that is at stake for Aer Lingus, the likelihood of such harm occurring, and whether such harm is indeed serious and irreparable. For example, the applicant has failed to provide sufficiently concrete evidence to establish, in relation to each example put forward, inter alia, whether and when a vote must be held, why a vote has to be held before a decision is issued in the main proceedings, why Ryanair alone would be able, in the specific circumstances, to oppose a proposal of the Board or to pass its own resolution. In addition, Aer Lingus has failed to provide sufficient evidence to support its claim that the resulting harm would be both serious and irreparable.
- It follows that the assertions put forward by the applicant remain hypothetical and unsubstantiated statements which do not satisfy the condition of foreseeability of harm with the requisite degree of probability.
- More specifically, in relation, first, to the claim that under the current shareholding structure of Aer Lingus, Ryanair already enjoys the power to block special resolutions requiring a 75% majority, and has on one occasion already done so, Aer Lingus has failed to provide concrete evidence demonstrating that the passing of any such special resolution is anticipated to be required before the decision in the main proceedings is issued by this Court. In addition, Aer Lingus has failed to provide concrete evidence indicating with the requisite degree of probability that Ryanair will oppose such a hypothetical special resolution, and has failed to provide any concrete evidence to support the statement that any such opposition is likely to cause both serious and irreparable harm to Aer Lingus. With reference to the example of the only special resolution which Ryanair has so far successfully opposed, no concrete evidence was provided by Aer Lingus to support its statement that the failure of the Board to obtain the abolition of shareholders' pre-emption rights is likely to cause serious and irreparable harm to Aer Lingus.
- Secondly, in relation to Aer Lingus' claim that Ryanair's weight when voting on ordinary resolutions is in practice more significant than the weight conferred on it by its shareholding, it should be noted, again, that, by this argument, the applicant is not claiming that Ryanair is in a position of de jure or de facto control. Furthermore, Aer Lingus has failed to provide concrete evidence to demonstrate that the passing of any such ordinary resolution is anticipated to be required before the decision in the main proceedings is issued by this Court. In addition, Aer Lingus has failed to provide any concrete evidence to support the statement that any such opposition is likely to cause both serious and irreparable harm to Aer Lingus.
- In this context Aer Lingus claimed that Ryanair's shareholding might give rise to serious harm to competition primarily in the context of two issues, namely the Aer Lingus Board's proposal to acquire Airbus aircraft, and the Board's plans regarding Dublin Airport's Terminal 2.
- As far as the Board's proposal to acquire Airbus aircraft is concerned, it should first of all be pointed out that Aer Lingus' conclusion that Ryanair would object to such acquisition is based on the general assumption that, since Ryanair owns a Boeing-only fleet, Ryanair would seek to impose the purchase of Boeing aircraft on Aer Lingus, and on a press statement in which Ryanair is reported to have declared that it would ensure that Aer Lingus' fleet be converted to a Boeing-only fleet. In that regard, it was pointed out by Ryanair at the hearing, and no objection was raised by Aer Lingus, that such intention was expressed at a time when the acquisition was being contemplated, and that the purpose of the idea of converting Aer Lingus' fleet to a Boeing-only fleet was to facilitate the integration of Aer Lingus into Ryanair. Whilst Ryanair has appealed the Commission decision declaring its acquisition of Aer Lingus incompatible with the common market, and on this basis, it might be said to be still contemplating, ultimately, the possibility of integrating Aer Lingus into Ryanair, it cannot be concluded on the basis of the evidence provided that there is a sufficient probability that Ryanair would object to the proposal of the Aer Lingus Board to acquire Airbus aircraft.
- In addition, while at the hearing Aer Lingus submitted that a purchase of Airbus wide-body aircraft is anticipated, and would need to be approved by the shareholders shortly after the hearing, Aer Lingus failed to demonstrate to the requisite degree of probability that, if such approval is required, the turnout at the shareholder meeting would be so low as to provide Ryanair with enough voting weight to prevent the approval of such acquisition, and even less to impose the acquisition of Boeing aircraft. Finally, even supposing that Ryanair would be in a position to object to the purchase of Airbus aircraft, Aer Lingus has not alleged that should the contract not be ratified by a certain date, its option would necessarily expire.
- Equally, in relation to Aer Lingus' claim that the Irish Government may decide, or may be required by Irish legislation, to abstain on some shareholder resolutions, no concrete evidence was provided to demonstrate that a specific issue in relation to which the Irish Government would not exercise its voting rights is anticipated to require shareholder approval before the decision in the main proceedings is issued by this Court. In addition, Aer Lingus has failed to provide any concrete evidence indicating to the requisite degree of probability that such abstention is likely to result in the rejection of the Board's proposal, and that this is in turn likely to cause both serious and irreparable harm to Aer Lingus. With reference to the specific example of Terminal 2, Aer Lingus provided no concrete evidence to support its statement that a shareholder resolution is required in order to approve the Board's plans in this context, and no concrete evidence was adduced to demonstrate that the Irish Government will be required by Irish legislation not to exercise its voting rights. Finally, no evidence was provided to support the statement that a failure of the Board to obtain shareholder approval in relation to its approach to the use of Terminal 2 is likely to cause harm to Aer Lingus which will be both serious and irreparable.
- In addition, in its submissions relating to the issues above, the applicant has failed to demonstrate that the harm which Aer Lingus would allegedly suffer is of a type other than pecuniary.
- In relation to pecuniary damage, it is appropriate at this stage to state that it is established case-law that damage of this nature cannot, save in exceptional circumstances, be regarded as irreparable, if it can ultimately be the subject of financial compensation. Pecuniary damage can justify the award of interim measures only if it appears that, without the measures sought, the applicant would be in a position that could jeopardise its existence before final decision in the main action or irremediably alter its position in the market (orders of the President of the Court in Case T-181/02 R Neue Erba Lautex v Commission [2002] ECR II-5081, paragraph 84, in Case T-169/00 R Esedra v Commission [2000] ECR II-2951, paragraph 45, in Case T-148/04 R TQ3 Travel Solutions Belgium v Commission [2004] ECR II-3027, paragraph 46, and in Case T-316/04 R Wam v Commission [2004] ECR II-3917, paragraph 29). In this regard, suffice it to state that at no point has the applicant claimed that, without the interim measures sought, its very existence would be jeopardised or its market position irremediably altered before a final decision is issued in the main action.
- At the oral hearing, the applicant did offer to provide, in camera, and in the absence of the intervener, new and more specific information relating to the examples of harm set out above. As an example of the type of information which it could provide in an in camera session, the applicant explained that a vote would soon be required at shareholder level to approve a contract for the purchase of Airbus aircraft, detailed information in relation to which is highly confidential. The applicant did not, however, explain how the additional information could fulfil the urgency requirement for the granting of interim measures. Moreover, the applicant failed to explain why such additional information could not be provided with its written application, under the claim of confidentiality, and had to be introduced at such a late stage in the proceedings. Finally, it follows from the considerations set out above in relation to the admissibility of a request for interim measures to be addressed to Ryanair or having an impact on Ryanair, that evidence provided in the absence of Ryanair cannot be used as the basis for interim measures, since that would give rise to a breach of Ryanair's rights of defence. The only exception to this principle, which is based on the temporary nature of interim measures, applies in cases where, in the absence of the interim measures sought, the very existence of the applicant would be jeopardised. As noted above, at no point in the proceedings has Aer Lingus claimed that its existence would be jeopardised in the absence of interim measures.
- In any event, irrespective of whether such new evidence is admissible or not, there is no evidence that such additional information would have been of a nature capable of changing the outcome of the President's assessment set out above.
- In the light of the foregoing, it must be held that the applicant has not established that without the interim measures sought it will suffer serious and irreparable harm.
- It follows from all of the foregoing that the applicant has not demonstrated the requisite prima facie case and the need for interim measures to prevent an imminent risk of serious and irreparable harm. The application for interim measures must therefore be rejected. This is particularly so in light of the fact that, as results from the reasoning in paragraph 56 above, a particularly strong prima facie case and the existence of very serious and irreparable harm will have to be demonstrated before the required measures could be imposed on Ryanair, in view of the fact that those measures would have a serious impact on the rights and interests of Ryanair as a shareholder of Aer Lingus.
On those grounds,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
hereby orders:
1) The application for interim measures is dismissed.
2) Costs are reserved.
Luxembourg, 18 March 2008.
* Language of the case: English.
