General Curt dismisses damages action by UPS following annulment of prohibition of UPS-TNT merger

 

General Curt dismisses damages action by UPS following annulment of prohibition of UPS-TNT merger

The EU General Court rejected a claim by United Parcel Service (UPS) and ASL Aviation Holdings (ASL) in respect of damages that they allegedly suffered as a result of the European Commission's 2013 decision prohibiting the proposed acquisition of TNT Express NV (TNT) by UPS.

The General Court annulled the Commission’s decision in March 2017; upheld by the Court of Justice in January 2019.

UPS claimed compensation of EUR1.742 billion in respect of costs and loss of profits.

The General Court held that the Commission’s failure to communicate changes in the economic model used to support the Commission’s analysis was a sufficiently serious breach intended to confer rights on individuals.  However the General Court did not consider that the Commission’s procedural defect was the direct cause of UPS’s losses.

ASL claimed that the Commission’s decision had deprived it of the agreement with UPS giving rise to loss.  The General Court held that ASL could not found its claim on UPS’s rights of defence.

As a result the General Court dismissed the claims in entirety.

Damages actions have been brought in the past in respect of Commission merger prohibition cases.

In 2008 the General Court rejected a claim for damages by My Travel Group as a result of the Commission's prohibition of the Airtours/First Choice merger.  The General Court referred to the complexity of the case and the margin of discretion afforded to the Commission and found that the breach was not sufficiently serious to give rise to non-contractual liability. 

In 2009 the Court of Justice awarded Schneider damages for its costs incurred in dealing with the Commission’s second investigation of the merger between it and Legrand following the General Court’s annulment of the Commission’s prohibition decision.  However it overruled the General Court’s finding that the Commission was responsible for two thirds of losses allegedly suffered by Schneider because it had to accept a lower sales price.  The Court concluded that this category of loss did not arise directly and exclusively out of the Commission’s breaches.

The cases show that a breach of law by the Commission will not automatically sound in damages.  The claimant will need to show that there is a direct causal link between the breach and the harm suffered and this will be interpreted strictly.

 

T-834/17 United Parcels Service, Inc v European Commission ECLI:EU:T:2022:84

T-540/18 ASL Aviation Holdings DAC and others v European Commission ECLI:EU:T:2022:85