Judgment

Neutral citation:

[2015] CAT 1

Published:

9 Jan 2015

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Summary:

Judgment of the Tribunal dismissing applications for review under section 120 of the Enterprise Act 2002 (the “Act”) brought by Groupe Eurotunnel S.A. (“Eurotunnel”) and the Société Coopérative de Production Sea France S.A. (the “SCOP”).

Eurotunnel and the SCOP challenged the CMA’s decision on a matter remitted back to it by a differently constituted Tribunal in its Judgment of 4 December 2013 (“Eurotunnel I” ([2013] CAT 30)) in relation to the completed acquisition by Eurotunnel of certain assets of the former SeaFrance. The CMA’s decision is contained in its Remittal Report of 27 June 2014.

The previous Tribunal had considered applications for review, filed by the same applicants, of a decision by the CMA’s predecessor, the Competition Commission (“CC”). The CC decided that the acquisition by Eurotunnel and the SCOP, as “associated persons” for the purposes of the Act, constituted a relevant merger situation, and that the acquisition may be expected to result in a substantial lessening of competition in the freight and passenger markets on the short sea. By way of remedy, the CC effectively prohibited the merger.

In Eurotunnel I, the first Tribunal dismissed challenges to the CC’s decision on various grounds, including a challenge to the remedy. However, it allowed the SCOP’s challenge to the CC’s jurisdiction to review the acquisition on the basis that it was unclear whether this was a case of two enterprises ceasing to be distinct within the meaning of section 26(1), such that a relevant merger situation arose within the meaning of section 35(1)(a) of the Act. That being the statutory foundation for the CC to intervene, the Tribunal therefore remitted the matter back to the CC (which has since been replaced by the CMA).

By the Remittal Report, the CMA decided that Eurotunnel/SCOP had acquired an enterprise. Eurotunnel and the SCOP both challenged this decision. By its second and third grounds, Eurotunnel also challenged the legal consequences of the decision to remit contained in Eurotunnel I.

1. No “enterprise”

As to the first Ground, the parties both argued that the SeaFrance assets acquired did not constitute an “enterprise”.

The Tribunal considered the approach taken in Eurotunnel I to the enterprise question and decided that it was not for it to reconsider that approach. Rather, the Tribunal’s role was to decide whether the CMA’s conclusion disclosed an error of law or was irrational under the established principles of judicial review. On that basis, and bearing in mind that the CMA’s task was to apply the approach prescribed in Eurotunnel I, the Tribunal saw no ground to set aside its decision that the jurisdictional test in the Act was satisfied on the facts.

The CMA had considered what over and above bare assets Eurotunnel/SCOP obtained and, then, how that placed them in a different position than if they had gone out in the market and acquired the assets. The Tribunal considered that that is what they were required to do by Eurotunnel I. The CMA’s findings that the difference was sufficient to give rise to the conclusion that Eurotunnel acquired the activities of a business could not be regarded as irrational under the test for judicial review.

2. Decision to reinstate the rest of the Original Report

The Tribunal rejected Eurotunnel’s further argument that the CMA erred in law in finding that the other conclusions of the Original Report could simply be reinstated. Eurotunnel I only quashed the part of the decision in the Original Report that related to the question of whether two enterprises ceased to be distinct. The remaining parts were never quashed.

3. CMA fettered its discretion

The Tribunal also rejected Eurotunnel’s alternative argument that the CMA erred in law and/or wrongly fettered its discretion in finding that it was bound by the findings in the Original Report where these had not been challenged at the Tribunal or had been unsuccessfully challenged. The Tribunal considered that the CMA was entirely correct in its view that it could not hear further argument revisiting matters on which it had reached conclusions in the Original Report, concerning the remedy, aside from the question of whether there had been a material change of circumstances such that the remedy should be reconsidered.

Accordingly, the Tribunal dismissed Eurotunnel and the SCOP’s applications for review.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.