Under the leadership of Commissioner Mario Monti, the Competition Directorate-General of the European Commission has had a mixed record in defending its decisions when they are challenged before the European courts. If a generalisation can be made, it might be that the Commission has a tendency to lose in high profile cases, but has a fairly good record of getting its more routine competition law decisions through the appeal process.
Under Article 230 of the European Commission treaty, a firm that is the subject of an adverse decision by the Commission can appeal to the Court of First Instance and seek a review of the legality of that decision. As far as the Commission's competition law decisions are concerned, this appeal procedure means that the Court of First Instance can review decisions on the abuse of dominant position, on cartels, on merger control and on State aid issues. Judgments of the Court of First Instance can be appealed to the Court of Justice. Both courts are located in Luxembourg.
For Commissioner Monti, his worst run of defeats at the hands of the Luxembourg judges came in the period June to October 2002 when the Court of First Instance struck down three important Commission merger control decisions, two of which were adopted on his watch.
In June 2002, the court heavily criticised the Commission's legal and economic reasoning in its decision to prohibit a merger between UK package tour operators Airtours and First Choice and annulled the Commission's decision.
Airtours (now called MyTravel) has subsequently filed proceedings against the Commission in the Court of First Instance seeking compensation for the loss it suffered as a result of the derailment of the proposed transaction. Although the amount claimed by MyTravel is confidential, some commentators have suggested that it is seeking more than € 500 million in compensation.
The Airtours judgment was bad, but for Commissioner Monti worse was to follow. In October 2002, the court reversed two more Commission merger prohibition decisions: the first in respect of a merger between French companies, Schneider and LeGrand, and the second in relation to a merger in the packaging sector between Tetra Laval and Sidel.
Although Commissioner Monti survived this run of defeats, it was followed by a thoroughgoing reorganisation of his Competition Directorate-General which involved the transfer or departure of a number of high profile officials. The Commission's merger control rules were also substantially revised.
The next major reversal in a competition case occurred in September 2003 when the Court of First Instance delivered its judgment on the Commission's TACA decision concerning a transatlantic liner conference.
In that decision (taken in September 1998 by Mr Monti's predecessor Commissioner Karel van Miert), the Commission had found TACA members guilty of the abuse of a collective dominant position. Record fines totalling €273 million were imposed on the firms involved.
The court subsequently annulled these fines, partly due to lack of evidence and to infringement of the firms' defence rights.
Since TACA, the Commission's record in the court has been reasonably positive. Its controversial rulings on the pricing policies of dominant firms were upheld in Michelin (September 2003) and British Airways (December 2003).
It has also succeeded in defending its decisions in a number of less prominent cartel and State aid cases.
There are, however, currently before the court a number of high profile cases, all of which involve decisions adopted since Commissioner Monti took over, which might disrupt this positive trend.
The addition of the Microsoft case to this list will ensure that the Commission's lawyers will be busy for some time to come.
Damian Collins is the partner in charge of the Brussels office of McCann FitzGerald Solicitors.
